Devry Eco312 final exam spring 2014

there is never enough of anything.
individuals have to make choices from among alternatives.
production has to be planned by government.
things which are plentiful have relatively high prices.

Money
Land
Labor
Capital

attainable and the economy is efficient.
attainable, but the economy is inefficient.
unattainable, but the economy is inefficient.
unattainable and the economy is efficient.

Government ownership of most factors of production
Competition and unrestricted markets
Reliance on the market system
Freedom of enterprise and choice

diminishing marginal utility.
capitalist markets.
the invisible hand.
the rationing function of price.

When supply decreases and demand increases
When demand increases and supply increases
When demand decreases and supply decreases
When supply increases and demand decreases

1.0.
greater than 1.
0.5.
zero.

There are few substitutes.
The time interval considered is long.
The good is considered a necessity.
Purchases of the good require a small portion of consumers' budgets.

The firm is making only normal profits.
The firm's marginal cost is greater than its marginal revenue.
The firm's marginal revenue is equal to its marginal cost.
A decrease in output would lead to a rise in profits.

exhibit the same price elasticity of demand for a given product than consumers who do not clip and redeem coupons.
exhibit more price elasticity of demand for a given product than consumers who do not clip and redeem coupons.
exhibit less price elasticity of demand for a given product than consumers who do not clip and redeem coupons.
cause total revenue to decrease for firms that issue coupons for their products.

a form of covert collusion.
legal in the United States.
always successful in raising profits.
a formal agreement among firms to collude.

a firm cannot vary its output level.
all factors of production can be varied.
a firm can change its fixed inputs.
output is raised or reduced by changing the levels of variable inputs.

Peak, recession, expansion, trough
Trough, recovery, expansion, peak
Expansion, recession, trough, peak
Peak, recession, trough, expansion

counted as unemployed because they are not working full-time.
counted as employed because they are receiving payment for work.
used to determine the size of the labor force, but not the unemployment rate.
treated the same as "discouraged" workers who are not actively seeking employment.

the calculation of GDP for that year.
the calculation of NDP for that year.
an amount less than GDP for that year.
an amount greater than GDP for that year.

improvements in product quality over time.
expenditures undertaken to correct pollution.
illegal activities of individuals and businesses.
nonmarket activities, such as the productive work of homemakers.

fiscal policy.
incomes policy.
monetary policy.
employment policy.

Increases in taxes and government spending
Decrease in taxes and increase in government spending
Increase in taxes and decrease in government spending
Decreases in taxes and government spending

increases in taxes and government spending.
decreases in taxes and government spending.
increases in government spending and decreases in taxes.
decreases in government spending and increases in taxes.

budget lag.
recognition lag.
operational lag.
administrative lag.

the wealth of consumers.
consumer and business confidence.
expected returns on investment.
the tax rates on household income.

becomes flatter at output levels above the full-employment output.
becomes vertical at output levels above the full-employment output.
is upward-sloping with a constant slope.
is horizontal.

decrease aggregate supply in the U.S.
increase aggregate supply in the U.S.
increase aggregate demand in the U.S.
decrease aggregate demand in the U.S.

price level falls, but the rate of inflation does not.
Price level rises, but the rate of inflation does not.
the rate of inflation falls, but the price level does not.
the rate of inflation rises, but the price level does not.

operating at the break-even point.
spending seven-tenths of any additional income.
necessarily dissaving.
spending 70 percent of its disposable income.

all coins and paper money held by the general public and the banks.
bank deposits of households and business firms.
bank deposits and mutual funds.
checkable deposits and currency in circulation.

is legal tender, is generally acceptable in exchange for goods or services, and is backed by the gold and silver of the federal government.
is generally acceptable in exchange for goods or services, is backed by the gold and silver of the federal government, and facilitates trade.
is relatively scarce, is legal tender, and is generally acceptable in exchange for goods and services.
facilitates trade, is legal tender, and permits the use of credit cards and near-monies.

financial adviser.
comptroller or accountant.
central bank.
deposit insurance provider.

Federal Open Market Committee
Office of Management and Budget
Thrift Advisory Council
Federal Advisory Council

the Fed.
the U.S. Treasury.
other banks.
large corporations.

establishment of the Federal Reserve System in 1913.
speculation during World War I.
stock market crash of 1987.
bank panics of 1930-1933.

federal funds market.
open market operations.
money market transactions.
term auction facility.

tax rate, transfer payments, and level of government spending.
consumer price index, inflation, and unemployment rate.
public debt, budget surplus, budget deficit, and interest rates.
discount rate, reserve ratio, open market operations, and term auction facility.

Japan
Iran
Peru
China

maximize its volume of trade with other nations.
use tariffs and quotas to protect the production of vital products for the nation.
concentrate production on those products for which it has the lowest domestic opportunity cost.
strive to be self-sufficient in the production of essential goods and services.

tax.
price ceiling.
quantity limit.
subsidy.

domestic government administers the former, whereas the foreign government administers the latter.
foreign government administers the former, whereas the domestic government administers the latter.
one is a tax, whereas the other is a quantity limit.
one raises the price of the imported product involved, whereas the other one does not.

consumers of the product.
domestic producers of the product.
workers in domestic firms producing the product.
the government of the importing country.

The United Nations Commission on Trade Law
The United Nations Conference on Trade and Development
The World Trade Organization
The Federal Reserve Board

increase the foreign demand for foreign currencies.
increase the domestic demand for foreign currencies.
decrease the foreign supply of foreign currencies.
increase the domestic supply of foreign currencies.

U.S. government sending aid to natural disaster victims in Asia
American tourists spending money in the other countries
Buying of U.S. Treasury bonds by a foreign bank
Payment of stock dividends by U.S. firms to foreign shareholders

inflow of payments for goods and services.
outflow of goods and services.
inflow of goods and services.
excess of exports over imports.

$0.44.
$0.23.
$2.25.
$2.00.

depreciated.
appreciated.
inflated.
deflated.

fixed exchange rates.
freely floating exchange rates.
a managed gold standard.
managed floating exchange rates.

Question 6.6.

(TCO 8) a) Explain four problems with the argument that trade protection is needed to protect American jobs. b) Describe the economic reasons why businesses use offshoring.

(Points : 40)

Question 7.7.

(TCO 6) a) Identify the four major tools of monetary policy. b) Describe how changes in the Fed’s major policy tools leads to [1] expansionary and [2] restrictive or contractionay monetary policies.

(Points : 40)