question
b
answer
In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?
a) The production possibilities curves for these countries would have shifted outward.
b) The production possibilities curves for these countries would have shifted inward.
c) The production possibilities curves for these countries would have been unaffected.
d) This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.
a) The production possibilities curves for these countries would have shifted outward.
b) The production possibilities curves for these countries would have shifted inward.
c) The production possibilities curves for these countries would have been unaffected.
d) This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.
question
d
answer
The production possibilities curve illustrates the basic principle that:
a) an economy's capacity to produce is unrelated to its population.
b) if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced.
c) an economy will automatically move toward a point at which all of its resources are being used inefficiently.
d) if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
a) an economy's capacity to produce is unrelated to its population.
b) if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced.
c) an economy will automatically move toward a point at which all of its resources are being used inefficiently.
d) if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
question
d
answer
How will an increase in lumber prices influence the home construction market?
a) The demand for newly constructed homes will increase.
b) The demand for newly constructed homes will decrease.
c) The supply of newly constructed homes will increase.
d) The supply of newly constructed homes will decrease.
a) The demand for newly constructed homes will increase.
b) The demand for newly constructed homes will decrease.
c) The supply of newly constructed homes will increase.
d) The supply of newly constructed homes will decrease.
question
producer surplus
answer
The difference between what producers are paid, and the marginal cost of production.
question
law of supply
answer
according to the _____ _____ _______, more of a good will be offered by suppliers as the price rises.
question
demand shifters
answer
what are these:
-change in buyer taste
-Change in number of buyers
-Change in income (normal or inferior goods)
-Change in prices of related goods (substitutes and complements)
-Change in buyer expectations
-change in buyer taste
-Change in number of buyers
-Change in income (normal or inferior goods)
-Change in prices of related goods (substitutes and complements)
-Change in buyer expectations
question
supply shifters
answer
what are these:
-Change in resource prices
-Change in technology
-Change in taxes or subsidies
-Change in expectations
-Change in the number of suppliers
-Change in resource prices
-Change in technology
-Change in taxes or subsidies
-Change in expectations
-Change in the number of suppliers
question
aggregate demand shifters
answer
what are these:
-Changes in Consumer spending caused by wealth, expectations, indebtedness, or personal taxes
-Changes in investment spending caused by a change in interest rates, profit expectations, business taxes, or excess capacity
-Changes in government spending
-Changes in net export spending caused by a change in national income abroad or exchange rates.
-Changes in Consumer spending caused by wealth, expectations, indebtedness, or personal taxes
-Changes in investment spending caused by a change in interest rates, profit expectations, business taxes, or excess capacity
-Changes in government spending
-Changes in net export spending caused by a change in national income abroad or exchange rates.
question
aggregate supply shifters
answer
what are these:
-Changes in input prices (changes in CELL)
-Changes in productivity
-Changes in government policies such as business taxes, subsidies, regulations
-Changes in input prices (changes in CELL)
-Changes in productivity
-Changes in government policies such as business taxes, subsidies, regulations
question
open market operations
answer
what is the #1 tool of the federal reserve
question
Consumption + Investment + Government Spending + Net Exports
answer
what is the formula for GDP
question
bond
answer
A certificate of debt issued by a company or government to an investor
question
budget deficit
answer
When a government spends more than it collects in tax revenues in a given year
question
business cycle
answer
A model showing the short-run periods of contraction and expansion in output experienced by an economy over a period of time
question
classical economic theory
answer
The view that an economy will self-correct from periods of economic shock if left alone. AKA "laissez-faire"
question
consumption
answer
A component of a nation's aggregate demand; measures the total spending by domestic households of goods and services
question
excess reserves
answer
The amount of _______ _________ in the banking system determines equilibrium interest rate.
question
fiscal policy
answer
Changes in government spending and tax collections implemented by government with the aim of either increasing or decreasing aggregate demand to achieve the macroeconomic objectives of full employment and price-level stability
question
money supply
answer
The vertical curve representing the total supply of excess reserves in a nation's banking system. Determined by the monetary policy actions of the central bank.
question
money market
answer
The market where the supply of money is set by the central bank; includes the downward sloping money-demand curve and a vertical money-supply curve. The "price" of money is the nominal interest rate.
question
stagflation
answer
a situation in which both inflation and unemployment increase. Caused by a negative supply shock.
stagnation + inflation
stagnation + inflation
question
trade deficit
answer
When a country's total spending on imported goods and services exceeds its total revenues from the sale of exports to the rest of the world.
question
trade surplus
answer
When a country's sale of exports exceeds its spending on imports
question
right
answer
The dynamic aggregate demand curve shifts to the ______ if M or V grows faster
question
left
answer
The dynamic aggregate demand curve shifts to the ______ if M or V grows slower
question
slow growth model
answer
explains long-run economic growth by looking at capital accumulation, labor or population growth, and increases in productivity, commonly referred to as technological progress
question
slow growth curve
answer
a vertical line that says there's no relation between the economic growth & inflation
question
raise taxes and cut spending
answer
During booms the government should:
question
the multiplier effect
answer
an additional dollar of government spending or of income from tax cuts leads to more than one dollar of GDP
question
marginal propensity to consumer (MPC)
answer
The fraction of each additional (marginal) dollar of disposable income spent on consumption; the change in consumption divided by the change in disposable income.
question
(1/1-MPC)
answer
What is the equation for the Keynesian multiplier
question
automatic stabilizers
answer
policies that act quickly without constant input from policy makers
-ex: unemployment benefits
-ex: unemployment benefits
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