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Mid-Term #2
CHapters 4, 5, 6
18
Economics
Undergraduate 2
03/10/2013

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Cards

Term
Which of the following would most likely serve as an example of a monopoly?
Definition
A local cable television company
Term
If the price of apple pies rose to $10 per pie, consumers would purchase fewer than if the price were $5 per pie. If the price of ice cream fell to $0.30 per scoop, consumers would purchase more ice cream than if the price were $0.50 per scoop. These relationships illustrate the
Definition
law of demand
Term
Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then its likely that the
Definition
Supply of bicycle assembly will shift to the left
Term
Because bagels and cream cheese are often eaten together, they are complements. During 2009, the following two things happen: the price of flour falls, and the price of milk also falls. WHat effect do these have on the bagel and cheese markets
Definition
Bagel- positive supply shock, cream cheese- positive supply shock
Term
At the end of 2009, market research shows that the equilibrium price of cream cheese and the equilibrium quantity of bagels have risen. This could be because
Definition
cheaper bagels generated a demand shock for the cream cheese market
Term
Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of
Definition
market prices
Term
Ralph pays someone to mow his lawn, while Mike mows his own lawn. Regarding these two practices, which of the following statements is correct?
Definition
Only Ralph's payments are included in GDP
Term
Ryan lives in an apartment where he pays $7,000 a year in rent. Alexis lives in a house that could be rented for $14,000 a year. How much do these housing services contribute to GDP?
Definition
$7,000+$14,000=$21,000
Term
Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has
Definition
increased measured GDP by the value of the restaurant meals
Term
Rachel babysits for her sister for no pay. When she babysits for a day-care center she receives $8 an hour. When is Rachel's babysitting included in the GDP
Definition
When she babysits for the day-care center, not when she babysits for her sister
Term
A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?
Definition
$1200
Term
In the economy of Ukzten in 2010, exports were $500, GDP was $6400, government purchases were $1500, imports were $600, and investments was $2000. What was the countries consumption in 2010?
Definition
$3000
Term
A farmer sells $50,000 of apples to individuals who take them eat and $75,000 of apples to a company that uses them all to produce cider. How much of the farmers sales will be included as apples in GDP?
Definition
$50,000
Term
In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?
Definition
The value of the consumer price index is always 100 in the base year.
Term
Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been selected as the base year. IN 2002, the baskets cost was $50; in 2004, the baskets cost was $52; and in 2006, the baskets cost was $54.60. The value of the CPI in 2004 was
Definition
104.0 (calculating CPI)
Term
Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. Which of the following statements is correct?
Definition
The economy experienced inflation between 2004 and 2005 and between 2005 and 2006
Term
Assume the consumers consider rice and potatoes to be substitutes, so that when the price of rice rises, consumers purchase less rice and more potatoes. When the CPI is computed following the increase in the price of rice, it takes into account
Definition
the increase in the price of rice
Term
Ms. LAne borrowed $1,000 from her bank for one year at an interest rate of 10 percent. During that year, the price level went up by 15 percent. Which of the following statements is correct?
Definition
Ms. Lane's repayment will give the bank less purchasing power than it originally loaned her.
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