Economics1

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Economics Review for Test


 
  
Created Feb 16, 2012
by
studygirl1

 

 
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  Side A   Side B
1
The word that comes from the Greek word “one who manages a household” 
 
economy
2
Resources are
 
scarce for households and scarce for economics
3

1.     ...

 

4
Who wrote the Wealth of Nations?
 
Adam Smith
5
Wealth of Nations and the Declaration of Independence shares the point of view that ___.
 
individuals are best left to their own devices without the government guiding their actions
6
An example of externality
 
 impact of pollution from a factory on the health of people in the vicinity of the factory
7
In a market economy, who makes the decisions that guide most economic activity?
 
Households and firms
8
the principle that "people face trade offs" applies to
 
individuals, families, societies
9
economists study
 
the management of scare resources
10
Most economists believe that an increase in the quantity of money results is:
 

11
The business cycle 
 
irregular fluctuations in economic activity
12
A circular flow diagram is a model that
 

13
In the circular flow diagram the factors of production
 
labor, land, capital
14
What arrow represents the flow of goods and services?
 
The inside arrow starting from Markets for goods and Services ending/pointing to households
15
What arrow represents the flow of spending by households?
 
The outside arrow starting from households and pointing to markets for goods and services
16
The production possibilities frontier is a graph that shows the various combinations of output...
 
can produce
17
Production possibilities frontiers says 
 
an economy can produce at any point on or inside the production possibilities frontier, but...
18
A production possibilities frontier shifts outward when
 
the economy experiences economic growth
19
A demand curve shows the relationship
 
between price and quantity demanded
20
What you give up to obtain an item is called your
 
opportunity cost
21
What statement exemplifies a principle of individual decision making? a) Trade can make everyone...
 
the cost of something is what you give up to get it; c 
22
Trade between the United States and Indiaa) benefits both the United States and Indiab) is...
 
benefits both the United States and India
23
Trade between countries tend to: a) reduce both competition and specializationb)reduce competition...
 
increase both competition and specialization
24
The economy of the former Soviet Union is best described as a: a) primitive economy b)market...
 
Centrally-planned economy
25
One advantage market economies have over centrally-planned economies is that market economies:...
 
are more efficient 
26
Prior to the collapse of communism, communist countries worked on the premise that economic...
 
the actions of government central planners
27
The invisible hand works to promote general well-being in the economy primarily through: a)...
 
people's pursuit of self-interest 
28
In a market economy, who makes the decisions that guide most economic activity? a. firms b.households...
 
firms and households
29
One reason we need government, even in a market economy, is that
 
the invisible hand is not perfect
30
a direct or positive relationship between a country's: a. productivity and its standard of...
 
productivity and its standard of living 
31
To raise productivity, policymakers could: a) increase spending on education b) provide tax...
 
increase spending on education, provide tax credits to firms for capital improvements, and...
32
with respect to how economists, study the economy, what is the best following statement that...
 
economists devise theories, collect data, and analyze the data to test the theories
33
If this economy devotes one-half of its available resources to the production of baseballs...
 
150 bananas and 100 baseballs
34
The field of economists is traditionally divided into two broad subfields, a) national...
 
microeconomics and macroeconomics
35
Normative statements are a)  prescriptive, whereas positive statements are descriptive...
 
prescriptive, whereas positive statements are descriptive
36
Prices rise when the quantity of money rises rapidly is an example of __.
 
 positive economic statement
37
The council of economic advisers a) was created in 1946 b)advises the president of the United...
 
was created in 1946,  advises the president of the United States on economic policy matters, writes...
38
Economists at the Department of the Treasury a)design U.S. currency and coins b)provide congress...
 
provide advice on tax policy to the President
39
When two variables have a positive correlation, a)when the x-variable increases, the y-variable...
 
when the x-variable increases, the y-variable increases 
40
When two variables have a negative correlation, a)tend to move in opposite directionsb)they...
 
tend to move in opposite directions
41
When an economists points out that you and millions of other people are interdependent, he...
 
rely upon one another for the goods and services we consume
42
Canada and the U.S. both produce wheat and computer software. Canada is said to have the comparative...
 
the opportunity cost of producing a bushel of wheat is lower for Canada than it is for the...
43
Imports are 
 

1.   ...

44
Exports are 
 

1.   ...

45
Trade can make everyone better off because it: a)increases cooperation among nations b) allows...
 
allows people to specialize according to comparative advantage 
46
In a market economy, supply and demand determine 
 
both the quantity of each good produced and the price at which it is sold
47
Economists generally support: a)trade restrictions b)government management of trade...
 
free international trade
48
The gains from trade are: a) evident in economic models, but seldom observed in the real world...
 
a result of more efficient resource allocation than would be observed in the absence of trade
49
In a market economy: a) supply determines demand and demand, in turn, determines prices b)demand...
 
demand determines supply and supply, in turn, determines price
50
What are the characteristics of a perfectly competitive market?
 

51
A competitive market is one in which
 
 there are so many buyers and so many sellers that each has a negligible impact on the...
52
A monopoly is a market 
 
with one seller, and that seller sets the price
53
Other things equal, when the price of a good rises, the quantity demanded of the good falls,...
 
applies to most goods in the economy, is represented by a downward-sloping demand curve, is...
54
At the equilibrium price,
 
the quantity of the good that buyers are willing and able to buy exactly equals the quantity...
55
The line that relates the price of a good and the quantity demanded of that good is called...
 
demand curve, and it usually slopes downward
56
A increase in quantity demand: a)results in a movement downward and to the right along a fixed...
 
results in a movement downward and to the right along a fixed demand curve
57
If, at the equilibrium price, there is a surplus of a good, then
 
sellers are producing more than buyers wish to buy
58
An early frost in the vineyards of Napa Valley would cause a)an increase in demand for wine,...
 
a decrease in the supply of wine, increasing price
59
Elasticity is 
 

1.     ...

60
How does the concept of elasticity allow us to improve upon our understand of supply and demand?...
 

61
What is the correct statement that describes price elasticity of demand? a) the price...
 
the price elasticity of demand for a good measures the willingness of buyers of the good to...
62
Demand is said to be unit elastic
 
if quantity demanded changes by the same percent as the price
63
If the price elasticity of demand for a good is 0.4, then a 10 percent increase in...
 
4 percent decrease in quantity demanded
64
An increase in price causes and increase in total revenue when 
 
demand is inelastic
65
The price elasticity of supply measures how much
 
the quantity supplied responds to changes in input prices
66
if a 25% change in price results in 40% change in quantity supplied, then the price elasticity of...
 
1.60 and supply is elastic
67
If a 40% change in price results in a 25% change in quantity supplied, then the price...
 
0.63 and supply is inelastic
68

1.   ...

 
an organization that overseas GATT
69

1.     ...

 
a limit on imports to protect domestic manufacturers; limits on total imports
70

1.     ...

 
Tax on imports
71
Euro
 
common currency used throughout much of Europe
72

1.     ...

 
General Agreement on Trade and Tariff which has reduced trade barriers; a worldwide trade agreement...
73
Real
 
takes inflation into consideration; adjusted for inflation
74
Nominal
 
stated value, does not take inflation into consideration
75

1.     ...

 
Wrote The World of Nations
76

1.     ...

 
measure total output of goods and services in a country in a given time; gross domestic product
77

1.     ...

 
an organization European Nations that has reduced trade barriers within Europe

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