A primarily market oriented economy has less...?

government intervention and regulation

government subsidies and support

What is equilibrium ?

the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity change.

At the existing prequantity supplied exceeds tge quantity.

The quantit demanded is equal ot quantity supplied

What is equilibrium price ?

The price where quantity demanded is euqal to quantity supplied.

at the existing prequantity supplied exceeds the quantity demanded.

A produce whose demand rises when income rises and vice versa

the quantity at which quantity demanded and quantity shipped are equal for a certain price level.

What is equilibrium quantity ?

The quantity at which quantity demanded and quantity shipped are equal for a certain price level.

The price where quantity demanded is equal to quantity supplied

The combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity change.

What are price controls ?

laws that governments enact to regulate prices

the combination of price and quantity where there is no economic prssure from supluses or shortages that would cause price or quantity change.

The price where quantity demanded is euqal to quantity supplied.

Chapter 6: What are the 4 components of GDP?

Consumption, Investment, Government Spending, Net Exports

Consumption, National income, Investment, Net Exports

Services, National income, Government Spending, Net Exports

Services, Investment, Government Spending, Net Exports

Chapter 6: What is the Definition of GDP?

The value of the output of all final goods and services produced within a country in a given year.

The total amount of money a country makes in one year.

The estimated total of goods and services in a business cycle.

The total amount of goods and services given to the people by the government in one year.

Chapter 6:What is the forumla for real GDP?

Nominal GDP*price indexTO/price indexFROM

Nominal GDP*price indexFROM/price indexTO

Chapter 6: What is a Recession?

Two or more consecutive quarters of decline in real GDP.

Two or more consecutive quarters of decline in nominal GDP.

One business cycle of decline in real GDP.

One quarter of decline in real GDP.

Chapter 6: What is the formula for converting GDP for Country B's currency to Country A's?

Country B's GDP in B's Currency/ Exchange Rate (Currency A/Currency B)

Country B's GDP in B's Currency/ Country A's GDP in A's Currency

Exchange Rate (Currency A/Currency B)/ Country B's GDP in B's Currency

Country A's GDP in A's Currency/ Exchange Rate (Currency B/Currency A)

Chapter 6: What is the difference of measuring in Nominal terms vs Real terms

Nominal: Statistic measured in actual prices that existed at time

Real: Same statistic, but adjusted for inflation

Real: Statistic measured in actual prices that existed at time

Nominal: Same statistic, but adjusted for inflation

CH. 15 - What does a central bank do?

2. To promote stability of the financial system

3. To provide banking services to commercial banks and other depository institutions, and to provide banking services to the federal government.

CH. 15 - Why is it important for the members of the Board of Governors of the Federal Reserve to have longer terms in office than elected officials?

2. The purpose of the long and staggered terms is to insulate the Board of Governors as much as possible from political pressure so that governors can make policy decisions based only on their economic merits.

1. They don't serve longer terms.

3. The purpose is so that they hold the most power to make decisions without any repercussions.

CH. 15 - What is a bank run?

3. When the fear and uncertainty created by the suggestion that a bank might fail leads to depositors to withdraw their money.

1. When the workers of a bank run a marathon to raise money.

2. People who refuse to put their money in a bank and instead keep it with them at all times.

4. A robbery of a bank where the money "runs" away.

CH. 15 - Given the danger of bank runs, why do banks not keep the majority of deposits on hand to meet the demands of depositors?

1. Banks make their money from issuing loans and charging interest. The more money that is stored in the bank’s vault, the less is available for lending and the less money the bank stands to make.

2. So that they can keep the money for themselves.

3. To make people pull out less money in cash.

CH. 15 - If the central bank sells $500 in bonds to a bank that has issued $10,000 in loans and is exactly meeting the reserve requirement of 10%, what will happen to the amount of loans and to the money supply in general?

4. The bank has to hold $1,000 in reserves, so when it buys the $500 in bonds, it will have to reduce its loans by $500 to make up the difference. The money supply decreases by the same amount.

2. The money supply stay the same.

3. The bank has to hold $1,000 in reserves, so when it buys the $500 in bonds, it will have to induce its loans by $500 to make up the difference. The money supply increases by the same amount.

CH. 15 - What would be the effect of increasing the banks' reserve requirements on the money supply?

2. An increase in reserve requirements would reduce the supply of money, since more money would be held in banks rather than circulating in the economy.

1. A decrease in reserve requirements would reduce the supply of money, since more money would be held in banks rather than circulating in the economy.

3. An increase in reserve requirements would induce the supply of money, since more money would be held in banks rather than circulating in the economy.

4. A decrease in reserve requirements would induce the supply of money, since less money would be held in banks rather than circulating in the economy.

CH. 15 - What does it mean to have a higher or lower velocity of money supply?

4. A higher velocity of money means that the average dollar circulates more times in a year. A lower velocity means that the average dollar circulates fewer times in a year.

1. A higher velocity of money means that the average dollar circulates less times in a year. A lower velocity means that the average dollar circulates more times in a year.

2. There is no such thing as velocity in economics.

3. They both go at the samr rate.

CH. 15 - What is the basic quantity equation of money?

2. Money Supply × velocity = Nominal GDP = Price Level × Real GDP. (MV = PY)

CH. 15 - Why does contractionary monetary policy cause interest rates to rise?

3. Contractionary policy reduces the amount of loanable funds in the economy. As with all goods, greater scarcity leads a greater price, so the interest rate, or the price of borrowing money, rises.

1. Contractionary policy induces the amount of loanable funds in the economy. As with all goods, greater scarcity leads a greater price, so the interest rate, or the price of borrowing money, decreases.

2. Contractionary policy reduces the amount of loanable funds in the economy. As with all goods, greater scarcity leads a greater price, so the interest rate, or the price of borrowing money, decreases.

CH. 15 - Why does expansionary monetary policy causes interest rates to drop?

1. An increase in the amount of available loanable funds means that there are more people who want to lend. They, therefore, bid the price of borrowing (the interest rate) down.

2. A decrease in the amount of available loanable funds means that there are more people who want to lend. They, therefore, bid the price of borrowing (the interest rate) up.

3. An increase in the amount of available loanable funds means that there are more people who want to lend. They, therefore, bid the price of borrowing (the interest rate) up.

A general and ongoing rise in the level of price in an entire economy

The measure of monetary value from goods and services

How high the cost for borrowing is

A process where prices of consumer goods and services fall and money increses in value

What is the measure of inflation that U.S. government statisticians calculate based on the price level from a fixed basket of goods and services that represents the average consumer's purchases is?

Cost-of-Living-Adjustments (COLAs)

When National Debt surpasses GDP.

Final Review

Authored by Justine Sanchez

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12th Grade

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MULTIPLE SELECT QUESTION

30 sec • 1 pt

What is the focus of macroeconomics?

Economic growth

Unemployment

Inflation

Trade balance

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What type of economy does Cuba and North Korea have?

market economy

command economy

mixed economy

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Who owns resources in a market economy?

the government

businesses

households

private individuals

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What percent of control does the government have in a socialist/communist economy?

more than 50%

less than 50%

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How much does private businesses control in free market economies?

more than 50%

less than 50%

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Outside of the U.S., what color is associated with leftist politics?

Red

Blue

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What color is assosciated with right leaning politics in countries outside the U.S.?

Red

Blue

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