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Final Review

Final Review. Economics. What term describes the total value of all final goods and services produced in a particular economy in a year? Gross domestic product (GDP). What is a mutual fund? A device for pooling the savings of many investors and investing it in a variety of ways.

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Final Review

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  1. Final Review Economics

  2. What term describes the total value of all final goods and services produced in a particular economy in a year? • Gross domestic product (GDP)

  3. What is a mutual fund? • A device for pooling the savings of many investors and investing it in a variety of ways

  4. Americans have a high standard of living and have shifted the production possibilities frontier outward via a good work ethic and what which allows an economy to produce more output from the same quantity resources? • Technology

  5. What would be the annual yield of a bond if the coupon rate was 8.5%, maturity was 10 years, and the par value was $10,000? • $850

  6. Why might Soviet economic planners have favored heavy industry over the makers of consumer goods? • The products of heavy industry provide material for many other industries

  7. What term describes a shared good or service for which it would be impractical to make consumers pay individually and to exclude non-payers? • Public good

  8. What “invisible hand” regulates the free market economy? • Competition and self-interests

  9. How do public goods limit a free market economy? • They allow government, and not consumers, to make some economic decisions

  10. What term describes an economy that is using all its resources to produce the maximum output of goods and services? • Efficiency

  11. What is critical in determining whether something is produced as a public good? • Whether the benefits to society are greater than the total cost

  12. What term describes a social philosophy based on the belief that democratic means should be used to evenly distribute wealth throughout a society? • Socialism

  13. What is the government’s role in controlling externalities in the American economy? • Government tries to encourage positive externalities and limit negative externalities

  14. In 2009, a single parent with one child with an income level less than $15,000 per year falls below what? • Poverty threshold

  15. Since the 1930s, what term describes the main government effort to ease poverty by collecting taxes from individuals and redistributing some of those funds? • Welfare

  16. How does improved technology help create a higher standard of living for future generations? • Providing additional goods and services

  17. Why is a certificate of deposit considered a safe investment? • It is guaranteed by the federal government

  18. What term describes direct payments of money to eligible poor people? • Cash transfers

  19. What allows the United States economy to operate more efficiently and productively, increasing GDP and giving U.S. businesses a competitive advantage in the world? • Technology

  20. Respectively, what governmental health insurance covers people over 65 and what governmental health insurance covers the poor or unemployed? • Medicare • Medicaid

  21. What term describes the line on a production possibilities graph that shows the maximum possible output? • Production possibilities frontier

  22. How do education programs make the economy more productive? • Adding to human capital and labor productivity

  23. What term describes the tendency of suppliers to offer more of a good at a higher price? • Law of supply

  24. What term describes goods and services provided for free or at greatly reduced prices, like food stamps and subsidized housing? • In-kind benefits

  25. What term describes consumers buying more of a good when its price is lowered? • Law of demand

  26. In which direction will the demand curve for RVs shift as baby boomers start to retire? • Right

  27. What term describes goods for which demand falls as income increases? • Inferior goods

  28. What causes a change in the demand curve or a shift in demand? • A change in an area other than price

  29. How does the price range affect the elasticity of demand for a product? • Demand for a good can be inelastic at a low price, but elastic at a high price

  30. What term describes a measure of how suppliers react to a change in price? • Elasticity of supply

  31. What term describes the relationship between price and total quantity supplied by all firms? • Market supply schedule

  32. What term describes elasticity of supply that is less than 1 and is not very responsive to changes in price? • Inelastic

  33. What term describes the change in consumption resulting from a change in real income? • Income effect

  34. A demand curve is only accurate for a specific set of market conditions and what is the only factor affecting demand on a demand curve? • Price

  35. What do economists call a situation in which consumers buy a different quantity than they did before, at every price? • A change in demand

  36. The best level of output occurs when marginal revenue is equal to what? • Marginal cost

  37. What term describes a graphic representation of a demand schedule? • Demand curve

  38. What does it mean when an economist says a consumer has demand for a good or service? • He is willing and able to buy the good or service at the specified price

  39. What term describes two goods that are used together? • Complements

  40. What term describes the income level below which income is insufficient to support a family or household? • Poverty threshold

  41. What term describes goods used in place of one another? • Substitutes

  42. In a free market economy, who owns the factors of production? • Households • Firms

  43. What age group in the United States has the largest percentage of its members living in poverty? • Children

  44. Why is the 2008 American median household income of $51,000 misleading? • It does not take into account income distribution

  45. If marginal cost becomes higher than price, what happens to a company? • The company will lose money on each additional unit produced

  46. What term describes the change in output that results from having one more worker? • Marginal product of labor

  47. What is the elasticity of supply for an orchard owner in the short run if the price he can get for his crop goes up? • Inelastic

  48. How long can a family collect aid from the Temporary Assistance for Needy Families (TANF) program? • A maximum of 5 years

  49. What effect does a rise in the cost of machinery or raw materials have on the cost of a good? • The good becomes more expensive to produce

  50. What term describes a condition of rising prices? • Inflation

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