2019 Adam Smith Quiz Bowl

The government cutting taxes would be an example of

Expansionary fiscal policy

The unemployment rate at the natural level (or potential) GDP is called

natural rate of unemployment

The interest rate on loans that the Fed makes to banks is called

Discount Rate

Consider the market for rice. Two things happen: 1) A change in the climate causes farmers to switch from planting corn to rice and 2) a credible study shows that eating even a moderate amount of rice is good for you. All else being equal, what happens to the equilibrium price and quantity of rice?

Quantity increases, price is unknown

What is the price elasticity of demand?

The responsiveness of demand to a change in price

The difference between the nominal interest rate and real interest rate is

inflation rate

Economists call the total income generated from factors owned a nation's residents

Gross National Product

The interest rate targeted by the Federal Reserve is called

Federal Funds rate

A stable outcome in a strategic interaction, where no one has an incentive to deviate, is called

Nash Equilibrium

What does IRA stand for?

Individual Retirement Account

When the central bank increases the money supply, this is called

Expansionary monetary policy

Suppose there is a binding price ceiling in a market that is in equilibrium. What can you say about the quantity demanded and quantity supplied in this market?

Quantity demanded is greater than quantity supplied

You invested $1000 2 years ago in an investment earning 10%, compounded annually. What is your current balance?

$1,210

What types of goods are nonrivalrous in consumption and non-excludable?

Public goods

What is FAFSA?

Free Application for Federal Student Aid

If more US citizens are buying British goods, we would expect the British pound to

Appreciate

Suppose widgets impose a positive externality of $5 per unit. What is the optimal government policy to maximize the total surplus of this market?

Subsidize by $5 per unit

Suppose there is a non-binding price floor in a market that is in equilibrium. What can you say about the quantity demanded and quantity supplied in this market?

They are equal

What do we call the practice of sending people legitimate appearing emails in order to gain access to personal information?

Phishing

The first theory of mutually beneficial trade was proposed by

Adam Smith

The costs associated with a business having to change their prices are commonly referred to as

Menu costs

In an industry, demand is perfectly price elastic and supply is perfectly price inelastic. Suppose a per-unit tax is imposed in this industry. What can you say about who bears the tax burden?

The suppliers bear the entire tax burden

What does APR stand for?

Annual Percentage Rate

Trade in the classical (Ricardian) model is based on

Comparative Advantage

As a result of trade, the price of the good will ______ in the exporting country.

Increase