ECON 312 Final Exam Solution
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1. (TCO 1) Opportunity cost is best defined as :
2. (TCO1) Which is not a factor of production?
3. (TCO1) A point outside the production possibilities curve is :
4. (TCO1) A basic characteristic of a command system is that :
5. (TCO 2) Which is consistent with the law of demand?
6. (TCO 2) A decrease in supply and a decrease in demand will :
7. (TCO 2) You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than one. To increase total revenues, you should:
8. (TCO 2) The price elasticity of demand increases with the length of the period considered because :
9. (TCO 2) A profit-maximizing firm in the short run will expand output
10. (TCO 2) Which case below best represents a case of price discrimination?
11. (TCO 3) A major reason that firms form a cartel is to:
12. (TCO 3) The main difference between the short run and the long run is that
13. (TCO 4) A recession is a decline in
14. (TCO 4) The unemployed are those people who
15. (TCO 4) GDP is the market value of
16. (TCO 4) Nominal GDP differs from real GDP because
17. (TCO 6) When the federal government uses taxation and spending actions to stimulate the economy it is conducting
18. (TCO 6) Refer to the graph. What combination would most likely cause a shift from AD1 to AD3?
19. (TCO 6) The American Recovery and Reinvestment Act of 2009 included mostly
20. (TCO 6) The lag between the time the need for fiscal action is recognized and the time action is taken is referred to as the
21. (TCO 5) A decrease in government spending will cause a(n)
22. (TCO 5) The long-run aggregate supply curve is
23. (TCO 5) Which would most likely increase aggregate supply?
24. (TCO 5) Deflation refers to a situation where
25. (TCO 6) Dissaving occurs when
26. (TCO 7) The M1 money supply is composed of
27. (TCO 7) The basic requirement of money is that it be
28. (TCO 7) The Federal Reserve System of the U.S. is the country’s
29. (TCO 7) Which of the following is the most important function of the Federal Reserve System?
30. (TCO 7) Money is “created” when
31. (TCO 7) During the financial crisis of 2007-2008, the FDIC increased deposit insurance coverage from
32. (TCO 7) The purchase and sale of government securities by the Fed is called
33. (TCO 7) The Federal Reserve could reduce the money supply by
34. (TCO 8) Which country is the United States’ largest trading partner in terms of volume of trade?
35. (TCO 8) The principal concept behind comparative advantage is that a nation should
36. (TCO 8) A tariff is a
37. (TCO 8) Tariffs and quotas are costly to consumers because
38. (TCO 8) Tariffs and import quotas would benefit the following groups, except
39. (TCO 8) Which organization meets regularly to establish rules and settle disputes related to international trade?
40. (TCO 9) U.S. businesses are demanders of foreign currencies because they need them to
41. (TCO 9) In the balance of payments statement, a current account surplus will be matched by a
42. (TCO 9) A trade deficit means a net
43. (TCO 9) Foreign exchange rates refer to the
44. (TCO 9) When the exchange rate between pounds and dollars moves from $2 = 1 pound to $1 = 1 pound, we say that the dollar has :
45. (TCO 9) The monetary system for conducting international trade is usually described as a system of :
46. (TCO 8) a) Explain four problems with the argument that trade protection is needed to protect American jobs. b) Describe the economic reasons why businesses use off shoring.
47. (TCO 6) a) Identify the four major tools of monetary policy. b) How can monetary policy address the problem of inflation?