C211 WGU OA UPDATED QUESTIONS AND ANSWERS
GRADED A+
✔✔when the reserve ratio is decreased, what happens to the money supply and AD -
✔✔increases, shifts to the right
✔✔if the government uses fiscal policy and cuts taxes, what effect will this have on
interest rates and AD? - ✔✔cutting taxes will increase demand for money, increase
interest rates and cause AD to shift to the right
✔✔the difference between what a buyer is willing to pay for a good or service and what
they actually pay - ✔✔consumer surplus
✔✔consumer surplus is measured in the area _____ the demand curve, _______ the
price, _______ the quantity consumed - ✔✔under DC, above price, up to quantity
consumed
✔✔the benefit sellers receive from participating in a market - ✔✔producer surplus
✔✔producer surplus is measured in the area ______ the supply curve, _____ the price,
______ the quantity supplied - ✔✔above, below price, up to
✔✔total surplus equation - ✔✔value to buyers - cost to sellers
✔✔the study of economy wide phenomena such as inflation, unemployment and
economic growth - ✔✔macroeconomics
✔✔the study of how households and firms make decisions and how they interact in
markets - ✔✔microeconomics
✔✔income must _______ expenditure in an economy - ✔✔equal
✔✔the market value of all final goods and services produced within the border of a
given country during a specified period of time - ✔✔gross domestic product
✔✔gross domestic product measures what two things? - ✔✔total amount of
expenditures and total income of everyone in the economy
✔✔4 components of GDP - ✔✔1. consumption
2. investment
3. government purchases
4. net exports (exports minus imports)
, ✔✔which payments are not counted in government expenditures? - ✔✔transfer
payments, social security
✔✔a tax on goods produced abroad and sold domestically - ✔✔tariff
✔✔a method used to restrict international trade by taxing imported goods - ✔✔tariff
✔✔the fall in total surplus that results from a tax - ✔✔deadweight loss
✔✔financial environment in which exchange rates and payments for goods and services
are conducted - ✔✔international monetary system
✔✔what happens to a country's real exchange rate and nominal interest rate as the
price level increases - ✔✔exchange rates depreciate, interest rates increase
✔✔easiest method non financial companies use to handle currency fluctuations -
✔✔currency diversification
✔✔strategy that minimizes the risk of unanticipated changes in future exchange rates -
✔✔currency swap
✔✔a non equity arrangement for a company contemplating entry into a foreign market -
✔✔licensing
✔✔What size commitment is required for a non-equity mode of entry into a foreign
market? - ✔✔small
✔✔two supportive pillars of an informal institution - ✔✔normative and cognitive
✔✔reducing uncertainty is the key role of an institution according to which view -
✔✔institution based view
✔✔the rules, enforcement mechanisms, and organizations that support market
transactions are referred to as _____. - ✔✔institutions
✔✔two polar types of economies - ✔✔centrally planned and market
✔✔in addition to improving efficiency, why might a government intervene in a market? -
✔✔to promote equality
✔✔what is the relationship between marginal cost and total cost? - ✔✔marginal cost is
the change in total cost divided by the change in quantity
GRADED A+
✔✔when the reserve ratio is decreased, what happens to the money supply and AD -
✔✔increases, shifts to the right
✔✔if the government uses fiscal policy and cuts taxes, what effect will this have on
interest rates and AD? - ✔✔cutting taxes will increase demand for money, increase
interest rates and cause AD to shift to the right
✔✔the difference between what a buyer is willing to pay for a good or service and what
they actually pay - ✔✔consumer surplus
✔✔consumer surplus is measured in the area _____ the demand curve, _______ the
price, _______ the quantity consumed - ✔✔under DC, above price, up to quantity
consumed
✔✔the benefit sellers receive from participating in a market - ✔✔producer surplus
✔✔producer surplus is measured in the area ______ the supply curve, _____ the price,
______ the quantity supplied - ✔✔above, below price, up to
✔✔total surplus equation - ✔✔value to buyers - cost to sellers
✔✔the study of economy wide phenomena such as inflation, unemployment and
economic growth - ✔✔macroeconomics
✔✔the study of how households and firms make decisions and how they interact in
markets - ✔✔microeconomics
✔✔income must _______ expenditure in an economy - ✔✔equal
✔✔the market value of all final goods and services produced within the border of a
given country during a specified period of time - ✔✔gross domestic product
✔✔gross domestic product measures what two things? - ✔✔total amount of
expenditures and total income of everyone in the economy
✔✔4 components of GDP - ✔✔1. consumption
2. investment
3. government purchases
4. net exports (exports minus imports)
, ✔✔which payments are not counted in government expenditures? - ✔✔transfer
payments, social security
✔✔a tax on goods produced abroad and sold domestically - ✔✔tariff
✔✔a method used to restrict international trade by taxing imported goods - ✔✔tariff
✔✔the fall in total surplus that results from a tax - ✔✔deadweight loss
✔✔financial environment in which exchange rates and payments for goods and services
are conducted - ✔✔international monetary system
✔✔what happens to a country's real exchange rate and nominal interest rate as the
price level increases - ✔✔exchange rates depreciate, interest rates increase
✔✔easiest method non financial companies use to handle currency fluctuations -
✔✔currency diversification
✔✔strategy that minimizes the risk of unanticipated changes in future exchange rates -
✔✔currency swap
✔✔a non equity arrangement for a company contemplating entry into a foreign market -
✔✔licensing
✔✔What size commitment is required for a non-equity mode of entry into a foreign
market? - ✔✔small
✔✔two supportive pillars of an informal institution - ✔✔normative and cognitive
✔✔reducing uncertainty is the key role of an institution according to which view -
✔✔institution based view
✔✔the rules, enforcement mechanisms, and organizations that support market
transactions are referred to as _____. - ✔✔institutions
✔✔two polar types of economies - ✔✔centrally planned and market
✔✔in addition to improving efficiency, why might a government intervene in a market? -
✔✔to promote equality
✔✔what is the relationship between marginal cost and total cost? - ✔✔marginal cost is
the change in total cost divided by the change in quantity
