Elasticity
Is the elasticity of demand elastic, inelastic, or unit-elastic if quantity decreases by 10% and price increases by 20%
Inelastic
An increase in technology will shift what part of the AS/AD graph?
Long-run Aggregate Supply
What economic indicator uses a fixed basket of goods to measure the change in prices paid by consumers?
Consumer Price Index
In perfect competition, at what quantity should a firm produce to maximize their profits?
The firm should produce where MR=MC or where P=MC.
What kind of policy is increasing taxes?
Contractionary fiscal policy
Is the demand for a diamond ring going to be inelastic, elastic, or unit-elastic?
Elastic
Natural resources are part of which factor of production?
Land
How would buying a stock affect nominal GDP?
It would have no effect on nominal GDP.
In perfect competition, what will happen to price in the long run when demand for the product increases.
There will be no change in price.
What kind of policy would increase real interest rates but also increase aggregate demand.
Expansionary fiscal policy
If good A has an elasticity of demand of .2 and good B has an elasticity of demand of .8, other things equal, will a tax of good A or good B have a larger effect on quantity demanded?
Good B
If a firm is experiencing economies of scale, what curve is decreasing?
Long-run Average Total Cost Curve
Using the expenditures method to calculate GDP, inventory is counted as what type of spending?
Investment Spending
In a perfectly competitive factor market, what is the elasticity of supply for each firm?
The elasticity of supply is infinity.
The Central Bank conducts an open market sale of $10 billion in government securities. What is the maximum change in the money supply if the reserve requirement is 5%?
$200 billion decrease
If the income elasticity of demand for a good is 3 and consumer's income increases by 10%, how will quantity demanded of this good change?
Quantity demanded will increase by 30%.
What curve shows the level of economic inequality in a society?
Lorenz Curve
What economic indicator provides an accurate measure of a country's standard of living by adjusting for inflation and accounting for population size?
Real GDP per capita
In the short run, when should a profit maximizing firm keep producing?
The firm should produce when P>AVC
What will be the effect on a countries currency if the Central Bank uses contractionary monetary policy.
The country's currency will appreciate.
If the price of a key input for good A increases and good A and good B have a negative cross price elasticity, what will happen to the demand for good B?
The demand will decrease.
What curve is used to show the relationship between tax rates and tax revenue?
Laffer Curve
A country's nominal GDP in 2024 was 15,000 and rose to 20,000 in 2025. The GDP deflator in 2025 is 200. What was the change in real GDP between 2024 and 2025 using 2024 as the base year?
Real GDP decreased by $5,000.
If the price is above the point where ATC=MC, what will happen to the quantity of each firm and the market quantity in the long run.
Each firm will produce less and the market quantity will increase.
In an ample reserves market, what will be the effect on the interest rate if the Central Bank increases the reserve ratio?
There will be no change in the interest rate.