Views
11 months ago

Holt 7525-9 S15_IT

Cross elasticity of

Cross elasticity of demand – measures the responsiveness of demand for one good to a change in price for another good. Crowding out – occurs when increases in government spending lead to decreases in private spending. Currency – consists of the coins and paper money issued by the federal government. Cyclical unemployment – due to downturns in the business cycle. Deflation – a decrease in the price level. Demand – the willingness and ability of buyers to buy different quantities of a good at different prices. Determinants of demand – the factors that change demand (shift the demand curve). Determinants of factor demand – cause the marginal revenue product of a factor to increase or decrease. Determinants of labor supply – factors that cause the labor supply curve to shift. Determinants of price elasticity of demand – the factors that determine whether the demand for a good is elastic or inelastic. Determinant of supply – the factor that changes supply (shifts the supply curve). Developed country – has a relatively high per capita Real GDP. Diamond-water paradox – the observation that essential goods are often lower priced than non-essential goods. Discount rate – the interest rate the Fed charges banks that borrow reserves from it. Disposable income – household income after taxes. Dominant strategy – a strategy that always yields the best result regardless of the strategies of the other players. Dumping – selling exports at a price below the price charged in the home market. Earmark – a provision in congressional legislation that allocates a specified amount of money for a specific project, program or organization Economic efficiency rule – produce the quantity of output where marginal social benefit equals marginal social cost. Economic growth – an increase in the productive capacity of an economy. Economic profit – the difference between total revenue and total opportunity costs, both explicit and implicit. Economic rent – payment to a factor in excess of opportunity costs. Economic system – the way in which a society answers economic questions. Economics – the study of how individuals and societies use their limited resources to try to satisfy their unlimited wants. Economies of scale – occur when a firm’s average total cost decreases as the scale of its operation increases. Elastic demand – price elasticity of demand is greater than one. Elasticity – a measure of the responsiveness of one variable to changes in another variable. Elasticity of demand for labor – measures the responsiveness of employers to a change in the wage rate. Employed – those with paying jobs. Employment discrimination – occurs when employers make hiring, promotion, and pay decisions based on factors unrelated to worker productivity. Entrepreneurship – the special skill involved in organizing labor, land, and capital for production. Equilibrium price – the price where quantity demanded equals quantity supplied. Excess burden – the amount that the burden imposed by a tax exceeds the funding provided by the tax. Excess reserves – the excess of reserves over required reserves. Exchange rate – the value of one nation’s currency in terms of another nation’s currency. Exchange rate effect – when the price level decreases, interest rates will decrease, causing depreciation in the exchange rate. Excludable good – nonpayers can easily be excluded from consuming the good. Exclusive dealing agreement – a producer refuses to sell to a retailer unless the retailer agrees to deal only in the producer’s product. Expansion – the phase of the business cycle when Real GDP is increasing. Expansionary fiscal policy – an increase in government expenditures or a decrease in taxation. Expansionary monetary policy – an increase in the money supply. Exports – total foreign purchases of domestic goods. Externality – a benefit or a cost of an activity that affects third parties. Fallacy of composition – the idea that what is true for one must be true for the group. Fatalism – the belief that the course of a person’s life is determined by fate. Federal funds rate – the interest rate one bank charges another bank to borrow reserves. FOR REVIEW ONLY - NOT FOR DISTRIBUTION Glossary - 2

Fiat money – money by government decree or fiat. Financial intermediation – the process by which banks make depositors’ savings available to borrowers. Firm – an entity that employs resources to produce goods and services. Fiscal policy – changes in government expenditures and taxation to achieve macroeconomic goals. Fixed costs – costs that do not vary with output. Free market – a market in which price is free to adjust up or down in response to demand and supply. Frictional unemployment – due to the time required to match workers with jobs. Game theory – a method for analyzing strategic behavior. Gini coefficient - a measure of income inequality based on the Lorenz curve. Government failure – occurs when government action results in a less efficient allocation of resources. Graphs – illustrate the relationship between two variables. Gross domestic product (GDP) – the market value of all final goods and services produced annually. High dependency ratio – a large percentage of the population consists of children and the elderly. Horizontal merger – a merger of firms competing in the same product market. Human capital – developed ability that increases a person’s productivity. Imports – total domestic purchases of foreign goods. Incentive – changes the benefit or cost associated with an action. Income elasticity of demand – measures the responsiveness of demand to a change in income. Indifference curve – a curve showing different combinations of two goods that provide equal total utility to a consumer. Industrial policy – government aid to those industries that have the greatest potential for future growth. Industrial union – a union made up of workers in the same industry. Inelastic demand – price elasticity of demand is less than one. Infant mortality rate – the number of infants who die before reaching one year of age out of every 1,000 live births. Inferior goods – goods for which income and demand are inversely related. Inflation – an increase in the price level. Inflationary gap – when Real GDP is greater than Natural Real GDP. Interest – the payment for the use of loanable funds. Interest rate effect – when the price level decreases, the demand for money will decrease, causing interest rates to decrease. Intermediate good – a good that has not yet reached its final user, but rather is an input in the production of another good or has been purchased for resale. Inverse relationship – as the value of one variable increases, the value of the other variable decreases. Investment – the acquisition of new physical capital. Keynesian monetary transmission mechanism – the series of steps through which changes in the money supply affect Real GDP, according to Keynesian theory. Labor – the physical and mental efforts that people contribute to production. Labor force – the sum of the number of people employed plus the number unemployed. Labor union – an organization of workers that represents all the eligible workers in negotiating with management over wages and other issues. Laffer curve – indicates that lowering tax rates might actually increase tax revenues. Laissez-faire – the policy that the government should not interfere with the economy. Land – the naturally occurring resources. Law of comparative advantage – trade between nations is beneficial to both if there is a difference in opportunity costs. Law of demand – the price and the quantity demanded of a good are inversely related. Law of diminishing marginal returns – as larger amounts of a variable input are combined with fixed inputs, eventually the marginal physical product of the variable input declines. Law of diminishing marginal utility – the marginal utility from consuming additional units of a good eventually declines. Law of increasing opportunity cost – as production of a good increases, the opportunity cost of producing that good increases. Legal barriers to entry – barriers to entry created by government action. FOR REVIEW ONLY - NOT FOR DISTRIBUTION Glossary - 3

  • Page 1 and 2:

    PRINCIPLES OF ECONOMICS JEFF HOLT S

  • Page 3 and 4:

    Principles of Economics, 6th Editio

  • Page 5 and 6:

    16. Study Guide for Chapter 7 17. C

  • Page 7 and 8:

    11. Appendix: Book Review - “The

  • Page 9 and 10:

    20. Appendix: The NCAA Cartel 21. S

  • Page 11 and 12:

    Introduction: A Brief History of U.

  • Page 13 and 14:

    In the twentieth century, per capit

  • Page 15 and 16:

    Appendix: The 35 Largest National E

  • Page 17 and 18:

    Multiple Choice: ___ 1. The Jamesto

  • Page 19 and 20:

    2. Describe the economic cost of th

  • Page 21 and 22:

    Chapter 1 Scarcity and Choices The

  • Page 23 and 24:

    Example 5B: At the end of 1982, the

  • Page 25 and 26:

    Example 11: When Cindy quits her jo

  • Page 27 and 28:

    consequences may result in failure

  • Page 29 and 30:

    An upward sloping curve (as in Exam

  • Page 31 and 32:

    In making decisions, humans tend to

  • Page 33 and 34:

    5. ______________________ _________

  • Page 35 and 36:

    ___ 13. If the value of one variabl

  • Page 37 and 38:

    Y Point X Y A 0 1 B 3 3 C 6 5 D 9 7

  • Page 39 and 40:

    Chapter 2 Trade and Economic System

  • Page 41 and 42:

    Example 4B: The following quantitie

  • Page 43 and 44:

    1. An increase in the quantity of r

  • Page 45 and 46:

    3. For whom to produce? This is det

  • Page 47 and 48:

    The graph below illustrates the shi

  • Page 49 and 50:

    The two primary economic systems ar

  • Page 51 and 52:

    ___ 12. The capitalist vision sees

  • Page 53 and 54:

    ___ 25. According to the book “Ca

  • Page 55 and 56:

    Chapter 3 Demand, Supply, and Equil

  • Page 57 and 58:

    . For inferior goods, income and de

  • Page 59 and 60:

    The same information can be placed

  • Page 61 and 62:

    Not only does a free market elimina

  • Page 63 and 64:

    $7 - 6 - 5 - S 3 S1 S 2 Price 4 - 3

  • Page 65 and 66:

    Example 17: The graph below illustr

  • Page 67 and 68:

    Questions for Chapter 3 Fill-in-the

  • Page 69 and 70:

    ___ 12. Assuming a market originall

  • Page 71 and 72:

    $8 - 7 - 6 - 5 - Price 4 - 3 - 2 -

  • Page 73 and 74:

    Chapter 4 Inflation and Unemploymen

  • Page 75 and 76:

    Computing the Rate of Inflation The

  • Page 77 and 78:

    Full Employment Though unemployment

  • Page 79 and 80:

    3. Cyclical unemployment - due to d

  • Page 81 and 82:

    During the Great Depression, the ec

  • Page 83 and 84:

    Appendix: Think Like an Economist -

  • Page 85 and 86:

    Answer questions 8. and 9. based on

  • Page 87 and 88:

    ___ 25. The extension of unemployme

  • Page 89 and 90:

    Chapter 5 Measuring Total Output: G

  • Page 91 and 92:

    5. Leisure. Leisure time is by defi

  • Page 93 and 94:

    The U.S. is a high per capita GDP c

  • Page 95 and 96:

    Example 17: In “An International

  • Page 97 and 98:

    The simple circular flow diagram be

  • Page 99 and 100:

    ___ 3. Which of the following would

  • Page 101 and 102:

    2. Explain what nonproduction trans

  • Page 103 and 104:

    Chapter 6 The Aggregate Market The

  • Page 105 and 106:

    Example 2C: Assume the same facts a

  • Page 107 and 108:

    Example 5B: The price of crude oil

  • Page 109 and 110:

    Price Level Real GDP SRAS AD 2 AD 1

  • Page 111 and 112:

    Appendix: Why the Aggregate Demand

  • Page 113 and 114:

    ___ 3. DEF Company can invest in ne

  • Page 115 and 116:

    2. List and explain the two factors

  • Page 117 and 118:

    Chapter 7 Classical Economic Theory

  • Page 119 and 120:

    Notice that the investment demand c

  • Page 121 and 122:

    Long-Run Equilibrium If Real GDP is

  • Page 123 and 124:

    Example 6B: When the economy is in

  • Page 125 and 126:

    Laissez-faire If the economy is sel

  • Page 127 and 128:

    ___ 5. According to Say’s Law: a.

  • Page 129 and 130:

    3. On the graph below, draw an aggr

  • Page 131 and 132:

    Chapter 8 Keynesian Economic Theory

  • Page 133 and 134:

    Example 2B: The graph below illustr

  • Page 135 and 136:

    Example 5: Assume that the table be

  • Page 137 and 138:

    Notice on the graph on the previous

  • Page 139 and 140:

    According to Keynesian theory, a ch

  • Page 141 and 142:

    “The General Theory” also inclu

  • Page 143 and 144:

    ___ 8. If the consumption function

  • Page 145 and 146:

    3. If the MPC is .667, and investme

  • Page 147 and 148:

    Chapter 9 Fiscal Policy The basic e

  • Page 149 and 150:

    Keynesian Fiscal Policy Theory and

  • Page 151 and 152:

    Example 5A: The federal government

  • Page 153 and 154:

    The Laffer Curve What will happen t

  • Page 155 and 156:

    Appendix: The Importance of Incenti

  • Page 157 and 158:

    ___ 4. A decrease in government exp

  • Page 159 and 160:

    2. Explain what automatic stabilize

  • Page 161 and 162:

    Chapter 10 Money, Money Creation, a

  • Page 163 and 164:

    Example 4B: The castaways on Gillig

  • Page 165 and 166:

    Looking at the balance sheet below,

  • Page 167 and 168:

    Demand-side One-shot Inflation Exam

  • Page 169 and 170:

    4. Inflation increases uncertainty

  • Page 171 and 172:

    life; it came into existence not by

  • Page 173 and 174:

    calculated by using the potential d

  • Page 175 and 176:

    ___ 12. If the required-reserve rat

  • Page 177 and 178:

    4. Referring to the balance sheet f

  • Page 179 and 180:

    Chapter 11 The Federal Reserve Syst

  • Page 181 and 182:

    5. After Bank X sells the $300,000

  • Page 183 and 184:

    Low Mortgage Interest Rates Mortgag

  • Page 185 and 186:

    Relaxed Standards for Mortgage Loan

  • Page 187 and 188:

    The Bursting of the Housing Bubble

  • Page 189 and 190:

    On February 17, 2009, the federal g

  • Page 191 and 192:

    Fed policies caused short-term inte

  • Page 193 and 194:

    ___ 10. The Fed’s most important

  • Page 195 and 196:

    ___ 25. In response to the recessio

  • Page 197 and 198:

    Chapter 12 Monetary Policy The basi

  • Page 199 and 200:

    2. A change in aggregate demand (AD

  • Page 201 and 202:

    Monetarist Transmission Mechanism C

  • Page 203 and 204:

    3. Borrowers do not have to seek ou

  • Page 205 and 206:

    Appendix: Book Review - “The Age

  • Page 207 and 208:

    Questions for Chapter 12 Fill-in-th

  • Page 209 and 210:

    ___ 16. The primary source of incom

  • Page 211 and 212:

    7. According to Alan Greenspan, wha

  • Page 213 and 214:

    Chapter 13 Taxes, Deficits, and the

  • Page 215 and 216:

    Example 5: In 2015, Taxpayer A had

  • Page 217 and 218:

    of $5 and a quantity of 10 units. T

  • Page 219 and 220:

    The complexity of the tax law also

  • Page 221 and 222:

    the current government spending and

  • Page 223 and 224:

    cut of 1964. The top rate was lower

  • Page 225 and 226:

    ___ 6. Federal excise taxes: a. are

  • Page 227 and 228:

    3. How would eliminating the loopho

  • Page 229 and 230:

    Chapter 14 Economic Growth The basi

  • Page 231 and 232:

    2. Labor. Labor can contribute to e

  • Page 233 and 234:

    estricting international trade (e.g

  • Page 235 and 236:

    An improvement in technology (e.g.

  • Page 237 and 238:

    The table below shows the economic

  • Page 239 and 240:

    will increase both Real GDP and per

  • Page 241 and 242:

    ___ 8. Which of the following is co

  • Page 243 and 244:

    ___ 26. The opinion that economic g

  • Page 245 and 246:

    Chapter 15 Less Developed Countries

  • Page 247 and 248:

    Example 8: Countries A, B, C, and D

  • Page 249 and 250:

    Obstacles to Economic Development f

  • Page 251 and 252:

    c. Restrictions on international tr

  • Page 253 and 254:

    Appendix: Book Review - “The Powe

  • Page 255 and 256:

    Example 25: In Brazil, about half t

  • Page 257 and 258:

    Study Guide for Chapter 15 Chapter

  • Page 259 and 260:

    ___ 13. Among the counterproductive

  • Page 261 and 262:

    4. List four ways that governments

  • Page 263 and 264:

    Chapter 16 International Trade The

  • Page 265 and 266:

    Other Benefits of Free Internationa

  • Page 267 and 268:

    Example 6: The graph below illustra

  • Page 269 and 270:

    competitive disadvantage. But dumpi

  • Page 271 and 272:

    is only 25% as productive as before

  • Page 273 and 274:

    Smith was skeptical of government a

  • Page 275 and 276:

    ___ 4. For Country X, what is the o

  • Page 277 and 278:

    ___ 18. Frédéric Bastiat’s “P

  • Page 279 and 280:

    4. On the graph below: (1) What is

  • Page 281 and 282:

    Chapter 17 Elasticity We are often

  • Page 283 and 284:

    Example 4A: What is price elasticit

  • Page 285 and 286:

    Example 5A: Gertie’s Gas and Go i

  • Page 287 and 288:

    Example 10A: When the price of Good

  • Page 289 and 290:

    Example 13B: On the graph below, su

  • Page 291 and 292:

    $7 - 6 - 5 - Price 4 - 3 - 2 - 1 -

  • Page 293 and 294:

    In the long run, would the deadweig

  • Page 295 and 296:

    ___ 7. The factors that determine w

  • Page 297 and 298:

    3. a. Which price (or prices) from

  • Page 299 and 300:

    Chapter 18 Utility The basic econom

  • Page 301 and 302:

    Nonetheless, society generally assu

  • Page 303 and 304:

    Example 9: Capital City operates a

  • Page 305 and 306:

    Marginal rate of substitution - the

  • Page 307 and 308:

    The diamond-water paradox is the ob

  • Page 309 and 310:

    Complete the table below to answer

  • Page 311 and 312:

    4. The graph below shows indifferen

  • Page 313 and 314:

    Chapter 19 The Firm The basic econo

  • Page 315 and 316:

    than contributing to team productio

  • Page 317 and 318:

    1. Difficulty in raising large amou

  • Page 319 and 320:

    Corporations also use self-financin

  • Page 321 and 322:

    Example 24: A blacksmith who produc

  • Page 323 and 324:

    For financing needs, proprietorship

  • Page 325 and 326:

    ___ 13. Corporations: a. are comple

  • Page 327 and 328:

    5. List two things that the absence

  • Page 329 and 330:

    Chapter 20 Production and Costs The

  • Page 331 and 332:

    In Example 5B, Birdwell finds that

  • Page 333 and 334:

    variable cost initially decreases,

  • Page 335 and 336:

    Quantity TC MC AFC AVC ATC 0 240 X

  • Page 337 and 338:

    If the scale of operation is increa

  • Page 339 and 340:

    average total cost. Average fixed c

  • Page 341 and 342:

    ___ 11. Concerning the cost curves:

  • Page 343 and 344:

    5. Complete the following cost tabl

  • Page 345 and 346:

    Chapter 21 Perfect Competition The

  • Page 347 and 348:

    Even though a perfect competitor ca

  • Page 349 and 350:

    Example 6C: This example builds on

  • Page 351 and 352:

    At what price will there be neither

  • Page 353 and 354:

    Appendix: Perfect Competition in th

  • Page 355 and 356:

    Multiple Choice: ___ 1. A perfect c

  • Page 357 and 358:

    ___ 17. Perfect competition: a. req

  • Page 359 and 360:

    Answers for Chapter 21 Fill-in-the-

  • Page 361 and 362:

    Chapter 22 Monopoly Of the four mar

  • Page 363 and 364:

    3. Exclusive ownership of an essent

  • Page 365 and 366:

    maximizing quantity (4 units) creat

  • Page 367 and 368:

    $22 - 20 - 18 - 16 - 14 - Deadweigh

  • Page 369 and 370:

    2. Negotiating, beginning at a high

  • Page 371 and 372:

    Legal barriers are created by gover

  • Page 373 and 374:

    ___ 8. The slope of the demand curv

  • Page 375 and 376:

    Price Quantity 3. List some of the

  • Page 377 and 378:

    Chapter 23 Monopolistic Competition

  • Page 379 and 380:

    For Percomp (the perfect competitor

  • Page 381 and 382:

    Example 7A: The graph below represe

  • Page 383 and 384:

    Example 9: The Organization of the

  • Page 385 and 386:

    Example 12 illustrates the dilemma

  • Page 387 and 388:

    its current price and quantity. The

  • Page 389 and 390:

    ___ 14. Game theory: a. is a method

  • Page 391 and 392:

    Answers for Chapter 23 Fill-in-the-

  • Page 393 and 394:

    Chapter 24 Factor Markets The basic

  • Page 395 and 396:

    $ $240 - 200 - 160 - 120 - 80 - 40

  • Page 397 and 398:

    Since producers will attempt to equ

  • Page 399 and 400:

    2. Differences in nonmoney aspects

  • Page 401 and 402:

    were his strikeouts, walks, and hom

  • Page 403 and 404:

    ___ 3. To maximize profits, a produ

  • Page 405 and 406:

    ___ 19. According to the book, “M

  • Page 407 and 408:

    Multiple Choice: 1. a. 8. c. 15. d.

  • Page 409 and 410:

    Chapter 25 Labor Unions The primary

  • Page 411 and 412:

    The elasticity of demand for union

  • Page 413 and 414:

    Example 4A: Assume that the graph b

  • Page 415 and 416:

    Notice from the graph in Example 6

  • Page 417 and 418:

    Wage Factory A Quantity of Labor S

  • Page 419 and 420:

    As a cartel, a labor union faces a

  • Page 421 and 422:

    ___ 10. For a monopsony: a. there i

  • Page 423 and 424:

    3. The graph below represents a lab

  • Page 425 and 426:

    Chapter 26 Interest, Present Value,

  • Page 427 and 428:

    An increase in expected rates of re

  • Page 429 and 430:

    An asset is valuable because we exp

  • Page 431 and 432:

    Example 13B: General Ordnance prove

  • Page 433 and 434:

    Appendix: Present Value Table One f

  • Page 435 and 436:

    ___ 4. An increase in expected rate

  • Page 437 and 438:

    Problems: 1. List and explain the t

  • Page 439 and 440:

    Chapter 27 Market Failure The basic

  • Page 441 and 442:

    External Benefit If a market genera

  • Page 443 and 444:

    Example 2: To encourage the consump

  • Page 445 and 446:

    $100 - 90 - 80 - MSC 70 - $ 60 - 50

  • Page 447 and 448:

    A common good is nonexcludable. Non

  • Page 449 and 450:

    Study Guide for Chapter 27 Chapter

  • Page 451 and 452:

    ___ 5. What government policy would

  • Page 453 and 454:

    4. Based on the information on the

  • Page 455 and 456:

    Chapter 28 Public Choice and Govern

  • Page 457 and 458:

    Candidates and the Median Voter Mod

  • Page 459 and 460:

    Example 8: According to State and F

  • Page 461 and 462:

    Example 10: When Elvis Presley was

  • Page 463 and 464:

    4. Pessimistic bias. This is the te

  • Page 465 and 466:

    ___ 5. An elected official will: a.

  • Page 467 and 468:

    2. If a certain policy will yield s

  • Page 469 and 470: Chapter 29 Government Regulation of
  • Page 471 and 472: underproduction is the amount that
  • Page 473 and 474: micromanagement results in business
  • Page 475 and 476: market. They may agree with their c
  • Page 477 and 478: Questions for Chapter 29 Fill-in-th
  • Page 479 and 480: ___ 10. The public interest theory
  • Page 481 and 482: 4. List the four types of costs imp
  • Page 483 and 484: Chapter 30 Agriculture and Health C
  • Page 485 and 486: weather may cause bumper crops. Bad
  • Page 487 and 488: Security and Rural Investment Act o
  • Page 489 and 490: Example 12: From 1960 to 2013, the
  • Page 491 and 492: 1. NHI would provide universal heal
  • Page 493 and 494: d. Insurance providers are not allo
  • Page 495 and 496: Study Guide for Chapter 30 Chapter
  • Page 497 and 498: Answer questions 7. through 10. by
  • Page 499 and 500: ___ 21. If there were no individual
  • Page 501 and 502: Chapter 31 Income Distribution and
  • Page 503 and 504: Income is more equally distributed
  • Page 505 and 506: over a typical career is the accumu
  • Page 507 and 508: Ideal Income Redistribution The ide
  • Page 509 and 510: Poverty - a family whose income fal
  • Page 511 and 512: Appendix: Income Inequality around
  • Page 513 and 514: How is this story an analogy for th
  • Page 515 and 516: ___ 2. In 2013, the Lowest Income 6
  • Page 517 and 518: Problems: 1. Explain the two primar
  • Page 519: Absolute advantage - when one natio
  • Page 523 and 524: Nonrivalrous good - a good for whic
  • Page 525 and 526: Absolute advantage, 16-9 Absolute e
  • Page 527 and 528: “Company town”, 25-6 Comparativ
  • Page 529 and 530: Eli Lilly and Company, 22-1 Emergen
  • Page 531 and 532: Houston, Texas, 15-10 Human capital
  • Page 533 and 534: Market, 3-1, 3-8-9 Market basket, 4
  • Page 535 and 536: Political bias, 9-4, 12-7 Political
  • Page 537 and 538: Short run production, 20-2-3 Short-
  • Page 539 and 540: Upturns, 9-4 USDA, 27-9, 30-1-2, 30
Economic Report of the President 1994 - The American Presidency ...
Eco Today - Mar10:ET Master Page 2007 - ASKnLearn
An Employment-Targeted Economic Program for South Africa
Download Policano Presentation Notes - The Paul Merage School ...
BEACONOMICS - Los Angeles Chamber of Commerce
Failure%20of%20the%20New%20Economics
ECONOMIC REPORT OF THE PRESIDENT