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what you give up to get that item
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The opportunity cost of an item is...
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each person spends more time producing that product in which he or she has a comparative advantage
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Total output in an economy increases when each person specializes because...
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has an absolute advantage in the production of that good...
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The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good,
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willing and able to purchase
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The quantity demanded of good is the amount that buyers are...
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represents the sum of the quantities demanded by all the buyers at each price of the good
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The market demand curve...
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sellers are willing and able to sell
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The quantity supplied of a god is the amount that...
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demand decreases and supply increases
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Which of the following events must cause equilibrium price to fall?
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value of all final goods and services produced within a country in a given period of time
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GDP is defined as the...
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both changes in prices and changes in the amounts being produced.
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Changes in nominal GDP reflect
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divided by the labor force, all times 100.
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The unemployment rate is computed as the number of unemployed...
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both the unemployment rate and labor-force participation rate would be higher.
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Some persons are counted as out of the labor force because they have made no serious or recent effort to look for work. However, some of these individuals may want to work even though they are too discouraged to make a serious effort to look for work. If these individuals were counted as unemployed instead of out of the labor force, then...
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monitor changes in the cost of living over time.
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The consumer price index is used to...
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when the inflation rate is positive, the nominal interest rate is necessarily greater than the real interest rate.
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Which of the following statements about real and nominal interest rates is correct?
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the nominal interest rate was 14%.
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During a certain year, the consumer price index increased from 120 to 132 and the purchasing power of a person's bank account increased by 4%. For that year...
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goods and services produced from each unit of labor input.
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Productivity is defined as the quantity of...
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output will rise but by less than it did when the previous unit was added.
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All else equal, if there are diminishing returns, then which of the following is true if a country increases its capital by one unit?
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saver. Long term bonds have more risk than short term bonds.
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A bond buyer is a...
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is saving and the source of demand for loanable funds in investment.
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The source of the supply of loanable funds...
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assets people use regularly to buy goods and services.
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Economists equate money with...
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stores of value.
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Dollar bills, rare paintings, and emerald necklaces are all...
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increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public.
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An open-market purchase...
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is responsible for conducting the nation's monetary policy, and it plays a role in regulating banks.
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The Federal Reserve...
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determines nominal variables, but not real variables.
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The classical dichotomy refers to the idea that the supply of money...
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causes the price level to rise by 3%.
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According to the quantity theory of money, a 3% increase in the money supply...
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real gDP and the price level.
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The model of aggregate demand and aggregate supply explains the relationship between....
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rises, so people will want to buy more.
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If the price level falls, the real value of a dollar...
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the capital stock increases.
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The long-run aggregate supply curve shits right if...
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the price level is higher than than expected making production more profitable.
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The sticky-wage theory of the short-run aggregate supply curve says that the quantity of output firms supply will increase if...
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rise in the short run, and rise even more in the long run.
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An economic expansion caused by a shift in aggregate demand causes prices to...
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aggregate demand shifts right.
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Which of the following would cause prices and real GDP to rise in the short run?
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output fall and prices rise.
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In the short-run an increase in the costs of production makes...
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stock prices fall for some reason other than a change in the price level.
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Which of the following shifts aggregate demand to the left?
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the Federal Reserve and involves changing the money supply.
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Monetary policy is determined by...
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the president and Congress and involves changing government spending and taxation.
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Fiscal policy is determined by...
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the interest rate falls, which causes the opportunity cost of holding money to fall.
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People choose to hold a larger quantity of money if...
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an increase in the price level.
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Which of the following events could shift money demand to the right?
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interest rates to rise and stock prices to fall.
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When the Fed decreases the money supply, we expect...
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