Midterm 1
A point outside of the production possibilities curve is _______.
Unattainable (only attainable through trade)
What happens to average fixed cost when quantity produced increases?
AFC decreases
Gross domestic product is defined as in a country, the monetary value of....
all final goods and services produced in one year
This type of policy involves manipulating the levels of government spending and taxation
Giving up the next best thing is called....
Opportunity Cost
Economics is the study of how to use....
Shut Down
Structural Unemployment
This is a tax on an imported product
Tariff
What happens to price(P) and unemployment(U) when C goes up and ReST go down? (CReST)
P and U both go down
What happens to supply when a negative shock occurs?
It shifts to the left
This market has pricing discretion because they sell somewhat unique products
Monopolistic Competition
What does the Natural Rate of Unemployment contain?
Hint: Some of these 2 types of unemployment, none of 1 type of unemployment.
Some frictional and structural, but no cyclical unemployment.
What 3 things should the fed do to reduce inflation?
increase the reserve requirement, increase the discount rate, sell bonds
What happens to price(P) and unemployment(U) when consumers hide part of their money in their mattress?
P goes down, U goes up
What happens to the number of workers when there is a minimum wage instituted above the equilibrium price?
There will be a surplus of workers and a shortage of jobs.
What costs can be avoided by having output at zero?
Variable Costs
What does this formula find?
(New P - Old P/ Old P)x 100
Rate of inflation
When it costs more for Americans to go to Europe, then the dollar has _______ compared to the euro.
The rate at which banks can borrow money from the Fed is called?
The discount rate
The demand of an item will not change with price when the demand is ______.
inelastic
In this market, the firms must consider the reaction of its rivals before choosing a course of action.
Oligopoly
Which way would the aggregate demand curve shift when a reduction in money supply takes place?
Left
What 3 basic functions does money have?
Standard of value, store of value, and medium of exchange
The supply of dollars in foreign exchange markets is determined by...
the American demand for foreign goods