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invisible hand
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competition
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labor productivity=
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output/# of workers
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Francois Fillon
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Prime Minister of France
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allocative efficiency
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production refelcts consumer preferences
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local government
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1) K-12 education2) property tax
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reunified Germany
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a substantial budget deficit threatened to keep this nation out of the European Monetary Union
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Suspect
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If convicted, the suspect's endowment will be Wc= W-S-B-R
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Moore's Law
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Predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months. As this happens, the cost of global communications plummets, which lowers the costs of coordinationg and controlling global organization
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the relationship between the price of a good and the quantity that firms are willing and able to sell, all other factors fixed
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supply
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Cyclical unemployment
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Deviation of actual unemployment from natural unemployment
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Substitutes
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two goods that satisfy similar needs or desires. if two goods are substitutes, the demand for one rises as the price of the other rises (or the demand for one falls as the price for the other falls)
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Shift of Demand Curve
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Change in Quantity Demanded
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supply-side
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a theory that stresses the reduction of taxes as a means of encouraging business investment and growth to stabilize the economy
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Economics
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Study of how people seek to satisfy their needs and wants by making choices
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when graphing a change in supply/demand where does it shift on the graph when it is increasing?
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to the right
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False
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In the new Russia during the early 1900's, small-scale privatization of shops, agricultural collectives, and apartments was slow and disastrous relative to voucher and cash privatization
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The average ____ cost is the total cost divided by the quantity of output produced.
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total
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the ability to buy goods and services
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purchasing power
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public goods
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goods that are neither rival in consumption nor excludable
EX) tornado siren
* comes with the free rider problem- people can receive the good without paying for it
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Property Tax
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Tax on the value of a property
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In reference to interest capitalization, what is a qualifying asset?
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To qualify for interest capitalization, assets must require a period of time to get them ready for their intended use.
-Assets that qualify for interest cost capitalization include assets under construction for a company's own use (including buildings, plants, and large machinery) and assets intended for sale or lease that are constructed or otherwise produced as discrete projects (ships or land developments)
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Real exchange rate
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A real exchangerate adjusts this for changes in price levels in bothcurrencies.
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refer to the (t) table above. if all the banks in the economy have the same reserve ratio as this bank, then an increase in reserves of 150 for this bank has the potential to increase deposits for all banks by a.2,000b.866.67c.1666.67d.infinate amount
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$2,000
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brain drain
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the emigration of many of the most highly educated workers to rich countrir where these workers can enjoy a higher standard of living.
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The price of one commodity divided by the money price of another commodity
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Relative Price
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Central Bank
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Bankthat can lend to other banks in times of need
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price index
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statistical series that can be used to measure changes in prices over time
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the minimum dollar amount a seller is willing to accept in order to part with an item.
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sellers reservation price
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Kim Il-sung (d. 1994)
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a former leader of the resistance against the Japanese, later a "comrade"
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The Exchange-Rate Effect
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When a lower price level reduces the interest rate
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marginal cost
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the cost of one additional unit of any item produced or bought in quantity
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The DeBeers Company of South Africe was able to block competition by...
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Ownership of an essential input
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positive externalities are created by people when they act in ways that
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benefit others without their intent to do so
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Define: The Price System
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monetary prices as a message system to facilitate exchanges between buyers and sellers
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Decreasing Returns to Scale (define)
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the state in which LRAC (Long Run Average Cost) increases with output.
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What principles do companies use in selecting the appropriate interest rates to be applied to the weighted average accumulated expenditures?
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1. For the portion of weighted-average accumulated expenditures that is less than or equal to any amounts borrowed specifically to finance construction of the assets, use interest rate incurred on the specific borrowing.
2. For the portion of weighted-average accumulated expenditures that is greater than any debt incurred specifically to finance construction of the assets, use a weighted average of interest rates incurred on all other outstanding debt during the period.
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reservation price
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a customer’s highest willingness to pay for a product
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Why is CPI better than the GDP deflator?
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CPI takes into account imported goods that typical consumers can consume and it does not include investment goods that we usually don't consume.
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Change in Demand vs Change in QTY Demanded
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chang in the qty demanded at each possible price of the commodity (shift in the whole curve) vs a change in the specific qty of the good demanded, represented by a change from one point to another...either on the orig demand curve or on a new one
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Need
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A necessity.
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positive income elasticity
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normal good
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arbitrage
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Enter your back text here.
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G
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(Government purchases of Goods and Services)-State-Federal
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EMU
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EC ("Common Market") becomes European Union
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Fiscal Policy
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involves decisions about government spending and taxation
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Microprocessors and Telecommunications
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Lowered cost of communication, therefore cost of coordination and control
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measure of the “gain” or “surplus” that society as a whole realizes from a trade, defined as the sum of Consumer’s Surplus and Producer’s Surplus
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social surplus
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individual demand curve
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illustrates the relationship between quantity demanded and price for an individual consumer
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Consumer's surplus
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the difference between the maximum price the buyer is willing and able to pay for a good or service and the minimum price actually paidCS = Maximum buying price - Price paid
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Law of Demand
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Everything equal, the quantity demanded of a good falls when the price of the good rises
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abstinence
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the conserving of current income in order to build up capital or savings
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Profit motive
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the force that encourages people and organizes to improve their material well-being.
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a change in demand is never in response to a change in price of that product. T OR F?
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TRUE
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excess reserves
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reserves held over and above the amount required to satisfy the legal-minimum reserve requirement
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The average ___ cost is the total fixed cost dived by the quantity of output produced
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fixed
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the percentage of the labor force that is unemployed
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unemployment rate
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revenue
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amount paid by buyers and received by sellers
R = P x Q
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capital good
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Machines and tools used in the production of other goods
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What is commercial substance?
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An exchange has commercial substance if the future cash flows change as a result of the transaction.
-If the two parties' economic positions change, the transaction has commercial substance.
Exchanging equipment for land, cash flows arising for land will differ significantly from the cash flows arising form the equipment.
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The Balance of Trade, BT
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BT = X − M
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refer to the (t) table above. if all banks in the economy have the same reserve ration as this bank, then the value of the economy's money multiplier isa.13.33b.10.81c.1.33d.10.00
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13.33
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policies that encourage economic growth:
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investment, investment from abroad, education, property rights and political stability, free trade, control of population growth, research and developement
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• What does retrospective reimbursement mean? What does prospective reimbursement mean?
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Reimbursement to providers based on what they report is retrospective reimbursement, and there is a moral hazard here. Prosepctive reimbursements pay based on what the treatments should cost, not on what the provider spends.
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Fiat Money
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Money that has value because the gov't has ordered that it is an acceptable means to pay off debts
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center of population
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point where the country would balance if it could be laid flat and all the people weighed the same.
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How is investment calculated?
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Gross investment = net investment (net additions to new K stock) + depreciation investment (replacement investment).
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Ad Valorem Tariff
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A tax on imports defined as a percentage of the good
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The Wealth Effect
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A lower price level raises the real value of house
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To sell more output, the monopolist...
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has to advertise the product extensively
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European Economic Area
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the free trade area formed by the 12 members of the EU and 5 of the 7 members of the EFTA on January 1, 1994.
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implicit GDP price deflator
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an index of average levels of prices for all goods and services in the economy
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When AVC (Average Variable Cost) is minimum: MC ____, AFC ____ and ATC ____
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MC (Marginal Costs increases, AFC (Average Fixed Cost) decreases, and ATC (Average Total Cost increases.
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How should a company account for receiving a non-monetary asset or contributing a non-monetary asset in a nonreciprocal transfer?
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Companies use FAIR VALUE OF THE ASSET to establish its value on the books.
Companies should recognize contributions as revenues in the period received.
Receives
Land 150,000
Contributed Revenue 150,000
Contributes
Kline industries donates land to the city of Los Angeles for a city park. The land cost 80,000 and has a fair market value of 110,000. Kline industries records this donation as:
Contribution Expense 110,000
Land 80,000
Gain on Disposal of Land 30,000
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If the interest rates on all bonds rise from 5 to 6% over the course of the year, which bond would you prefer to have been holding?
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a bond with one year to maturity
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refer to table 7. the inflation rate wasa.22.6% 2007 and 12.9% 2008b.35% 2007 and 14.8% 2008c.35% 2007 and 20% 2008d.25.9% 2007 and 14.8% 2008
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35 percent in 2007,and 14.8 percent in 2008
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