Untitled Flashcards Set

Q: Trade allows people to specialize in what they do best, which improves overall economic efficiency. This concept is an example of:
A: A. The benefits of trade

Flashcard 2
Q: What happens when firms expect the price of their products to rise in the future?
A: C. The supply curve decreases, causing the equilibrium price to rise.

Flashcard 3
Q: When demand increases and supply remains constant, what happens to equilibrium price and quantity?
A: A. Price and quantity both increase.

Flashcard 4
Q: How is GDP growth rate calculated?
A: A. [(New GDP - Old GDP) / Old GDP] × 100

Flashcard 5
Q: What is one way GDP can be computed?
A: A. The sum of consumption, investment, government spending, and net exports.

Flashcard 6
Q: People respond to incentives. This principle is part of the:
A: A. Five foundations of economics.

Flashcard 7
Q: What is opportunity cost?
A: C. The value of the next-best alternative when a decision is made.

Flashcard 8
Q: Which of the following is an example of positive economic analysis?
A: D. "If the government increases the minimum wage, unemployment will rise."

Flashcard 9
Q: What is DiNozzo’s opportunity cost of making a wooden boat?
A: A. 10 solved crimes.

Flashcard 10
Q: What is Gibbs’s opportunity cost of making a wooden boat?
A: C. 30 solved crimes.

Flashcard 11
Q: What is the value of the GDP deflator in 2011?
A: C. 112.0

Flashcard 12
Q: What is the value of real GDP in 2010?
A: C. $520.00 million

Flashcard 13
Q: GDP is used as a measure of all of the following EXCEPT:
A: E. Environmental quality.

Flashcard 14
Q: What happens to the equilibrium price and quantity of new cars during a recession?
A: B. The equilibrium price and quantity would both fall as demand shifts to the left.

Flashcard 15
Q: The fact that people clean cabinet doors but not inside cabinets is an example of ________ thinking.
A: E. Marginal

Flashcard 16
Q: What happens to the equilibrium price and quantity of goods used by elderly people in northern New York when they leave for Florida?
A: B. They would both decrease.

Flashcard 17
Q: If supply and demand curves both shift to the right, what happens to equilibrium quantity?
A: B. It increases, but the change in price is uncertain.

Flashcard 18
Q: What is the term for short-run fluctuations in economic activity?
A: A. Business cycles.

Flashcard 19
Q: Variables that are NOT accounted for in a model are called:
A: C. Exogenous factors.

Flashcard 20
Q: What happens to the equilibrium price and quantity of iPhones if the price of Android phones (a substitute) decreases?
A: B. They would both decrease.

Extra Flashcards (Potential Exam Questions)

Flashcard 21
Q: What does "ceteris paribus" mean in economics?
A: C. Other things being equal.

Flashcard 22
Q: If an economy is operating at a point inside the production possibilities frontier (PPF), what does this indicate?
A: D. There is unemployment or inefficiency.

Flashcard 23
Q: If nominal GDP increases while real GDP stays the same, what must have happened?
A: A. Prices have increased.

Flashcard 24
Q: If the government increases taxes on gasoline, what happens to the supply and price of gasoline?
A: A. Supply decreases, price increases.

Flashcard 25
Q: What type of economic system is based on voluntary trade and private property?
A: A. Market economy.

Flashcard 26
Q: If the Federal Reserve lowers interest rates, what is the expected effect on borrowing and spending?
A: B. Borrowing and spending increase.

Flashcard 27
Q: If demand for a product is inelastic, what happens when the price increases?
A: C. Total revenue increases.

Flashcard 28
Q: What is the law of diminishing marginal utility?
A: D. As a person consumes more of a good, the additional satisfaction gained decreases.

Flashcard 29
Q: What happens in the labor market if minimum wage increases?
A: B. Unemployment may increase if employers cut jobs.

Flashcard 30
Q: What is an example of a public good?
A: A. National defense.

  Q: Florida’s warm climate gives it a ________ advantage in growing oranges.
A: Comparative

  Q: When the price changes from P1 to P2, an increase in quantity supplied occurs from Q2 to Q1. What is this called?
A: Increase in quantity supplied

  Q: If the price of cotton decreases, what happens to the price and quantity of shirts?
A: The price falls and the quantity rises

  Q: What is the percentage increase in real GDP from quarter 2 to quarter 3?
A: 4%

  Q: What is the percentage change in real GDP from quarter 7 to quarter 8?
A: -2%

  Q: Paying someone to do something for you, like changing oil, is an example of what type of incentive?
A: Direct incentive

  Q: Why don’t people like using dollar coins instead of paper bills?
A: The opportunity cost of carrying large quantities of coins is too large

  Q: Which of the following is a positive economic statement?
A: On average, people save 15% when they switch to GEICO

  Q: What is DiNozzo’s opportunity cost of making a wooden boat?
A: 10 solved crimes

  Q: What is Gibbs’s opportunity cost of making a wooden boat?
A: 20 solved crimes

  Q: How do you calculate the GDP deflator?
A: (Nominal GDP / Real GDP) × 100

  Q: What is real GDP in 2010 if nominal GDP is $551.2 million and the deflator is 106?
A: $520.00 million

  Q: GDP measures all of the following except what?
A: Environmental quality

  Q: What happens to the price of new cars during a recession?
A: Price and quantity both fall

  Q: Why do people clean cabinet doors more often than inside cabinets?
A: Marginal thinking

  Q: What happens to demand for elderly goods in New York during winter months?
A: Both price and quantity decrease

  Q: If buyers leave the market, what happens to equilibrium price and quantity?
A: Both decrease

  Q: Using experiments and real-world data to test theories is an example of what?
A: The scientific method in economics

  Q: What system encourages innovation through financial rewards?
A: Patent system

  Q: Choices are necessary in economics due to what?
A: Scarcity

  Q: What index measures the average prices of all final goods and services in GDP?
A: GDP deflator

  Q: If real GDP grows by 2% and inflation is 2%, how much does nominal GDP grow?
A: 4%

  Q: Actions are discouraged with what type of incentive?
A: Negative incentive

  Q: Why is the opportunity cost of moving from D to E different from moving from E to C?
A: The slope of the PPF is different in each segment

  Q: Which point on a PPF is unattainable?
A: A point beyond the frontier

  Q: What does a point inside the PPF represent?
A: Inefficiency

  Q: Short-term fluctuations in economic activity are called what?
A: Business cycles

  Q: Variables not accounted for in a model are called what?
A: Exogenous factors

  Q: What causes real GDP to increase over time?
A: Increases in quantities produced

  Q: What happens to iPhone prices if Android phone prices decrease?
A: iPhone prices and quantity decrease

  Q: If the price is $10 and there is a surplus of 30 units, what does that indicate?
A: The price is above equilibrium

  Q: If firms expect prices to rise in the future, what happens to supply today?
A: Supply decreases, and equilibrium price rises

  Q: What illustrates unemployment on a PPF?
A: A point inside the frontier

  Q: How do you calculate the inflation rate?
A: [(New GDP Deflator – Old GDP Deflator) / Old GDP Deflator] × 100

  Q: When price is above equilibrium, what happens?
A: Surplus, causing downward pressure on price

  Q: What does "ceteris paribus" mean?
A: Other things being equal

  Q: If Isaac accepts a $47,500 job, and his second-best option is $46,000, what is his opportunity cost?
A: $46,000

  Q: If Lucian trades parsley for Bea’s cupcakes, what happens?
A: Both are made better off by trade

  Q: What defines an imperfect market?
A: A buyer or seller has influence over price

  Q: What is the study of decisions made by individuals and firms?
A: Microeconomics