ECO 2013 UCF Exam 2 Elaborate
Study Questions with Correct
Answers
1. A positive externality can be cured by - ANSWER Private bargaining and
Subsidy to buyers
2. Which of the following are market failures? - ANSWER Producing the
maximum amount of a good
Consuming the maximum amount of a good
3. the basic cost of unemployment is - ANSWER foregone output
4. the dollar value of the economic activity taking place at every stage of
production and distribution is - ANSWER Gross output
5. A net decrease in inventories ___ GDP - ANSWER subtracts from GDP
6. Potential GDP (tread GDP) - ANSWER Describes the long run productive
capacity of the US economy. This is the GDP that would result if resources
were fully utilized
7. A person who works at a water park is let go after Labor Day weekend. This
person is ____ unemployed. - ANSWER frictionally
,8. the pool of frictionally unemployed people is ___ and membership in the
pool is ___ - ANSWER relatively constant; short-lived
9. If citizen H gets a $2,000 benefit while being taxed $1,900, the most citizen
H is willing to pay for a vote would be - ANSWER $100
10.Senator A votes for Senator B's project in return for Senator B voting for
something Senator A wants later. This is - ANSWER logrolling
11.unlawful misdirection of government resources that occurs when
government officials abuse their power for personal gain - ANSWER
corruption
12.an externality is - ANSWER a form of market failure
a benefit that is bestowed on a free rider
a cost imposed on a third party
all of these
13.a quasi-public good could be ___ but has a large ___ that the government
sponsors it to avoid market failure - ANSWER excludable; positive
externality
14.GDP using the expenditure method includes - ANSWER net investment
depreciation
gross investment
all of these
,15.an intermediate good is - ANSWER consumed in the production of the final
good
16.the total intermediate output is - ANSWER gross output
17.A salesperson earns a $250 commission on the $12,000 sale. How much of
this transaction counts towards GDP? - ANSWER $250
18.GDP measures - ANSWER output
19.Can the economy deviate from potential GDP in the short run? - ANSWER
Actual GDP will be less than potentially if there's a lot of unused capacity
and resources in the economy. Actual GDP will be greater than potential of
resources are being over utilized
20.U.S average growth rate is between - ANSWER 2% and 3% per year
21.business cycle - ANSWER Consists of an expansion phase and a
contraction phase. Expansion phase begins at a trough and ends at a peak,
and contraction phase begins at a peak and ends at a trough. Trough down
peak up
22.Economic expansion - ANSWER Occurs when GDP is increasing
23.Economic contraction - ANSWER occurs when GDP is decreasing
24.Recession - ANSWER Two consecutive quarters of negative GDP growth
, 25.Recession of 2007-2009 - ANSWER Lasted 19 months and was the longest
recession since the Great Depression
26.Economist are interested in what about recessions - ANSWER Reducing
frequency and severity of recessions bcs they are often coupled w rising
unemployment, lower gov tax revenues, And underutilization of productive
resources
27.Inflation rate - ANSWER Percentage change in the price level from year to
year
28.Why is inflation rate important? - ANSWER Measures the change in the
cost of living from year to year
29.What does the government prefer with inflation rates? - ANSWER Small
amount of inflation to negative inflation or deflation bcs the costs of
deflation's are so high
30.Unemployment rate - ANSWER Reflects the percentage change of the labor
force that is unemployed
31.Economists expect the natural rate of unemployment to... - ANSWER Fall
slightly in the coming years
32.Why isn't the unemployment rate not perfect? - ANSWER Employment rate
doesn't count discouraged works nor distinguish between full time and part
time, also fails to account for underemployed workers
Study Questions with Correct
Answers
1. A positive externality can be cured by - ANSWER Private bargaining and
Subsidy to buyers
2. Which of the following are market failures? - ANSWER Producing the
maximum amount of a good
Consuming the maximum amount of a good
3. the basic cost of unemployment is - ANSWER foregone output
4. the dollar value of the economic activity taking place at every stage of
production and distribution is - ANSWER Gross output
5. A net decrease in inventories ___ GDP - ANSWER subtracts from GDP
6. Potential GDP (tread GDP) - ANSWER Describes the long run productive
capacity of the US economy. This is the GDP that would result if resources
were fully utilized
7. A person who works at a water park is let go after Labor Day weekend. This
person is ____ unemployed. - ANSWER frictionally
,8. the pool of frictionally unemployed people is ___ and membership in the
pool is ___ - ANSWER relatively constant; short-lived
9. If citizen H gets a $2,000 benefit while being taxed $1,900, the most citizen
H is willing to pay for a vote would be - ANSWER $100
10.Senator A votes for Senator B's project in return for Senator B voting for
something Senator A wants later. This is - ANSWER logrolling
11.unlawful misdirection of government resources that occurs when
government officials abuse their power for personal gain - ANSWER
corruption
12.an externality is - ANSWER a form of market failure
a benefit that is bestowed on a free rider
a cost imposed on a third party
all of these
13.a quasi-public good could be ___ but has a large ___ that the government
sponsors it to avoid market failure - ANSWER excludable; positive
externality
14.GDP using the expenditure method includes - ANSWER net investment
depreciation
gross investment
all of these
,15.an intermediate good is - ANSWER consumed in the production of the final
good
16.the total intermediate output is - ANSWER gross output
17.A salesperson earns a $250 commission on the $12,000 sale. How much of
this transaction counts towards GDP? - ANSWER $250
18.GDP measures - ANSWER output
19.Can the economy deviate from potential GDP in the short run? - ANSWER
Actual GDP will be less than potentially if there's a lot of unused capacity
and resources in the economy. Actual GDP will be greater than potential of
resources are being over utilized
20.U.S average growth rate is between - ANSWER 2% and 3% per year
21.business cycle - ANSWER Consists of an expansion phase and a
contraction phase. Expansion phase begins at a trough and ends at a peak,
and contraction phase begins at a peak and ends at a trough. Trough down
peak up
22.Economic expansion - ANSWER Occurs when GDP is increasing
23.Economic contraction - ANSWER occurs when GDP is decreasing
24.Recession - ANSWER Two consecutive quarters of negative GDP growth
, 25.Recession of 2007-2009 - ANSWER Lasted 19 months and was the longest
recession since the Great Depression
26.Economist are interested in what about recessions - ANSWER Reducing
frequency and severity of recessions bcs they are often coupled w rising
unemployment, lower gov tax revenues, And underutilization of productive
resources
27.Inflation rate - ANSWER Percentage change in the price level from year to
year
28.Why is inflation rate important? - ANSWER Measures the change in the
cost of living from year to year
29.What does the government prefer with inflation rates? - ANSWER Small
amount of inflation to negative inflation or deflation bcs the costs of
deflation's are so high
30.Unemployment rate - ANSWER Reflects the percentage change of the labor
force that is unemployed
31.Economists expect the natural rate of unemployment to... - ANSWER Fall
slightly in the coming years
32.Why isn't the unemployment rate not perfect? - ANSWER Employment rate
doesn't count discouraged works nor distinguish between full time and part
time, also fails to account for underemployed workers
