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MacroEconomics Midterm
N/A
38
Economics
10/26/2010

Additional Economics Flashcards

 


 

Cards

Term

The key economic concept that serves as the basis for the study of economics is:


 

A. Inflation

B. Unemployment

C. Money

D. Scarcity

Definition
D. Scarcity
Term

Tammie makes $150 a day as a bank clerk.  She takes off two days of work without pay to fly to another city to attend the concert of her favorite music group.  The cost of transportation for the trip is $250.  The cost of the concert ticket is $50.  The opportunity cost of Tammie's trip to the concert is:


 

A. $300   B. $450  C. $500 D. $600


Definition
D. $600
Term

Which expression is another way of saying marginal benefit?


A. Profit

B. Loss

C. Total Benefit

D. Extra Benefit

Definition
D. Extra Benefit
Term

From an economic perspective, when a student decides to attend another year of college, the student has concluded that the marginal:


A. Costs of attending college has decreased in that year

B. Benefits of attending college has increased that year

C. Benefits of attending college are greater than the marginal costs

D Costs of attending college will be subsidized by someone else such as parents or the government

Definition
C. Benefits of attending college are greater than the marginal costs
Term

Economic models do not reflect the full complexity of reality, but instead are based on:


A. Tradeoffs

B. Simplifications

C. Value Judgements

D. The fallacy of composition

Definition
B. Simplifications
Term

The market system is an economic system that:


A. Produces more consumer goods than capital goods

B. Produces more capital goods than consumer goods

C. Gives private individuals and institutions the right to own resources used in production

D. Gives the government the right to tax individuals and corporations for the production of capital goods

Definition
C. Gives private individuals and institutions the right to own resources used in production
Term

Which would not be characteristic of a capitalist economy?


 

A. Government ownership of the factors of production

B. Competition and unrestricted markets

C. Reliance on the market system

D. Free enterprise of choice

Definition
A. Government ownership of the factors of production
Term

The economy of the former Soviet Union would best be classified as:


 

A. A market system

B. Pure capitalism

C. laissez-faire capitalism

D. A command system

Definition
D. A command system
Term

The maximization of profit and the minimization of losses is the primary factor affecting the economic decision making of:


 

A. Workers

B. Consumers

C. Public officials

D. Entrepreneurs

Definition
D. Entrepreneurs
Term

Legal and social rules that affect the ownership of property are:


 

A. Property rights

B. The coincidence of wants

C. The freedom of choice

D. The freedom of enterprise

Definition
A. Property Rights
Term

Which are not generally considered to be complementary goods?


 

A. Gasoline and motor oil

B. Beef and chicken

C. Beer and pretzels

D. Razors and razor blades

Definition
B. Beef and Chicken
Term

A decrease in the price of product X causes and increase in the demand for product Y.


 

A. Apples and oranges

B. Butter and margarine

C. Hamburgers and pizza

D. Video recorders and video tapes

Definition
D. Video recorders and video tapes
Term

Which of the following products are not close substitutes?


 

A. Peanut butter and jelly

B. Margarine and Chicken

C. Beef and chicken

D. Tea and coffee

Definition
A. Peanut butter and jelly
Term

All of the following would cause an increase in the demand for private airplanes at a given price, except a(n):


 

A. Decrease in interest rates

B. Increase in consumer goods

C. Decrease in taxes on luxury goods

D. Decease in the costs of constructing private airplanes

Definition
D. Decrease in costs of constructing private airplanes
Term
Opportunity Cost
Definition
The value of a good, service or time forgone to obtain something else.
Term
Marginalism
Definition

Given the relationship between two variables, ask yourself what happens to the dependent variable when I increase the independent variable by one unit?

 

(If you increase the # of employees by 1, how much more product can be produced?)

Term
Utility
Definition
Units of satisfaction
Term
Positive Economics
Definition
Deals with facts.  Making a statement or analysis without a preconceived notion or bias.
Term
Normative Economics
Definition
Reflects value judgements.  Analises the outcome of economic behavior - then takes sides with the economy or society.
Term
Economizing problem
Definition
Societal wants exceed the available resources to fulfill them - society must decide what to produce and what to forego.
Term

Private Property


Includes....

You can receive property......

Encourages......

Has limitations:

Definition

Includes copyright, patent, etc. as well as cars, houses...

 

You can receive property, use it as you wish, control it as you wish, dispose of it as you wish.

 

Encourages growth, business, etc

 

Limitations: cannot own drugs, "private property"...

Term
Freedom of Enterprise and Choice
Definition

You obtain resources and use them to produce goods and services

 

The owner of property can use it as he or she see fit (freedom of choice)

 

Laborers can do any work they like if they are qualified

Term

Individualism and Self Interest


(A primary driving force of Capitalism)

Try to maximize ______ or minimize _______

Try to get _________ for product or ________for rent if you own property

Want to get highest______as a laborer

Try to get _________ as a consumer

As a business, maximize the u____ of a product

Definition

Try to maximize profit or minimize losses

Try to get highest price for product or highest price for rent if you own property

Want to get highest income as a laborer

try to get lowest price as a consumer

As a business, maximize the utility of a product

Term
Competition
Definition
A large # of buyers and sellers are present for every product
Term
Free Entry / Free Exit
Definition

Nobody forces you to buy or not buy

 

Nobody forces you to produce or not produce

Term
Market as a driving force
Definition

Through interaction of supply/demand, the market dictates the price


In competition you don't have a choice of what the price of your product is - it is decided by supply/demand

Term
A product that can be produced at a profit will be produced.  If not, then not.
Definition
Term
Total Revenue =
Definition
Price x Quantity
Term
Total Cost =
Definition
Price of resources x quantity of resources
Term
Normal Profit is a cost but pure profit is not
Definition
Term
The cost of Entrepreneurial ability to a firm is called:
Definition

Normal Profit


 

This is a cost not a profit

Term
The 4 costs to a firm are:
Definition

Land

Labor

Capitalist Goods

Entrepreneurial Ability

Term
"Net foreign factor income"
Definition
Difference between the GNP and GDP
Term
GDP
Definition

Gross Domestic Product

 

Total output produced within the USA

Term
GNP
Definition

Gross National Product

 

Total output produced by the USA, within or without USA

Term
Definition
Term
Things to Be Excluded from the GDP:
Definition

1. Public Transfer Payments

(ie. Social Security, Welfare Payment)

2. Private Transfer Payments

(i.e. gift or support from family to a student)

3. Securities Transactions

(Buying/Selling stocks & bonds)

4. Second-Hand Sales

(used car)

 

Term
Definition