TTU ECO 2305 Final Exam Review Questions and Answers(A+ Solution guide)

"other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises" - this relationship between price and quantity demanded is referred to as - Answer-the law of demand a basic principle of economics is that a country's standard of living depends on its - Answer-ability to produce goods and services a bond that never matures is known as a - Answer-perpetuity a circular flow diagram is a model that - Answer-helps to explain how participants in the economy interact with one another a decrease in supply will cause the smallest increase in price when - Answer-both supply and demand are elastic a decrease in the number of sellers in the market causes - Answer-the supply curve to shift to the left a legal maximum on the price at which a good can be sold is called a - Answer-price ceiling a legal minimum on the price at which a good can be sold is called a - Answer-price floor a mutual fund is - Answer-an institution that sells shares to the public and uses the proceeds to buy a selection of various types of stocks, bonds, or both stocks and bonds a perfectly inelastic demand implies that buyers - Answer-purchase the same amount as before when the price rises or falls an American retailer purchased 5000 pairs of shoes from a company in Thailand in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016 - what component of U.S. GDP is affected by this transaction in the third quarter of 2016 - Answer-only consumption and investmentan increase in the overall level of prices in an economy is referred to as - Answer-inflation an increase in the price of a good would - Answer-increase the supply of the good at the equilibrium price, the quantity of the good that buyers are willing and able to buy - Answerexactly equals the quantity that sellers are willing and able to sell bank runs - Answer-are a problem because the banks only hold a fraction of deposits as reserves banks - Answer-play a role in creating an asset that people can use as a medium of exchange consumer surplus is measured using - Answer-the demand curve for a product cost is a measure of the - Answer-seller's willingness to sell demand is elastic if the price elasticity of demand is - Answer-greater than 1 demand is inelastic if the price elasticity of demand is - Answer-less than 1 Donald produces nails at a cost of $200 per ton - if he sells the nails for $350 per ton, his producer surplus per ton is - Answer-$150 economics deals primarily with the concept of - Answer-scarcity economics is the study of - Answer-how society manages is scarce resources externalities are - Answer-side effects passed on to a party other than the buyers and sellers in a market fiat money - Answer-has no intrinsic value for a good that is a luxury, demand tends to be - Answer-elasticfor an imaginary closed economy, T=$5000, S=$11000, C=$48000 and the government is running a budget surplus of $1000 - what is GDP and private savings - Answer-GDP= $63000 private savings= $10000 for economists, statements about the world are of two types: - Answer-positive and normative statements George produces cupcakes and his production cost is $10 per dozen, he sells the cupcakes for $16 per dozen - his producer surplus per dozen cupcakes is - Answer-$6