Econ Exam
Terms
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- What does the process of specialization do for an economy?
- it leads to effecient use of resources and is easier
- According to the law of comparative advantage, a country should?
- prdouce goods and services in which it has a comaritive advantage
- What is collective bargaining?
- process in which union and company representitives meet a new labor contract
- What is the purpose of competition?
- it keeps it fair and keeps businesses running and out of monopolies...regulating force in markets
- What is the role of the Federal Open Market Committee?
- makes key decisions about intrests rates, and growth of U.S. money supply
- Characteristics of developed Nations include?
- high per capita GDP...not rich or poor...more economic and political freedom...high consumer spending...agricultrual output is high
- Who benifits from a voluntary trade?
- traders- to get what they want
- A knitting factory worker who losers her job becasue the company has relocated the plant to another country is an example of?
- stuctured unemployment...globalization
- Specialization in a nation leads to?
- efficient use of resources including capital, land and labor
- Economists look to what kind of explanation to describe inflation?
- price index
- A person who consumes a good or service but does not pay for it is called?
- free rider
- How are wages fro a perticular job determinded?
- buy the demand for workers
- The "market basket" that is used by the Bureau of Labor Statistics to calculate prices is made up of what?
- goods and servicies
- What is a product market?
- when the goods and services that households produce are purchased
- What does a "most-favored-nation" (MFN) status mean?
- Normal Trade Relations status NTR- pay tariffs as those NTR partners
- Your department store receipt says that you paid a 10% sales tax on sports equipment. This sales tax is and example of a?
- regressive tax
- The purpose of expansionary fiscal policy is to?
- increase separation between government and private idustry
- If the supply of a good is inelastic?
- producers will not change their quanity supplied by much if market price doubles
- Ahat doe it mean when a person is under employed?
- they work at a job for which one is over qualified or work part time when they want full time
- In a typical business cycle, what stage immediately follows peak?
- contraction
- The law of increasing costs means that when an economy increases the production of one item?
- then more and more resources are necessary to increase production therefore increasing opportunity cost
- An efficient economy is one that?
- uses resources in such a way as to maximize the production of goods and services
- What is the money and other valuables that belong to a corporation or partnership called?
- assets
- Who is most likely to be worried about high inflation?
- the unemployed
- Define and give and example of a blue chip stock?
- top 30 stocks that represent top industries to give and idea of what is going on in the economy
- Why are all goods and services scarce?
- limited supply of resources
- What is a fringe benifit?
- payment other than wages or saleries
- When revenues exceed expenditures its called?
- surplus, profit
- What happens when you make a purchase with a credit card?
- the bank will pay for it now and you will pay for it when the bill comes
- How does a natural monopoly function?
- many companies sell products that are similar not identical
- What are some key economic questions?
- 1. What goods and services should be produced? 2. How should these goods and services be produced? 3. Who consumes these goods and services
- What is a positive externality?
- good economic side effect of a good or service that generates benifits to someone other than the person who produced it
- Who wrote the book Wealth of Nations describing the market economy?
- Adam Smith
- According to the cost-push theory, what is responisible for inflation?
- when producers raise prices to increase cost
- What are some examples of a form of non price competition?
- style...service...quality of product...location
- What does it mean when the demand for a product is inelastic?
- demand is not very sensitive to change in price
- What is a company's total revenue?
- income recieved by a government by taxes and non taxations
- Supporters of supply-side economics believe that?
- taxes have a strong negative influence on economy
- When you invest in mutual funds?
- it is many stocks managed by one indidual
- A company makes basketballs but is underutilizing its resources. What does this mean?
- it is using fewer resources than the economy is capable of using
- According to the demand-pull theory, what is responsible for inflation?
- when demand for goods and services exceeds existing supplies
- Labor unions arose largely in response to the?
- industrial Revolution to get better wages, conditions, and working hours
- Why do companies practice price discrimination?
- efficient, effective, makes greater profit and to seel to people unwilling to pay top price
- A shortage will develop when?
- when there is not enough of something like natural resources
- What type of policy does the Federal Reserve use to counteract an expansion that is causing high intrest rates?
- tight money policy
- The lowest point in an economic contraction is called?
- trough
- What helps to explain why carpenters usually earn more than dishwashers?
- high human capital- greater demand and skill
- What incentive motivates a manufacturer to sell a product?
- profit
- When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?
- equilibrium
- How is nominal GDP converted into real GDP?
- the NOMINAL is current money while REAL is over a year