Market Structure
What market structure has a single seller and high barriers to entry?
Monopoly
What measure of elasticity describes how quantity demanded changes in response to a change in price?
Price Elasticity of Demand
What is the name given to a tax imposed on imports?
Tariff
What is the name of the central banking system of the United States?
The Federal Reserve System
Reducing taxes and increasing government spending is an example of ...
Expansionary Fiscal Policy
What market structure has many firms, differentiated products, and few barriers to entry?
Monopolistic Competition
A price increase leads to no change in the quantity demanded means...
Perfectly Inelastic
Concept that states countries should specialize in the production of goods and services they can produce most efficiently.
Comparative Advantage
What is the discount rate?
Interest rate commercial banks must pay to borrow from central bank.
If there is unexpected inflation, who is better off?
Borrowers
Define "oligopoly."
A market structure with a few large firms that usually use strategic interactions.
Calculate the elasticity of demand if the quantity demanded changes from 100 units to 150 units when the price drops from $30 to $20.
-1.5
"Balance of trade" measures...
the difference in value between a country's imports and exports.
The buying and selling of government securities to control the money supply is called...
Open Market Operations
What is speculation?
When you hold cash now because you expect interest to increase in the future.
In which market structure is the concept of "price taker" found?
Perfect Competition
If the good is a luxury and more time, determine elastisity.
More elastic
A trade deficit means...
a country is importing a greater amount of goods and services than it is exporting.
Explain how lowering the reserve requirement ratio affects the money supply.
Increases money supply by allowing banks to lend more of their deposits
What is M2 made up of?
Currency, demand deposits, checking accounts/savings, small denomination time deposits, retail money market funds
What is tacit collusion?
Unspoken understanding that firms act together, seen in oligopolies.
Cross-price elasticity of demand is... (+ vs. -)
how the quantity demanded of one good changes in response to a change in price of another good; + = substitutes and - = complements
World Trade Organization does what?
It helps facilitate international trade by enforcing trade rules and negotiating trade agreements.
With contractionary monetary policy and expansionary fiscal policy, what happens to interest rate?
Increase in interest rate
Discuss the long-term impact of running large fiscal deficits on the economy.
Higher interest rates, increased national debt, and potential crowding out of private investment