Transcript Monthly consumer price index

Economics
Final Review
1. Why can’t small convenience stores compete with large
stores like Wal-Mart?
1. Why can’t small convenience stores compete with large
stores like Wal-Mart?
Because of economies of scale
2. When a local burger joint tries to compete with national
burger chains, what type of competition are they engaging
in?
2. When a local burger joint tries to compete with national
burger chains, what type of competition are they engaging
in?
Monopolistic competition
3. When you buy groceries, what type of index could you
be helping us to calculate?
3. When you buy groceries, what type of index could you
be helping us to calculate?
The Consumer Price Index (CPI)
4. If your city has no growth in its GMP over the last six
months, it is said to be in what?
4. If your city has no growth in its GMP over the last six
months, it is said to be in what?
Your city is in recession
5. During which phase of a business cycle would you more
likely be laid off from your job?
5. During which phase of a business cycle would you more
likely be laid off from your job?
During contraction
6. When you use something other than currency to trade
for goods and services, that something other is said to be
what?
6. When you use something other than currency to trade
for goods and services, that something other is said to be
what?
That something other is called a “medium of exchange”
7. Full employment is considered to be what percent of the
work force?
7. Full employment is considered to be what percent of the
work force?
Full employment has roughly 96% of the workforce
employed
8. Be able to describe a price spiral.
8. Be able to describe a price spiral.
A price spiral is when your wages increase, then the price
of your product increases, then when the the price of your
product increases, consumer prices increase, then you’ll be
back in front of you boss to ask for another raise……
9. When you choose to do one activity over another, the
loss of being able to do the second activity is called what?
9. When you choose to do one activity over another, the
loss of being able to do the second activity is called what?
Not being able to do one activity because you’ve chosen to
do another is called “opportunity cost”
10. What type of system did the Soviet Union operate
under?
10. What type of system did the Soviet Union operate
under?
The Soviet Union used a system of authoritarian socialism
11. What causes a Production Possibilities Curve to expand
in the short run?
11. What causes a Production Possibilities Curve to expand
in the short run?
Improving manufacturing technology and adding
additional resources can expand the curve
12. How do you determine unemployment rate?
12. How do you determine unemployment rate?
To determine the unemployment rate, divide the total
number of members of the work force by the total number
of unemployed workers.
200,000 total workers divided by 2000 unemployed citizens
200,000 / 5000 = 40 = 4%
13. What is the employment status of a stay-at-home
mom?
13. What is the employment status of a stay-at-home
mom?
She is not considered to be in the workforce
14. When the economy expands and production increases,
what is likely to happen to stocks?
14. When the economy expands and production increases,
what is likely to happen to stocks?
Stocks will likely increase in value
15. What would an owner of several different companies,
in several different industries, most likely want to see from
the government?
15. What would an owner of several different companies,
in several different industries, most likely want to see from
the government?
The owner would probably like to see less government
regulation
16. Even if you never made any advancements in your
position at work, should you expect to receive any
increases in your income?
16. Even if you never made any advancements in your
position at work, should you expect to receive any
increases in your income?
Yes, you should expect minimal raises due to cost of living
increases in pay
17. Why would a huge subway system or light rail system
operate as a natural monopoly?
17. Why would a huge subway system or light rail system
operate as a natural monopoly?
Because enormous infrastructure costs make competition
impractical
18. When a municipality sets a minimum wage, outside the
federal minimum wage, it is doing what?
18. When a municipality sets a minimum wage, outside the
federal minimum wage, it is doing what?
The municipality is setting a wage price floor
19. If a unique factory is destroyed and millions of dollars
in product and equipment are lost, what will happen to the
price for those products?
19. If a unique factory is destroyed and millions of dollars
in product and equipment are lost, what will happen to the
price for those products?
The price of that product will increase due to reduced
supply
20. When a government provides healthcare services to all
of its citizens, how would you say this government is
acting?
20. When a government provides healthcare services to all
of its citizens, how would you say this government is
acting?
When a government provides healthcare services to all of
its citizens, it is acting in a socialistic manner
21. When a business is prevented by the municipality from
charging more for a product, what is the municipality
doing?
21. When a business is prevented by the municipality from
charging more for a product, what is the municipality
doing?
The municipality is setting a price ceiling
22. What are variable costs?
22. What are variable costs?
Variable costs are costs of production that can vary month
to month
23. If an item is extremely necessary, its elasticity is said to
be what?
23. If an item is extremely necessary, its elasticity is said to
be what?
It is inelastic
24. What happens to the Lorenz Curve when wealthy
citizens gain more wealth and working-class citizens
don’t?
24. What happens to the Lorenz Curve when wealthy
citizens gain more wealth and working-class citizens
don’t?
The Lorenz Curve will shift to the right
25. Why are products made in China likely to be less
expensive than products made in the U.S.A.?
25. Why are products made in China likely to be less
expensive than products made in the U.S.A.?
The cost of labor is typically less in China
26. If a manufacturer finds it difficult to sell its product
outside if its normal distribution area, what can you say
about that manufacturer?
26. If a manufacturer finds it difficult to sell its product
outside if its normal distribution area, what can you say
about that manufacturer?
That industry is an oligopoly
27. Are Federal Income Taxes paid by citizens used in
computing the U.S. Gross Domestic Product (GDP)?
27. Are Federal Income Taxes paid by citizens used in
computing the U.S. Gross Domestic Product (GDP)?
No, they’re not used in the computation of GDP
28. What type of person believes that all people should
share in the prosperity of the nation, and that paying
higher taxes for public goods is the right move?
28. What type of person believes that all people should
share in the prosperity of the nation, and that paying
higher taxes for public goods is the right move?
That person would be democratic socialist
29. What type of insurance claim would you file in the
event of the death of your spouse?
29. What type of insurance claim would you file in the
event of the death of your spouse?
You would file a life insurance claim
30. You need to be able to read a Supply and Demand
chart.
31. What would cause a shift to the right in a demand
curve ?
31. What would cause a shift to the right in a demand
curve ?
Sales of a limited edition product or other products where
the demand is high can cause a shift to the right
32. What happens to the market clearing price of a
product if delivery charges increase?
32. What happens to the market clearing price of a
product if delivery charges increase?
The price for that product will likely increase
33. When prices go up, and consumers are willing to
purchase less of a product, what is being illustrated?
33. When prices go up, and consumers are willing to
purchase less of a product, what is being illustrated?
The law of demand is being illustrated
34. You need to be able to interpret a Production
Possibilities Curve.
35. Most economies in the real world can be described as
what?
35. Most economies in the real world can be described as
what?
Most economies in the world are mixed economies
36. Why would you possibly have difficulties in refinancing
your home?
36. Why would you possibly have difficulties in refinancing
your home?
When the housing market is in a state of decline, you could
have difficulties refinancing
37. Describe laissez-faire economics.
37. Describe laissez-faire economics.
Laissez-faire economics wants little to no government
regulation, restriction or interference
38. What type of tax structure has millionaires paying
more in taxes than the working-class?
38. What type of tax structure has millionaires paying
more in taxes than the working-class?
This describes a progressive tax system
39. When you go to the hardware store to purchase
lumber, and the sales associate asks you if you need a
hammer and nails, what are those additional products
considered?
39. When you go to the hardware store to purchase
lumber, and the sales associate asks you if you need a
hammer and nails, what are those additional products
considered?
Those additional products are complementary goods
40. If you win the lottery and you have the option of taking
all of the cash now or taking the cash over 20 equal annual
payments, what is the best choice economically?
40. If you win the lottery and you have the option of taking
all of the cash now or taking the cash over 20 equal annual
payments, what is the best choice economically?
It would be best to collect all of your money asap because
inflation would cause your future payments to be worth
less
41. As you sit in front of the television, eating a bag of
Doritos, you become more full and the Doritos become less
and less satisfying. What does this illustrate?
41. As you sit in front of the television, eating a bag of
Doritos, you become more full and the Doritos become less
and less satisfying. What does this illustrate?
This illustrates the law of diminishing marginal utility
42. A lower interest rate at the bank will likely have what
type of effect on the economy?
42. A lower interest rate at the bank will likely have what
type of effect on the economy?
Decrease in unemployment and increase in inflation
43. How do you determine the price of a product in terms
of today’s money using the consumer price index (CPI)?
43. How do you determine the price of a product in terms
of today’s money using the consumer price index (CPI)?
Base year price x CPI = price in today’s money
.75 x 200 = 150 (price in today’s dollars is 1.50)
44. What would make it easier for a local bank to make
loans to its customers?
44. What would make it easier for a local bank to make
loans to its customers?
A lower interest rate from the Federal Reserve would
make it easier
45. What type of home mortgage would a person with
terrible credit be likely to qualify for?
45. What type of home mortgage would a person with
terrible credit be likely to qualify for?
That person would likely be eligible for a subprime
mortgage
46. What type of person would most likely dislike
inflation?
46. What type of person would most likely dislike
inflation?
Wealthy people generally don’t like inflation
47. When a community is more efficient because of its
many businesses, it is said to be illustrating what concept?
47. When a community is more efficient because of its
many businesses, it is said to be illustrating what concept?
We’re looking at economic interdependence
48. What are typical deductions from a paycheck?
48. What are typical deductions from a paycheck?
Federal & state income tax, payroll taxes (FICA) and
insurance premiums
49. What are typical deductions from your income tax
return?
49. What are typical deductions from your income tax
return?
Mortgage interest, charitable donations, retirement
contributions
50. What is the typical overdraft charge when you write a
check or use the ATM and you have no money in your
account?
50. What is the typical overdraft charge when you write a
check or use the ATM and you have no money in your
account?
Generally $25.00 – $40.00
51. What are the typical programs for seniors in our
society?
51. What are the typical programs for seniors in our
society?
Medicare, social security, veterans health care, etc
52. When a municipality decides to lower taxes and invest
more in its infrastructure, what is the city adjusting?
52. When a municipality decides to lower taxes and invest
more in its infrastructure, what is the city adjusting?
They are adjusting their fiscal policy
53. Why shouldn’t you withdraw money from your 401(k)
early?
53. Why shouldn’t you withdraw money from your 401(k)
early?
Withdrawing money from your 401(k) can cause you to
incur huge penalties
54. What are possible ways to pay off your home mortgage
sooner?
54. What are possible ways to pay off your home mortgage
sooner?
Lower interest rate, paying more than the minimum
monthly, find lower interest rates and apply the savings to
the principal, etc.