31 Jan an open market

KNOWLEDGE CHECK 1

Question 1

If macroeconomics looks at the economy as a whole, it focuses on which of the following?

Question 2

In a discussion of economics, which of the following would exert the most influence on an individual firm’s decision to hire workers?

Question 3

What is the basic difference between macroeconomics and microeconomics?

Question 4

What is the basic difference between macroeconomics and microeconomics?

Question 5

Which of the following is most likely a topic of discussion in macroeconomics?

Question 6

Attending college is a case where the ________________ exceeds the monetary cost.

Question 7

Most real-world choices aren’t about getting all of one thing or another; instead, most choices involve _________________, which includes comparing the benefits and costs of choosing a little more or a little less of a good.

Question 8

The law of ____________________________ explains why people and societies rarely make all-or-nothing choices.

Question 9

Also called the opportunity set—a diagram which shows what choices are possible—which of the following is the model that economists use to illustrate the process of individual choice in a situation of scarcity?

Question 10

Scarcity implies that:

KNOWLEDGE CHECK 2

Question 1

Which of the following would reduce the supply of microcomputers?

Question 2

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.

Question 3

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

Question 4

Which of the following is the only price where quantity demanded is equal to quantity supplied?

Question 5

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm’s profits will increase.

Question 6

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. What is this known as?

Question 7

What is enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling?

Question 8

The nature of demand indicates that as the price of a good increases:

Question 9

A demand curve shows the relationship between price and _________________ on a graph.

Question 10

What is the term economists use to refer to the relationship that a higher price leads to a lower quantity demanded?

KNOWLEDGE CHECK 3

Question 1

“Constant returns to scale” describes a situation where:

Question 2

In microeconomics, which of the following is synonymous with economies of scale?

Question 3

Which term describes a situation where the quantity of output rises, but the average cost of production falls?

Question 4

In order to determine the average variable cost, the firm’s variable costs are divided by _______________________.

Question 5

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.

Question 6

In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following is that choice?

Question 7

In the ________, the perfectly competitive firm will react to losses by __________________________.

Question 8

In the _________, the perfectly competitive firm will seek out ________________________.

Question 9

Firms operating in a market situation that creates ___________________, sell their product in a market with other firms who produce identical or extremely similar products.

Question 10

If a perfectly competitive firm is a price taker, then which of the following is true?

KNOWLEDGE CHECK 4

Question 1

Which of the following will be least concerning to a firm that has a monopoly over a particular industry?

Question 2

For a monopolistic firm, which of the following would be the ideal conditions for barriers to entry?

Question 3

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale,

Question 4

A firm that holds a monopoly position in the marketplace is:

Question 5

A monopolistically competitive firm may earn abnormally high profits in the

Question 6

If a monopolistic competitor raises its price, it _________ customers than a perfectly competitive firm, but ________________ customers compared to the number that a monopoly that raised its prices would.

Question 7

Shopping malls typically lease retail space to many clothing stores. When these retailers compete to sell similar but not completely identical products, they engage in which of the following?

Question 8

Which of the following poses a difficult challenge for U.S. competition policy?

Question 9

Government policy-makers often must decide how to balance the potential benefits of ______________ against the potential benefits of _____________ .

Question 10

Splitting up a natural monopoly held by a public utility that produces and provides electricity would

KNOWLEDGE CHECK 5

Question 1

Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s.

Question 2

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

Question 3

Improvements in the productivity of labor will tend to:

Question 4

Whenever there is a shortage at a particular price, the quantity sold at that price will equal:

Question 5

If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.

Question 6

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.

Question 7

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________.

Question 8

In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.

Question 9

The “law of supply” functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied.

Question 10

Are markets always in equilibrium?

KNOWLEDGE CHECK 6

Question 1

Which of the following is included in the calculated Gross Domestic Product?

Question 2

Economists would most likely classify which of the following as consumer durable goods?

Question 3

The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation.

Question 4

_______________, which can be estimated by the growth of GDP, ultimately determines the prevailing standard of living in a country.

Question 5

___________ is about two-thirds of the demand side of GDP, but it moves relatively little over time.

Question 6

For most high-income countries of the world, GDP _________________ over time.

Question 7

On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year.

Question 8

Which of the following is included in GDP calculations?

Question 9

Which is the best description GDP?

Question 10

Which of the following statements is true?

KNOWLEDGE CHECK 7

Question 1

Reginald looked for work for six months but could not find a job to his liking. He now spends his time at the beach. For purposes of employment he is considered:

Question 2

A college student who is enrolled in school full time and not seeking employment is considered:

Question 3

The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the ______________.

Question 4

The definition of market equilibrium states that at the _______________, the quantity of labor demanded by employers will equal the quantity supplied.

Question 5

If a nation’s labor force receives a significant influx of young workers:

Question 6

What name is given to the index based on the prices of exported or imported merchandise?

Question 7

Inflation can be calculated in terms of how the overall cost of ___________________ changes over time.

Question 8

Inflation implies that the level of all prices _____________________.

Question 9

The situation where the buying power of money in terms of goods and services increases is called:

Question 10

While one occasionally sees references to inflation over short time periods, the term typically implies a(n) _____________ in prices.

KNOWLEDGE CHECK 8

Question 1

Which term describes circumstances where a country’s exports exceed its imports?

Question 2

What is the name for goods and services produced in one country that are then sold in other countries?

Question 3

If exports and imports:

Question 4

The term _____________ describes circumstances where a country’s imports exceed its exports.

Question 5

Trade surpluses and trade deficits can be __________________ for an economy in certain circumstances.

Question 6

The idea behind comparative advantage reflects the possibility that one party:

other party.

Question 7

The idea behind comparative advantage reflects the possibility that one party:

Question 8

Colombia produces coffee with less labor and land than any other country; it therefore necessarily has:

Question 9

Which of the following is true?

Question 10

Jeremy has a(n) __________________ in all aspects of camping: he is faster at setting up tents, gathering firewood, paddling a canoe, cooking meals, and washing up.

KNOWLEDGE CHECK 9

Question 1

A(n) ________________________________ is calculated as a flat percentage of income earned, regardless of level of income.

progressive tax

regressive tax

proportional tax

estate and gift tax

Question 2

Which of the following terms is used to describe the set of policies that relate to government spending, taxation, and borrowing?

financial policies

monetary policies

fiscal policies

economic policies

Question 3

A(n) __________________________ policy will cause a greater share of income to be collected from those with high incomes than from those with lower incomes.

proportional tax

regressive tax

progressive tax

excise tax

Question 4

What do goods like gasoline, tobacco, and alcohol typically share in common?

A progressive tax is imposed on each of them.

A regressive tax is imposed on each of them.

They are all subject to government excise taxes.

They are all subject to government fiscal taxes.

Question 5

_____________________ are a form of tax and spending rules that can affect aggregate demand in the economy without any additional change in legislation.

Standardized employment budgets

Discretionary fiscal policies

Automatic stabilizers

Budget expenditures

Question 6

When the interest rate in an economy decreases, it is most likely as a result of:

an increase in the government budget surplus or its budget deficit.

a decrease in the government budget surplus or its budget deficit.

an increase in the government budget surplus or a decrease in its budget deficit.

a decrease in the government budget surplus or an increase in its budget deficit.

Question 7

When governments are borrowers in financial capital markets, which of the following is least likely to be a possible source of the funds from a macroeconomic point of view?

central bank prints more money

increase in household savings

decrease in borrowing by private firms

foreign financial investors

Question 8

A __________________ often results in an outflow of financial capital leaving the domestic economy and being invested in the global economy.

trade surplus

trade deficit

fiscal deficit

twin surplus

Question 9

From a macroeconomic point of view, which of the following is a source of demand for financial capital?

savings by households and firms

foreign financial investment

domestic household private savings

government borrowing

Question 10

The U.S. economy has two main sources for financial capital: _______________________ and ____________________________.

private savings from U.S. households and firms; inflows of foreign financial investment

private sector investment; government borrowing

private savings from U.S. households and firms; government borrowing

private sector investment; inflows of foreign financial investment from abroad

KNOWLEDGE CHECK 10

Question 1

When banks hold excess reserves because they don’t see good lending opportunities:

it negatively affects contractionary monetary policy.

it negatively affects expansionary monetary policy.

expansionary monetary policy is unaffected.

contractionary monetary policy is unaffected.

Question 2

How are the specific interest rates for the lending and borrowing markets determined?

U.S. Treasury Department Board policy

by the forces of supply and demand

through open market operations

by altering the discount rate

Question 3

Atlantic Bank is required to hold 10% of deposits as reserves. If the Central Bank increases the discount rate, how would Atlantic Bank respond?

by noting a decrease in net worth

by increasing its reserves

its balance sheet will be unchanged

it can make more loans with increased loan assets

Question 4

What term is used to describe the interest rate charged by the Central Bank when it makes loans to commercial banks?

discount rate

reserve requirement

Fed rate

open market rate

Question 5

Which of the following is considered to be a relatively weak tool of monetary policy?

quantitative easing

altering the discount rate

reserve requirements

reducing the money supply

Question 6

Regardless of the outcome in the long run, ______________________ always has the effect of stimulating the economy in the short run.

expansionary monetary policy

contractionary monetary policy

reverse quantitative easing policy

tight monetary policy

Question 7

Which of the following institutions oversees the safety and stability of the U.S. banking system?

Office of the Comptroller of the Currency

Federal Financial Institutions Examination Council

Federal Open Market Committee

The Federal Reserve

Question 8

When the Central Bank acts in a way that causes the money supply to increase while aggregate demand remains unchanged, it is:

following a contractionary monetary policy.

following a quantitative easing policy.

following a tight monetary policy.

following an expansionary monetary policy.

Question 9

Which of the following events would cause interest rates to increase?

lower tax rates

a higher discount rate

lower reserve requirements

an open market operation to buy bonds

Question 10

When the Central Bank lowers the reserve requirement on deposits:

the money supply increases and interest rates decrease.

the money supply and interest rates decrease.

the money supply and interest rates increase.

the money supply decreases and interest rates increase