Which of the following correctly describes how price adjustments eliminate a shortage? A. As the price rises, the quantity demanded decreases while the quantity supplied increases. B. As the price rises, the quantity demanded increases while the quantity supplied decreases. C. As the price falls, the quantity demanded decreases while the quantity supplied increases. D.As the price falls, the quantity demanded increases while the quantity supplied decreases.

A. As the price rises, the quantity demanded decreases while the quantity supplied increases.

Which of the following is FALSE regarding GDP per person as a measure of standard of living? A. GDP does not include the production and sale of illegal goods. B. GDP does not account for leisure time. C. GDP is adjusted to include the value of goods produced in the home for home consumption. D.GDP does not include information on income distribution

C. GDP is adjusted to include the value of goods produced in the home for home consumption.

Assume the figures above represent the market for chicken. Assume chicken is a normal good. Which of the following scenarios best describes graph C? A. An avian flu destroys flocks of chickens. B. The price of beef, a substitute, falls. C. Income increases. D. Chicken producers expect chicken prices to fall in the future. E. none of these.

B. The price of beef, a substitute, falls.

When two variables have a positive correlation, A.they tend to move in opposite directions. B. they tend to move in the same direction. C. one variable will move while the other remains constant. D. the variables’ values are never negative.

B. they tend to move in the same direction.

Which of these statements best represents the law of demand? A. When buyers’ tastes for a good increase, they purchase more of the good. B. When income levels increase, buyers purchase more of most goods. C. When the price of a good decreases, buyers purchase more of the good. D. When buyers’ demands for a good increase, the price of the good increases.

C. When the price of a good decreases, buyers purchase more of the good.

When the price of fresh apples rises, A. There is a decrease in the quantity supplied of apples and a movement down along the supply curve for fresh apples. B.There is an increase in the quantity supplied of apples and a movement up along the supply curve for fresh apples. C. There is an increase in supply and a rightward shift of the supply curve. D. There is a decrease in supply and a leftward shift of the supply curve.

B.There is an increase in the quantity supplied of apples and a movement up along the supply curve for fresh apples.

In a competitive market free of government regulation, A. price adjusts until quantity demanded is greater than quantity supplied. B. price adjusts until quantity demanded is less than quantity supplied. C. price adjusts until quantity demanded equals quantity supplied. D. supply adjusts to meet demand at every price.

C. price adjusts until quantity demanded equals quantity supplied.

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations is most consistent with this observation? A. Consumers have experienced an increase in income, and beef-production technology has improved. B. The price of chicken has risen, and the price of steak sauce has fallen. C. New medical evidence has been released that indicates a negative correlation between a person’s beef consumption and life expectancy. D. The demand curve for beef must be positively sloped.

C. New medical evidence has been released that indicates a negative correlation between a person’s beef consumption and life expectancy.

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good? A. an increase in consumer income B. a decrease in consumer income C. greater government restrictions on agricultural chemicals D. fewer government restrictions on agricultural chemicals

B. a decrease in consumer income

Which of the following events must cause equilibrium quantity to rise? A. demand increases and supply decreases B. demand and supply both decrease C. demand decreases and supply increases demand and supply both increase

D. demand and supply both increase

Which of the following is a positive statement? A. Tariffs should be imposed on imported cars to put pressure on other countries to open their markets to foreign competition. B. People should purchase U.S. produced cars if they wish to help the economy. C. Tariffs should be imposed on imported cars to increase domestic employment. D. Congress should protect the U.S. automobile industry from foreign competition. E. U.S. unemployment rises when U.S. residents purchase imported cars.

E. U.S. unemployment rises when U.S. residents purchase imported cars.

In economics, the cost of something is A. the dollar amount you must pay to obtain it. B. the time you had to spend to obtain it. C. the value of the next-best alternative forgone to get it. D. often impossible to quantify, even in principle.

C. the value of the next-best alternative forgone to get it.

The figure above shows a fictional market for apartments. Suppose the government imposed a rent ceiling of $400 per month. As a result, there is A. a shortage of 750 apartments. B. a surplus of 750 apartments. C. a shortage of 450 apartments. D. a surplus of 450 apartments. E. no effect since the price ceiling is below equilibrium.

A. a shortage of 750 apartments.

Refer to the figure above. Suppose the economy is producing at point E. What is the opportunity cost of producing an additional 25 units of manufactured goods? A. 50 units of manufactured goods B. zero, society is allocating resources efficiently C. 100 units of agricultural goods D. 50 units of agricultural goods E.20 units of agricultural goods

C. 100 units of agricultural goods

Refer to the figure above. Suppose the economy is producing at point C. What is the opportunity cost of increasing production of capital goods by 50 units? A. 150 units of consumption goods. B. 75 units of capital goods C. 50 units of consumption goods. D. It depends on the preferences of society. E. 200 units of consumption goods

E. 200 units of consumption goods

It takes Suzi 4 hours to sew a shirt and 2 hours to bake a cake. Anna can sew a shirt in three hours and bake a cake in one hour. Which of the following is true? A. Anna has a comparative advantage in production of both cakes and shirts. B. Anna has an absolute advantage in production of both cakes and shirts. C. It is not possible for Anna and Suzi to gain from trade. D. Neither Anna nor Suzi have a comparative advantage in the production cakes or shirts.

B. Anna has an absolute advantage in production of both cakes and shirts.

Scarcity refers to the situation in which A. a nation's poverty level increases faster than its population. B. unlimited resources exceed limited wants. C. unlimited wants exceed limited resources. D. a country's population is larger than its resource base.

C. unlimited wants exceed limited resources.

Opportunity Cost =What are you Sacrificing/ What are you gaining Comparative advantage = Quantity of a Good A for Country X/ Quantity of Good B for Country X Answer 1: 1 or 2 Answer 2: 2 or 1 Answer 3: Cakes or Pies Answer 4: Pies or Cakes Answer 5: 0 or 2 Answer 6: 2 or 0

A. 1 B. 2 C. Cakes D. Pies E. 0 F.2

If suppliers of diamonds alter expectations such that they begin to expect that the future price of diamonds will rise, the result will be A. a leftward shift in the current supply curve for diamonds. B. a rightward shift in the current supply curve for diamonds. C. a movement up and along the supply curve for diamonds. D. a movement down and along the supply curve for diamonds.

A. a leftward shift in the current supply curve for diamonds.

As a result of a decrease price of roasted coffee beans, A. the demand for coffee drinks increases B. the demand for coffee drinks decreases C. the supply of coffee drinks increases D. the supply of coffee drinks decreases E. the quantity supplied of coffee drinks increases

C. the supply of coffee drinks increases

Matthew bakes apple pies that he sells at the local farmer’s market. If the price of apples increases, the.. A. supply curve for Matthew’s pies will increase. B. supply curve for Matthew’s pies will decrease. C. demand curve for Matthew’s pies will increase. D. demand curve for Matthew’s pies will decrease.

B. supply curve for Matthew’s pies will decrease.

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding? A. Improvements in production technology reduce the costs of producing laptop computers. B. The number of firms selling laptop computers decreases. C. Consumers' income decreases, and laptop computers are a normal good. D. The number of consumers buying laptop computers decreases.

B. The number of firms selling laptop computers decreases.

Which of the following is/are considered an asset of a bank? A. bank capital B. loans to households and businesses C. debt or bank borrowing D. deposits from households and businesses

B. loans to households and businesses

The leverage ratio A.is the ratio of the bank’s total assets to bank capital. B.is the ratio of loans to deposits of a bank. C. is the ratio of total reserves relative to deposits of a bank. D. is the ratio of securities relative to loans of a bank.

A.is the ratio of the bank’s total assets to bank capital.

Commodity money... A. is used as money because of government decree. B. does not function as a store of value. C. has no value outside of its use as money. D. is money with intrinsic value.

D. is money with intrinsic value.

Which of the following is correct? A. The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers. B. The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers. C. The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers. D. The GDP deflator is more commonly used as a gauge of inflation than the CPI is.

B. The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers.

Over time, cars have become safer and more fuel efficient. Cars have also increased in price. The potential for bias in the CPI is referred to as ________ bias and results in ________. A. unmeasured quality bias; the CPI overestimating the true change in the cost of living B. unmeasured quality bias; the CPI underestimating the true change in the cost of living C. introduction of new goods; the CPI overestimating the true change in the cost of living D. introduction of new goods; the CPI underestimating the true change in the cost of living

A. unmeasured quality bias; the CPI overestimating the true change in the cost of living

The consumer price index is used to... A. convert nominal GDP into real GDP. B. turn dollar figures into meaningful measures of purchasing power. C. measure the value of goods and services that consumers purchase. D. measure the quantity of goods and services that the economy produces.

B. turn dollar figures into meaningful measures of purchasing power.

The consumer price index is used to A. monitor changes in the level of wholesale prices in the economy. B. monitor changes in the cost of living over time. C. monitor changes in the level of real GDP over time. D. monitor changes in the stock market.

B. monitor changes in the cost of living over time.

Tess lost her job as a typesetter and sought work for about 2 years. She would like to work, but has given up looking. Tess is officially considered A. employed. B. unemployed. C. not part of the labor force. D. both unemployed and not part of the labor force.

C. not part of the labor force.

The Federal Funds rate is the interest rate A. on the 3-month Treasury bill. B. banks charge each other on overnight loans. C. on the 30-year treasury bond. D. also known as the prime rate.

B. banks charge each other on overnight loans.

ECON FINAL

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FLASHCARD QUESTION

Front

Which of the following transactions does not take place in the markets for factors of production in the circular-flow diagram?

A. A landowner leases land to a farmer

B. a farmer hires a teenager to help with harvest

C. A construction company rents trucks for its business

D. A woman buys corn for dinner

Back

D. A woman buys corn for dinner

FLASHCARD QUESTION

Front

Factors of production are

A. used to produce goods and services.

B. also called output.

C. abundant in most economies.

D. assumed to be owned by firms in the circular-flow diagram.

Back

A. Used to produce goods and services

FLASHCARD QUESTION

Front

Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would...

A. make sense if Xenophobia had an absolute advantage in all goods.

B. make sense if Xenophobia had no absolute advantages in any good.

C. Not make sense as long as Xenophobia had a comparative advantage in some good

D. Not make sense as long as Xenophobia had an absolute advantage in at least half the goods that could be traded

Back

C. Not make any sense as long as Xenophobia had a comparative advantage

FLASHCARD QUESTION

Front

A person can benefit from specialization and trade by obtaining a good at a price that is

A. lower than his or her opportunity cost of that good.

B. the same as his or her opportunity cost of that good.

C. higher than his or her opportunity cost of that good.

D. different than his or her opportunity cost of that good.

Back

A. lower than his or her opportunity cost of that good.

FLASHCARD QUESTION

Front

If muffins and bagels are substitutes, a higher price for bagels would result in a(n)

A. Increase in the demand for bagels

B. Decrease in the demand for bagels

C. Increase in the demand for muffins

D. Decrease in the demand for Muffins

Back

C. Increase in the demand for muffins

FLASHCARD QUESTION

Front

If mayonnaise and Miracle Whip are substitutes, then which of the following would increase the demand for Miracle Whip

A. A decrease in the price of Miracle Whip

B. An increase in the price of mayonnaise

C. A decrease in the price of mayonnaise

D. An increase in the price of Miracle Whip

Back

B. An increase in the price of mayonnaise

FLASHCARD QUESTION

Front

Suppose new information is available that suggest the price of gold will be higher in the future than previously expected. As a result of this new information,

A. There is a decrease in the quantity demanded and a movement along the current demand curve

B. There is an Increase in quantity demanded a movement along the current demand curve

C. There is a rightward shift in the current demand curve for gold

D. There is a leftward shift in the current demand curve for gold

Back

C. There is a rightward shift in the current demand curve for gold

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