ECON 104 EXAM 2 Complete Study
Questions with 100% Verified
Answers | Latest Edition
1. a decrease in price and an indeterminate change in quantity are consistent
with a: - ANSWER rightward shift in supply and a leftward shift in demand
2. an effective price ceiling is best defined as a price: - ANSWER imposed by
government below equilibrium price
3. if the government imposes an excise tax on a good equal to $5 per unit and
the demand curve for this good is vertical, the supply of this good will shift -
ANSWER upward and the price will increase by $5
4. government imposed limit on how high a price can be charged - creates
shortages - ANSWER price ceiling
5. government imposed limit on how low a price can be charged - creates
surplus - ANSWER price floor
6. A tax that is levied on a specific good. Results in an increase in equilibrium
prices & reduces Eq. quantities - ANSWER excise tax
7. as long as the relative opportunity costs of producing goods differ among
countries, than there are potential trade gains - ANSWER comparative
advantage
,8. based on factors that are relatively unchangeable, such as resources &
climate - ANSWER inherent competitive advantage
9. based on factors that change easily; such as capital, technology, & types of
labor - ANSWER transferable comparative advantage
10.there will be pressure for equal factors to be prices equally, in a competitive
market - ANSWER law of one price
11.a change in the exchange rate so that one currency buys fewer units of a
foreign currency - ANSWER currency depreciation
12.change in exchange rate so one currency buys more units of foreign currency
- ANSWER currency appreciation
13.believes that business cycles are temporary glitches, and generally favor
laissez-faire, or no activist policies - ANSWER classical economics
14.business cycles reflect underlying problems that can be addressed with
activist government policies - ANSWER Keynesian economics
15.focuses on incentive for supply - ANSWER the long run
16.focuses on demand - ANSWER the short run
17.highest amount of output an economy can sustainably produce & sell using
existing production resources - ANSWER potential output
, 18.decline in real output that lasts more than 2 consecutive quarters in a year -
ANSWER recession
19.US baby boomers are beginning to retire and withdraw their savings for
retirement. What effect should we expect this to have on equilibrium price
and quantity of financial assets? - ANSWER Price falls and quantity also
falls
20.a decrease in quantity and price are consistent with a - ANSWER leftward
shift in demand keeping supply constant
21.If the gov't imposes an excise tax on gas equal to $0.25 per gallon an the
demand curve for gasoline is downward-sloping, the supply of gasoline will:
- ANSWER shift upward and the price will increase by less than $0.25 per
gallon
22.European Union subsidizes its farmers. How do these subsidies make it
difficult for farmers in developing economies to compete in the world farm
market - ANSWER the subsidies shift the supply of EU farm goods to the
right, lowering world prices of farm goods and the price developing country
farmers can receive for their produce.
23.countries can expect to gain from international trade as long as they -
ANSWER specialize according to their comparative advantage
24.No change in demand - no change in supply - ANSWER no change
25.demand shifts out - no change in supply - ANSWER price rises, quantity
rises
Questions with 100% Verified
Answers | Latest Edition
1. a decrease in price and an indeterminate change in quantity are consistent
with a: - ANSWER rightward shift in supply and a leftward shift in demand
2. an effective price ceiling is best defined as a price: - ANSWER imposed by
government below equilibrium price
3. if the government imposes an excise tax on a good equal to $5 per unit and
the demand curve for this good is vertical, the supply of this good will shift -
ANSWER upward and the price will increase by $5
4. government imposed limit on how high a price can be charged - creates
shortages - ANSWER price ceiling
5. government imposed limit on how low a price can be charged - creates
surplus - ANSWER price floor
6. A tax that is levied on a specific good. Results in an increase in equilibrium
prices & reduces Eq. quantities - ANSWER excise tax
7. as long as the relative opportunity costs of producing goods differ among
countries, than there are potential trade gains - ANSWER comparative
advantage
,8. based on factors that are relatively unchangeable, such as resources &
climate - ANSWER inherent competitive advantage
9. based on factors that change easily; such as capital, technology, & types of
labor - ANSWER transferable comparative advantage
10.there will be pressure for equal factors to be prices equally, in a competitive
market - ANSWER law of one price
11.a change in the exchange rate so that one currency buys fewer units of a
foreign currency - ANSWER currency depreciation
12.change in exchange rate so one currency buys more units of foreign currency
- ANSWER currency appreciation
13.believes that business cycles are temporary glitches, and generally favor
laissez-faire, or no activist policies - ANSWER classical economics
14.business cycles reflect underlying problems that can be addressed with
activist government policies - ANSWER Keynesian economics
15.focuses on incentive for supply - ANSWER the long run
16.focuses on demand - ANSWER the short run
17.highest amount of output an economy can sustainably produce & sell using
existing production resources - ANSWER potential output
, 18.decline in real output that lasts more than 2 consecutive quarters in a year -
ANSWER recession
19.US baby boomers are beginning to retire and withdraw their savings for
retirement. What effect should we expect this to have on equilibrium price
and quantity of financial assets? - ANSWER Price falls and quantity also
falls
20.a decrease in quantity and price are consistent with a - ANSWER leftward
shift in demand keeping supply constant
21.If the gov't imposes an excise tax on gas equal to $0.25 per gallon an the
demand curve for gasoline is downward-sloping, the supply of gasoline will:
- ANSWER shift upward and the price will increase by less than $0.25 per
gallon
22.European Union subsidizes its farmers. How do these subsidies make it
difficult for farmers in developing economies to compete in the world farm
market - ANSWER the subsidies shift the supply of EU farm goods to the
right, lowering world prices of farm goods and the price developing country
farmers can receive for their produce.
23.countries can expect to gain from international trade as long as they -
ANSWER specialize according to their comparative advantage
24.No change in demand - no change in supply - ANSWER no change
25.demand shifts out - no change in supply - ANSWER price rises, quantity
rises
