ECO 415 Final Exam Guide Page 1 1. According to Figure 1.3, The Production Possibilities Curve. the point where only satellites are produced is: 2. According to Figure 1.3, at which point is it possible for the economy to produce more of both goods? 3. According to Figure 1.3, which point cannot be obtained without an increase in production technology? 4. The principle that the cost of something is what is sacrificed to get it, is known as the: 5. The opportunity cost of going to college: PAGE 2 6. A demand curve is defined as the relationship between 7. The law of demand states that quantity demanded of a product increases as 8. The law of supply states that PAGE 3 9. Figure 4.1 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $30, there is 10. Figure 4.1 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $50, there is 11. Figure 4.1 illustrates the supply and demand for blue jeans. If the actual price of blue jeans is $30, we would expect that 12. Judy demands more peanuts as her income increases. From this, we can conclude that 13. A normal good is defined as a good for which demand decreases when PAGE 4 14. Two goods are complements if 15. Suppose that consumers expect the price of a product to decrease in the future. The result is that 16. Figure 4.2 illustrates the demand for guitars. An increase in the demand for guitars is represented by the movement from 17. Figure 4.2 illustrates the demand for guitars. A decrease in the demand for guitars is represented by the movement from PAGE 5 18. An inferior good is defined as a good for which demand decreases when 19. When Mary’s income increases, she purchases less hamburger. We can conclude that hamburger is 20. If a technological advance makes it possible to produce bananas at a lower cost, 21. The value of all final goods and services produced during a given time period measures a nation’s: 22. How does real gross domestic product (GDP) differ from nominal GDP? 23. If Sam does not have a job and is actively looking for work, he is considered: 24. Which of the following should be included in U.S. GDP? PAGE 6 25. A period when economic growth is negative for at least six months is called a: 26. The period of time in which the level of output moves out of recession to a peak is called: 27. Which of the following would cause an increase in aggregate demand? 28. The relationship between the level of prices and the quantity of real GDP supplied is known as: 29. Which of the following factors influence the position of the aggregate demand curve? 30. Keynesian fiscal policy refers to: 31. Government policies designed to decrease total demand and GDP are called _________ policies. PAGE 7 32. Government policies designed to increase total demand and GDP are called _________ policies. 33. When money is accepted as payment for a good or service, it is being used as a: 34. For the perfectly competitive firm: 35. A perfectly competitive market: 36. A market in which firms sell a homogenous product and cannot influence market price is most likely: 37. Pepsi uses advertising to create the impression that Pepsi is superior to any other soft drink. Pepsi is attempting to: 38. As compared to a perfectly competitive firm, a monopolistically competitive firm will: 39. Price fixing is an arrangement whereby firms agree to: PAGE 8 40. Which of the following statements is false?
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