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FECN Fundamentals of Economics questions with correct answers

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Name | A graph that shows the combinations of two goods that the economy can produce given the available scarce resources and available technology is called a - ANSWproduction possibilities frontier The opportunity cost of an item is - ANSWwhatever must be given up to obtain the item. Economists ...

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  • June 7, 2024
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  • 2023/2024
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FECN Fundamentals of Economics questions with correct answers 1. Name | A graph that shows the combinations of two goods that the economy can produce given the available scarce resources and available technology is called a - ✔✔ ANSW✔✔ production possibilities frontier The opportunity cost of an item is - ✔✔ ANSW✔✔ whatever must be given up to obtain the item. Economists frequently say there' s no such thing as a free lunch. What do they mean by this? - ✔✔ ANSW✔✔ Even if someone literally offers you a free lunch, there is an PAGE 1 opportunity cost to the resources that are used to produce your free lunch When an economy does not fully use its factors of production, then it ends up at a location _____the production possibilities frontier. - ✔✔ ANSW✔✔ Outside As the income of consumers increases, the demand for pizza decreases. Pizza is called - ✔✔ ANSW✔✔ an inferior good Which of the following would lead to an increase in the current price of beef? Assume beef is a normal good. - ✔✔ ANSW✔✔ All of the above In words, what does it mean when an economic consultant states: Café Ana's elasticity of supply of fine meals is equal to +3? - ✔✔ ANSW✔✔ If the market pri ce increases by 1 percent, then Café Ana's quantity supplied of fine meals will increase by 3 percent. In words, what does it mean when an economic consultant states: Carl's income elasticity of chicken is equal to +2? - ✔✔ ANSW✔✔ If Carl's income increases by 1 percent, then his quantity demanded of chicken will increase by 2 percent. The profit maximizing rule states that a business maximizes profits when it produces where marginal revenue equals average variable cost. - ✔✔ ANSW✔✔ FALSE The four components of aggregate expenditure are - ✔✔ ANSW✔✔ Consumption, net exports, government spending and investment The negative movement from peak to trough of a business cycle is called _____because over this segment of the business cycle, real GDP is smaller than in the previous period. - ✔✔ ANSW✔✔ an economic contraction The measure of the economic value of all final goods and services sold inside the boundaries of the country, adjusted for changes in the price level, is called - ✔✔ ANSW✔✔ Real gross domestic product. The negative movement from peak to trough of a business cycle is called an economic contraction because over this segment of the business cycle real GDP is larger than the previous period. - ✔✔ ANSW✔✔ FALSE The measure of the cost of a ba sket of goods and services in any period relative to the cost of the same basket of goods and services of the base year is called - ✔✔ ANSW✔✔ The consumer price index Money demand increases when the Federal Reserve Bank decreases the desired reserve deposit ratio. - ✔✔ ANSW✔✔ TRUE Money demand decreases when the Federal Reserve Bank increases the Federal Reserve discount rate. - ✔✔ ANSW✔✔ TRUE A decrease in the value of money from one period to the next is called - ✔✔ ANSW✔✔ Inflation Money demand decreases whe n the Federal Reserve Bank buys back government bonds. - ✔✔ ANSW✔✔ FALSE What is some intrinsically valuable good that also serves as money? - ✔✔ ANSW✔✔ Commodity money A decrease in the value of money from one period to the next is called inflation. - ✔✔ ANS W✔✔ TRUE If the price level ___(1)___, the value of money ___(2)___. - ✔✔ ANSW✔✔ Increases, decreases An item that buyers give to sellers when they want to purchase goods and services is called - ✔✔ ANSW✔✔ Medium of exchange Misperceptions, sticky wages, and sticky prices are each theories that explain why in the short run the - ✔✔ ANSW✔✔ aggregate supply curve has a positive slope An inflationary gap occurs when an economy's - ✔✔ ANSW✔✔ real GDP is greater than its potential real GDP Suppose that the economy is in an inflationary gap. Which of the following public policies could help the

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