Chapter 7 and 15 Review
< Question 1 (of10) V >
Which of the following goods is nonrival?
O A tuna in the ocean
@ A soccer match in a stadium
O A pizza at a pizza parlor
O A visit to the doctor at her ofce
Chapter 4 Quiz
In competitive markets, a surplus or shortage Will
Chapter 4 Quiz
Which of the following is an example ofa price ceiling?
never exist because the markets are always at equiiibrium.
cause shifts in the demand and supply curves that te
< Question 1 (of 20) V )
A nation can produce two products: tanks and cars. The table below is the nations production possibilities schedule:
Given the production possibilities schedule above. a combination of3 tanks and 350 cars
Chapter 2 and 3 Review Instructions i help
< Questl0n1(of10) v > El E
Consider each of the following scenarios and determine whether it is an example of the income effect, the substitution effect, or diminishing marginal utility.
16. A private business would never want to produce a public good to sell because they have
insufficient incentives to supply that good because most people would consume that good
for free since a public good is nonrival and nonexcludable. This means that
Answer: consumer incomes?
All things being constant constant includes: Determinants of DemandTastes and Preferences, Number of Buyers, and
curve is the graphical representation relationship between price and quantity supplied to t
Chapter 15 Notes:
Short-term interest rates:
the interest rate on financial assets that mature within less than a year.
Long-term interest rates:
the interest rate on financial assets that mature a number of years into
Money demand curve: a gr
Chapter 11 Notes:
Marginal propensity to consume (MPC):
the increase in consumer spending when disposable
income rises by $1. Because consumers normally spend part but not all of an additional dollar of
disposable income, MPC is between 0 and 1.
Chapter 12 Notes:
Aggregate demand curve:
a graphical representation that shows the relationship between the
aggregate price level and the quantity of aggregate output demanded by households, firms, the
government, and the rest of the world. The aggregate
The natural rate of unemployment is 4%, and the economy is producing 95% of its potential output.
Okun's law predicts an unemployment rate of:
According to recent estimates of Okun's law, if the unemployment rate fell by a full percentage point, it
Chapter 14 Notes
any asset that can easily be used to purchase goods and services.
Currency in circulation:
actual cash held by the public.
Checkable bank deposits:
bank accounts on which people can write checks.
Money supply: the total value of fi
When economists state that there is a zero bound on nominal interest rates, they mean that:
the nominal interest rate cannot go below zero.
If the economy is in a liquidity trap:
fiscal policy is effective, but monetary policy is not.
Expecting the inflat
In the long run, when the actual inflation rate gets embedded into people's expectation:
there is no longer a trade-off between inflation and unemployment
. The NAIRU is:
the unemployment rate at which inflation does not change over time
Which of the foll
shift the short-run aggregate supply curve to the _, changing the trade-off between inflation
and unemployment. As a result,
the short-run Phillips curve shifts _.
During the 1950s and 1960s, the short-run Phillips curve for the U.S. econ
Government's right to print money to finance deficits is referred to as:
When inflation is high:
people will decrease their level of real-money holdings.
During an inflationary gap:
the unemployment rate is less than the natural rate of unemp
the relationship between the output gap and the unemployment rate can be summarized thus
When the output gap is positive, the unemployment rate is below the natural rate.
Suppose actual aggregate output is equal to the potential output; the actual
1. Explain how each of the following situations illustrates one of the four principles of individual choice.
a. You are on your third trip to a restaurants all-you-can-eat dessert buffet and are feeling very full.
Although it would cost you no additional
a market in which there are many buyers and sellers of the same good or
service, none of whom can influence the price at which the good or service is sold.
Supply and demand model:
a model of how a competitive market behaves.
Chapter 9 Notes:
Rule of 70:
a mathematical formula that states that the time it takes real GDP per capita, or any
other variable that grows gradually over time, to double is approximately 70 divided by
that variables annual growth rate.
goods and services purchased from other countries.
goods and services sold to other countries.
Globalization: the phenomenon of growing economic linkages among countries.
the phenomenon of extremely high le
Chapter 10 Notes:
Savingsinvestment spending identity:
an accounting fact that states that savings and
investment spending are always equal for the economy as a whole.
the difference between tax revenue and government spending when tax
Price controls: legal restrictions on how high or low a market price may go.
The maximum price sellers are allowed to charge for a good or service; a form of price
the minimum price buyers are requi
Chapter 7 notes:
National income and product accounts (national accounts):
method of calculating and keeping track
of consumer spending, sales of producers, business investment spending, government purchases, and a
variety of other flows of money between
Chapter 8 Notes:
or part time.
the total number of people currently employed for pay in the economy, either full time
the total number of people who are actively looking for work but arent
Chapter 6 Notes:
describes an economy in which problems such as unemployment are
resolved without government intervention, through the working of the invisible hand, and in which
government attempts to improve the economys perform
Chapter 13 Notes:
government programslike Social Security, Medicare, unemployment insurance,
and food stampsintended to protect families against economic hardship.
Expansionary fiscal policy:
fiscal policy that increases aggregate demand