scarcity is a problem because
our wants are unlimited and resources are limited
forces people to make choices
three basic categories of resources
land, labor, and capital
is the study of how people satisfy their needs and wants because of scarcity
how it affects the individual
policies to create jobs in the nation
because of scarcity, each economic society must make what choices?
what to produce.
how to produce.
for whom to produce.
a good or service that is forgone by choosing one alternative over another
the law of increasing costs indicates that the opportunity cost of producing a good:
if we move toward the x-axis than we gain less of the y-axis
When the dot is on the PPC curve the economy is?
When the dot on the PPC curve is on the outside of the curve the economy needs to…
find new resources.
find new technology.
use them for efficiently.
All the points on the PPC are..
What cases the PPC curve to shift to the right?
the law of demand states
people will buy more if the price goes down. will buy less id the price goes up.
the law of demand is illustrated by a demand curve that is
a demand schedule for a good shows
various prices and the various quantities
and increase in the quantity demanded of a good is most often due to:
a demand curve shows the relationship between
price and quantity
other things being equal, the effect of an increase in the price of Coca-Cola would cause a
decrease in quantity demanded
an increase in the demand for a good means that
the demand curve has shifted
which of the following would shift the demand curve for 35 mm film to the right?
price of the related goods
if people expect the price of packaged coffee to rise next week, coffee demand will
if two goods are substitutes in consumption
an increase in the price in one will lead to a decrease in the demand for the other
definition of supply
as the price goes up the quantity supplied increases
in accordance with the law of supply, both individual and market supply curves are drawn
what will cause a movement along the supply curve?
price is changing of the good
a decrease in supply means:
the quantity supplied is going to change at every price level
what would increase the supply of tomatoes?
an increase in the number of producers will
if more people enter medical school we can expect
increase in supply of doctors
the equilibrium price is best defined as the price at which
when supply equal demand
price elasticity of demand refers to the ratio of the
percent change in demand/percent change in price
if demand is price elastic, a decrease in price causes
increase in demand
GDP is officially measured by adding together:
total value of all goods and services produced in a country
What is counted as the final good in the GDP
the finished good
what is included in the calculation of GDP
a legitimate service
what is included in the GDP
a finished good or service from that year
intermediate goods are goods and services used:
anything used in the production of funding
personal consumption expenditures include:
things that the average person purchases
Gross private domestic investment
the circular flow model is
flow of the economy between the house holds and the firms
in the circular flow model:
households make the factors of productions for the factories ad they use them to make products to sell to the households
the point at which real output reaches a max during a business cycle is called the
the period during which real output falls during a business cycle is called
the phase of the business cycle that follows a recession is known as the
who is part of the labor force?
working or trying to get a job
if you are not working or trying to find a job you are
not in the labor force
one problem with the unemployment rate is that
there are under payed workers
the number of people officially unemployed is not the same as the number of people who cant find a job because
unemployment that is of a short duration to allow time to find a new job is
structural unemployment is
because of mismatch of skills
eric lost his job because a recession caused his employers sales to fall. this is:
inflation is an increase in
the average price level
losers from inflation include:
savers, fixed income, lenders offering fixed rate loans
winners from inflation are:
borrowers of fixed rate loans, lenders of adjustable rate loans, Government debt repayment
in periods of high inflation businesses have trouble deciding what?
how much to produce
The CPI index:
typical purchases of the urban household
demand pull inflation is due to
not enough goods to meet demand
cost push inflation is due to
reduction in supply of goods and services
during periods of hyperinflation, what is the most likely response of consumers?
buy now before the price goes up
a gov. spending and tax policy to achieve macroeconomics is known as
expansionary fiscal policy may include
increase gov spending
when the MPC GETS SMALLER, THE SPENDING MULTIPLIER:
the MPC gets smaller than the spending multiplier gets smaller
an advocate of supply-side fiscal policy would advocate which of the following?
cut business tax a a means of stimulating output
the laffer curve is a graph of the relationship between tax rates and
barter is the
the direct exchange of goods for goods
coincidence of wants
buying coffee with a dollar bill represents the use of money as a
medium of exchange
the statement that Computech’s profits totalled $500 million last year represents the use of money as
a unit of account
what is not a store value?
a credit card
the primary functions of money are
medium of exchange, unit of account, store value
the ease with which an asset can be converted into a medium of exchange is known as
the characteristics that money should have are;
durable, scarce, portable, uniform, divisible,
M1 refers to
Decisions regarding purchases and sales of Gov securities by the FED are made by who?
what would be a liability for a bank
the amount of assets that a bank must hold at all times is determined by
required reserves ratio
if the fractional reserve system did not exist
wouldnt be able to create more money
the required reserve ration for a bank is set by
the buying and selling of GOV bonds by the FED is known as
Open market operations
during a period of inflation, the FED is likely to
if there is a recession the FED would most likely
Lower the RRR
what FED action would increase the money supply
lower the discount rate, buy bonds
keynes called money people hold to make day to day purchases
keynes called the money people hold in order to pay unforeseen expenses
keynes called the money people hold in order to buy bonds
a country that has lower opportunity cost of producing a good
with the benefits of international trade:
greater: consumption, production, efficiency
a tariff is
a tax on imports
General Agreement on Tariffs and Trade
the primary purpose of WTO is to
the international trade, and infant industry is one
a firm in the early stages of development
an exchange rate is the number of units of
the amount of a nations currency it takes to a buy another nations currency
flexible, or floating exchange rate is determined by the
supply and demand
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