Unit 1
What challenge does scarcity create in a national economy?
People have unlimited wants but there are limited resources forcing economies to make choices.
Name one factor of production.
Land, Labor, Capital, Entrepreneurship
Potential output is best defined as:
An output the economy can sustain without inflationary pressure.
A demand deposit is:
Money held in accounts that can be withdrawn on demand.
In an AD-AS graph which direction does SRAS slope?
Upward
How does macroeconomics differ from microeconomics?
Microeconomics is the impact of economics on the individual; macroeconomics is how economics applies to entire nations and their whole economies.
Define the resource market.
The place where businesses purchase resources they desire to produce goods.
Short run equilibrium occurs when:
Output = Output supplied
AD=SRAS
Liquidity refers to:
The ease with which an asset can be converted to cash.
What does the PPC compare?
The opportunity cost between two products
What is the consumer's role within an economy?
The consumer participates in the economy by purchasing goods and services and creating demand.
Which job has the highest chance to cause seasonal unemployment? (Level two)
a. Lifeguard
b. Accountant
c. Actor
a. Lifeguard
A negative demand shock would most likely cause:
Lower output and lower prices
Securities in finance generally refer to:
Financial instruments like stocks or bonds
Which of the following would shift AD right in an AD-AS graph?
a. Cheaper resources
b. Decrease in taxes
c. Decrease in government spending
b. Decrease in taxes
If the economy had a higher rate of consumption of a certain good how does the price and supply react?
The supply will steadily decrease. The price will increase as demand for the product remains high.
What demographics are included within the Labor Force Participation Rate?
Everyone except people actively not seeking jobs, students, retirees, and those with disabilities.
Expansionary fiscal policy includes which of the following?
a. Cutting Government Spending
b. Raising Taxes
c. Increasing Government Spending or Cutting Taxes
c. Increasing Government Spending or Cutting Taxes
Credit unions differ from banks in that they:
Are owned by their members.
Why is LRAS vertical?
The long-run supply and employment are not affected by changes in the price level or wages.
Assume nation A has more natural resources than nation B, how would their two economies compare?
Nation A with its abundance of resources would suffer less from scarcity and thus would be less impacted by opportunity costs and trade-offs leading to a larger economy.
Say the demand for cellphones within country X decreases resulting in less consumers buying phones. How does this impact the GDP from an expenditures approach?
The GDP will decrease as consumers are less willing to purchase the phones, leading to less expenditures and therefore a lower GDP when measuring expenditures.
A progressive taxation system means:
Higher income earners pay a higher percentage in taxes.
Tax rates vary on income level.
The loanable funds market determines:
The equilibrium interest rate, based on supply and demand for loans.
If interest rates decrease while in a government surplus what is the resulting affect on the AD-AS graph?
a. Shift left
b. Shift right
c. Indeterminate
c. The result on the AD-AS graph is indeterminate.
The decrease in interest rates would shift AD right, but the government surplus means a decrease in government spending shifting AD left.