Economics Daily Ten #1
- Why are all goods and services scarce?
a. Some goods have a greater opportunity cost than
others
b. All people have unlimited wants, but limited
resources to satisfy those wants
c. Some things are needs and others are wants
d. Some people want to have more goods than others
unlimited
Explanation: scarcity is defined as ____________
wants given
limited
_____________
resources, no one can have an unlimited amount
(time, rest, vacation, stuff, etc) of any given thing.
SSEF1 a
Economics Daily Ten #2
- An individual decides to pay $8 to see a movie instead of
buying an $8 meal. What is the opportunity cost of the
movie?
a. the satisfaction missed by not eating the meal
b. the $8 paid to see the movie
c. the time spent watching the movie
d. the satisfaction received by going to the movie
highest
Explanation: Opportunity cost measures the cost of the ____________
valued alternative forgone.
SSEF1 b
Economics Daily Ten #3
• Study the graph below and use it to answer the following question.
•The probable impact of corporate downsizing is a movement from
point X to
A. point M Explanation: The PPF model shows the production possibilities between
opportunity cost
B. point N two goods. It is a visual illustration of ______________________.
C. point O
D. point P
Economics Daily Ten #4
• Study the model below and use it to answer the following question.
•The entry of women into the American labor force during World War II was one
important reason for
A. a shift from curve CD to point G
B. a shift from curve EF to curve CD
C. a movement from point Y to point Z
D. a shift from curve CD to curve EF
labor
Explanation: An increase in the factor of production of __________
would increase the
work force and ability to produce at a greater level.
Economics Daily Ten #1
- An economy where the three economic questions are based
on decisions made by consumers and businesses, with
government intervention is an example of a
_____________ economic system.
a. Market
b. Mixed
c. Traditional
d. Command
Mixed
Explanation: – ____________
economies, such as the U.S.,
Consumers and _________
Firms
rely on ______________
to answer the
three economic questions. The government plays the role of
protector, overseer and regulator of the economy.
Economics Daily Ten #2
- Fill in the blanks for each of the following:
1. QB Peyton Manning’s high salary, vs. a cashier’s low salary,
equity
represents economic _________.
2. Moving from the personal computer to handheld devices
innovation
represents an economic _________.
3. “Today, I know Chevron will have gas” represents economic
___________.
predictability
4. GM receiving a government bailout represents economic
security
____________.
5. Increasing the production of goods, services and jobs would
growth
represent economic ________.
Word Bank: innovation, predictability, growth, security, equity.
Economics Daily Ten #3
•
Which of the following is MOST important for economic growth?
a. an efficient use of resources
b. ample tax revenues
c. availability of resources
d. a large labor force
efficiency allows society to maximize resources and
Explanation: economic _____________
increase production.
•
In the American economy, the goal of economic equity is MOST
connected with
a. restoring laissez-faire capitalism
b. creating limits on corporate profits
c. subsidizing businesses that would otherwise fail
d. giving participants a fair chance to succeed
Explanation: In the U.S. economic equity refers to a ________
fair
opportunity for
obtaining jobs and being paid based on your _____________.
skills
Economics Daily Ten #4
• In a market economy, how are the basic economic questions of what,
how, and for whom to produce answered?
a. by using a nation’s social customs and traditions
b. by using a combination of traditional and command economies
c. by the individuals and firms in the nation’s marketplace
d. by the nation’s federal and/or local governments
• A market economy has an advantage over a traditional economy in that
the market economy
a. controls prices and wages
b. fixes incomes of consumers
c. limits the profits of large corporations
d. adjusts to consumer demands over time
Explanation: a market economy answers the three economic questions through the
Individuals
Firms
decisions of ___________
and _____________.
Consumer purchases indicate to the
firm what should produced.
Economics Daily Ten #5
• Study the model below and use it to answer the following question.
The flow of goods and services to consumers is illustrated by
A. 4 to 2
B. 8 to 6
C. 2 to 5
D. 6 to 1
Outer
Inner
Explain: ____________circles
represent the flow of money,___________
circles
represent the flow of inputs and outputs.
Economics Daily Ten #6
1. What is the function of an economic system?
a. to make sure all people have equal access to goods
b. to organize and distribute scarce resources
c. to give all producers the same access to consumers
d. to make sure people are paid for their labor
2. You are an entrepreneur with an innovative idea for a new business. In
which kind of economy would you have the most opportunity to try to
achieve success?
a. market economy
b. command economy
c. traditional economy
d. economy of scale
market
Explanation: – a _______________
economy would offer the greatest degree of
economic freedom.
Economics Daily Ten #7
What is the purpose of competition in a market economy?
a. to create centralized control in the marketplace of one business
b. to cause producers to attempt to put each other out of business
c. to cause buyers and sellers to be generous about spending their
money
d. to act as a motivating force behind the free market
Which describes the metaphor of the invisible hand?
a. an economy where the 3 economic questions are answered by
the government
b. an influential force where the self-interests of households and
firms determine the three economic questions.
c. an economy where tradition, ritual and custom determine the
factors of production
d. a tangible force behind a modified free enterprise
Economics Daily Ten #8
Properly label each component of the circular flow model,
indicating the two markets, two entities and what is
represented by each arrow.
Economics Daily Ten #9
1. The idea that producers make goods that consumers like and are willing
to pay for is a principle of which of the following economic systems?
a. Traditional
b. Command
c. Market
d. Socialism
2. In what kind of economy does the government own the means of
production?
a. Traditional
b. Market
c. Command
d. Mixed
Economics Daily Ten #10
• Kim works on an automobile assembly line. Kim’s job illustrates a production
process that relies on
a. autonomous work groups
b. team decision making
c. quality circles
d. division of labor
Division of labor is another term for_________________,
specialization
Explanation: – _______________
which
focuses on the efficient use of resources
• If a nation encourages entrepreneurship, then which of the following is likely
to occur?
a. very little change in overall production of goods and services
b. the development of many new products and process methods
c. fewer applications to the United States Patent Office
d. a decline in the number of new businesses started
Economics Daily Ten #4
1. Why does a free market economy need some government intervention?
a. so that the government has total control over factor resources
b. to ensure the government has the freedom to tax as necessary
c. to make sure that the government can fulfill its needs for goods and
services
d. to provide for things that the marketplace does not address (i.e. market
failures)
Explanation: (d) – most modern economies are mixed, or have some government
involvement to regulate, protect and oversee.
2. In what kind of economy does the government make all the decisions?
a. socialist
b. laissez faire
c. centrally planned, or command economy
d. free enterprise
Explanation: (c) – command economies are controlled by a dictator, or small group
of economic policy makers.
Economics Daily Ten #2
- An efficient economy is one that
a. Has very few people who do not work for a
living
b. Makes less use of all its goods and services
c. Uses the factors of production wisely and not
wastefully
d. Makes the least costly use of it resources
Explanation: (c) – efficiency is using resources wisely to
produce goods and services
Economics Daily Ten #7
1. The upper line of monetary flow, marked “1”
shows the
a. factor market
b. product market
c. supply and demand
d. production possibilities frontier
2. The lower half, marked “2” represents the
a. factor market
b. product market
c. supply and demand
d. production possibilities frontier
3. Which of the following is not flowing from
the household to the firm in the factor
market?
a. Land
b. Labor
c. Capital
d. Goods
Economics Daily Ten #7
1. The upper line of monetary flow, marked “1”
shows the
a. factor market
b. product market
c. supply and demand
d. production possibilities frontier
2. The lower half, marked “2” represents the
a. factor market
b. product market
c. supply and demand
d. production possibilities frontier
3. Which of the following is not flowing from
the household to the firm in the factor
market?
a. Land
b. Labor
c. Capital
d. Goods
Economics Daily Ten #7
1. The upper line of monetary flow, marked “1”
shows the
a. factor market
b. product market
c. supply and demand
d. production possibilities frontier
2. The lower half, marked “2” represents the
a. factor market
b. product market
c. supply and demand
d. production possibilities frontier
3. Which of the following is not flowing from
the household to the firm in the factor
market?
a. Land
b. Labor
c. Capital
d. Goods
Economics Daily Ten #7
1. The upper line of monetary flow, marked “1”
shows the
a. factor market
b. product market
c. supply and demand
d. production possibilities frontier
2. The lower half, marked “2” represents the
a. factor market
b. product market
c. supply and demand
d. production possibilities frontier
3. Which of the following is not flowing from
the household to the firm in the factor
market?
a. Land
b. Labor
c. Capital
d. Goods
Economics Daily Ten #1
Buyers and sellers willingly engage in a transaction that benefits
both parties because of which concept in economics?
a. economic equity
b. communism
c. voluntary exchange
d. property rights
Voluntary Exchange
Explanation: ____________________is
the free trade of goods and services and
the gains made from trade.
One of the strongest incentives in the market economy is to make
money, this is illustrated by the concept of
a. property rights
b. profit motive
c. voluntary exchange
d. division of labor
Profit Motive
Explanation: ___________________is
the motivating factor behind every firm.
Economics Daily Ten # 2
Someone who does not pay for a public good/service, but benefits
from it is a
a. free-loader
b. free-rider
c. free-person
d. free-bird
free-rider
Explanation: a _______________is
someone who consumes public goods, but does
not contribute to the program.
A situation in which the market on its own does not distribute
resources efficiently
a. market externality
b. market production
c. market failure
d. market deficit
market failures
Explanation: __________________
occur as a result of an inability for the market to
answer the three economic questions on its own.
Economics Daily Ten # 3
Exposure to second hand smoke would be an example of a
a. positive externality
b. negative externality
c. negative perspective
d. positive incentive
Externalities
Explanation: _________________
are a cost or benefit incurred by a party who was
not directly involved in the action causing the cost or benefit.
The primary way to improve productivity is
a. reduced work ethic
b. negative incentives
c. improved technology
d. removal of subsidies from the private sector
Explanation: _______________
plays a major role in a society’s productivity,
Technology
inputs
allowing more _______________
to be created with less _______________.
outputs
Economics Daily Ten # 11
Which of the following is a role of the government in a modified free
enterprise?
a. ensure that businesses follow certain environmental protection rules
b. ensuring that business obtain market power and determine price fixing
c. ensuring that the market is completely deregulated in order to allow
competition to flourish
d. To actively dismiss the public interest for the concerns of the firms
Explanation: (a) – government plays the role of informer, protector and regulator of
the U.S. economy
The primary way to improve productivity is
a. reduced work ethic
b. negative incentives
c. improved technology
d. removal of subsidies from the private sector
Explanation: (c) – technology plays a major role in a society’s productivity and
growth.
Economics Daily Ten #4
• Why is the demand curve downward
sloping?
a. Because of the positive relationship
between p and qd.
b. Because of the inverse relationship
between price and qd.
c. Because of the direct relationship
between price and qd.
d. Because of negative relationship
between supply and demand.
Price
Quantity
Demanded
price
inverse
Explanation: The ________________
relationship between ________
and
quantity demanded causes a downward sloping curve
____________________
P
Q
P
Q
Price
Economics Daily Ten #2
Price
P1
P2
Q1
Q2
Quantity Demanded
Quantity Demanded
• Respectively, what do the above graphs illustrate?
a. A change in quantity demanded/a change in demand
b. A change in demand/a change in demand
c. A change in quantity demanded/a change in quantity demanded
d. A change in demand/a change in quantity demanded
Explanation: A change in price causes movement along the curve, a change in the
determinants of demand cause a shift.
Economics Daily Ten #3
Test Your Understanding
Each of the following represents an analysis of the demand for the American automobile industry
1. In each of the following cases, state whether
(1) there is a movement along the demand curve for American automobiles,
(2) the demand curve for American automobiles will shift to the right,
(3) the demand curve for American automobiles will shift to the left
(3) – Shift to the left
1. The price of gasoline rises ________________________
(1) – Movement along
2. The price of American automobiles rises ________________________
(2) – Shift to the right
3. The price of Japanese automobiles rises ________________________
(3) – Shift to the left
4. Buyers' incomes fall ________________________
(2) – Shift to the right
5. Buyers find that American automobiles are of higher quality __________________
6. Mexican automobile buyers are now able to buy American automobiles _____________________
(2) – Shift to the right
(3) – Shift to the left
7. Buyers expect that the price of American automobiles will drop next year _____________________
(1) – Movement along
8. The price of American automobiles drop ____________________
Economics Daily Ten #4
Event
1. The price of designer clothing
increases.
2. The price of designer clothes
decreases.
3. The popularity of polo brand
clothing increases.
4. The cost of Polo clothing
doubles, what is the effect
on Hilfiger brand clothing?
5. Consumer’s receive a pay
raise; designer clothing is a
normal good.
6. Consumer’s expect designer
clothing to fall in price in a
week.
7. There is a decrease in the
population of an area.
Effect (Change in QD or Change in D) (Shift or Movement)
Quantity Demanded
Movement
Quantity Demanded
Movement
Demand
Shift to the right
Demand
Shift to the right
Demand
Shift to the right
Demand
Shift to the left
Demand
Shift to the left
Economics Daily Ten # 7
Complete the following chart:
Product
Elastic or Inelastic
Determinant
Gasoline (tomorrow’s prices)
Inelastic
Time Horizon
Heinz baked beans
Elastic
Availability of Substitutes
Infiniti G37
Elastic
Insulin for a diabetic
Inelastic
Necessity vs. Luxury/
Relative Importance
Necessity vs. Luxury/
Relative Importance
Calculate the following using the midpoint method.
Q2 – Q1__
(Q2 + Q1)/2
P2 – P1__
(P2 + P1)/2
50
300
________
250
= ____________
=
________
30
35
1.2 =
______
.86
Elastic
Elastic or Inelastic ___________
20
100
400
1.4
______
Economics Daily Ten # 8
Complete the following chart:
Product
Elastic or Inelastic
Determinant
Gasoline (5 years from now)
Elastic
Time Horizon
Food in general
Inelastic
Necessity vs. Luxury
Marlboro Cigarettes
Elastic
Availability of Close Substitutes
Table Salt
Inelastic
Relative Importance
Calculate the following using the midpoint method.
Q2 – Q1__
(Q2 + Q1)/2
P2 – P1__
(P2 + P1)/2
40
________
80
= ____________
=
________
5
7.5
.5
______
=
.67
Inelastic
Elastic or Inelastic ___________
.75
______
Economics Daily Ten #3
1. Which of the following is a true statement?
a. P1 to P2 represents an increase in price
and decrease in qd.
b. P1 to P2 represents a shift in the
demand curve.
c. P1 to P2 represents a positive
relationship between price and qd.
d. P1 to P2 represents a drop in price and
an increase in qd.
Price
P1
P2
Q1
Q2
Quantity Demanded
Explanation: (d) Price falls, quantity demanded increases
Economics Daily Ten #4
• Study the model below and use it to answer the following question.
Price
D1
D2
Quantity Demanded
Which situation would cause the shift of the demand curve to shift from D1 to D2?
A – The economy is experiencing a recession and people’s overall income reduces.
B – Prices drop for the item being analyzed on the graph.
C – Population in the area analyzed by the graph increases by 80%.
D – Prices increase for the item being analyzed on the graph.
Explain: List Determinants of Demand: (c) Income, Tastes, Price of Related Products,
Expectations, Number of Buyers
Economics Daily Ten # 6
Ceteris Paribus means
a. all things changing
b. all things remaining constant
c. all things constantly changing
d. all things remaining changed
Explanation: (b) – The demand curve remains fixed Ceteris Paribus (all other things
constant).
A change in the price of an item being analyzed causes (2 answers apply)
a. a shift in the demand curve
b. a change in quantity demanded
c. a change in supply
d. a change in demand
e. movement along the demand curve
Explanation: (b and e) – price (of an item in study) does not change “demand”.
Economics Daily Ten #2
1. Which of the following statements exhibit demand in
economics?
a. I love the new Infiniti G37.
b. I want to travel to Europe next year, but I’m dead
broke.
c. I want to build a deck, so I’m saving the money and
I’m going to buy it this summer.
d. I really want to buy a new pair of UGGs, I have the
money, but they are too expensive for me to buy.
Explanation: (c) Demand is the desire, willingness and ability to
consume a good or service.
Price
EconomicsPrice
Daily Ten #1
P
QS
P
QS
S1
Quantity Supplied
S2
Quantity Supplied
1. Why is the supply curve upward sloping?
2. Which of the following could cause a shift in the
supply curve?
a. Because of the positive relationship between
p and qd.
a. The government places an excise tax on the
suppliers of the product.
b. Because of the inverse relationship between
price and qd.
b. The price of the good goes up because
demand for the good increases.
c. Because of the direct relationship between
price and qs.
c. The number of sellers reduces.
d. Because of negative relationship between
d. The government provides an incentive to
supply and demand.
produce through increased subsidies.
Economics Daily Ten # 2
Complete the following chart:
Scenario
Determinant(s)
Shift
The government imposes an
excise tax on tanning beds.
Taxes/Regulation
Left
Samsung, Microsoft and Google
develop their own line of smart
phones.
Number of Sellers
Right
New home builders anticipate a
decline in demand and reduce
their inventory.
Future Expectation of Prices
Left
Government reduces their
payments to farmers.
Subsidies
Left
New machinery improves
manufacturing efficiency.
Technology
Right
Gas prices increase.
Input Costs
Left
Economics Daily Ten #3
1. Draw 4 supply curves to illustrate the likely market response for the auto
industry:
a. Technological innovations advance the production process.
b. The U.S. government removes subsidies in the auto industry.
c. Automakers expect increased willingness to purchase in a month.
d. The U.S. government increases taxation, causing several firms to drop out
of the market
Price
Price
S1
S2
S2
QS
S1
QS
Economics Daily Ten #4
• Study the model below and use it to answer the following question.
QS – QD
20 – 80 = - 60
1. What is the Pe and Qe respectively at the
equilibrium point?
a. 50, 6
b. 6, 50
c. 5, 60
d. 60, 5
2. At $3 there would be a _____ of _____
quantity.
a. Shortage, 50
b. Shortage, 60
c. Surplus, 50
d. Surplus, 60
Economics Daily Ten #5
• Study the model below and use it to answer the following question.
Suppose the government set a price ceiling at $2.
1. What would be the quantity demanded and the quantity supplied? ______________
QD = 40 QS = 20
3
2. The natural market equilibrium is $_______
3. In this case the price ceiling is ______
below the equilibrium point.
Shortage - 20
4. There would be a shortage/surplus of ____________
Economics Daily Ten #6
Using a properly labeled graph, illustrate the below current headlines
a) iPhone 4S pre-orders sell out in first 12 hours of availability
b) Analyst predicts Toyota's sales down 17%, due to past recall
c) Worst Texas Drought in 44 Years Damaging Wheat Crop, Reducing Cattle Herds
d) Finally!: Used-car prices are falling due to reduced demand
S
D
Economics Daily Ten #6
1. Which of the following would most likely be fixed costs for a firm?
a. Salaried workers (someone that is paid a monthly amount based on an annual
salary, ie. $50,000)
b. Lease on the building (paid monthly spread out over 10, 20, 30 years, etc.)
c. Hourly workers (someone that is paid by the hour, i.e. $13.00 an hour)
d. Electricity (cost to power a building, office, etc.)
Explanation: (a, b) fixed costs do not change based on production.
2. Which of the following would most likely be variable costs for a firm?
a. Salaried workers
b. Lease on the building
c. Hourly workers
d. Electricity
Explanation: (c, d) variable costs change based on production.
Economics Daily Ten #4
• Study the model below and use it to answer the following question.
Of the following, which situation would cause the shift of the supply curve from S1 to S2?
a.
b.
c.
d.
The government reduces subsidies to wheat farmers.
New fertilizers increase wheat crop yields.
Firms exit the wheat industry.
Drought reduces industry output by 25%.
Explanation: (b) Technology, prices reduced, quantity increased
Economics Daily Ten #1
Characterize the following as sole proprietor, partnership or corporation.
Corporation
a. Google, inc.
b. Cohen and Cohen Law Firm
Partnership
c. John Doe’s Island Landscaping
Sole Proprietor
Which of the following is not an advantage of a sole proprietorship?
a. Easy to start up
b. Sole receiver of profit
c. Full control of decision-making
d. Unlimited personal liability
e. Relatively few regulations
Economics Daily Ten #2
Identify the proper term for each of the following:
Scenario
Term
1. Vivendi Company purchases Universal
Studios, Activision Gaming and MP3.com
Conglomerate
2. ESPN and Disney combine into one
company
Vertical Merger
3. Sirius Satellite and XM Radio combine into
one company
Horizontal Merger
4. McDonalds in China
Multinational
5. Marshland Credit Union; owned by its
members
Cooperative (Coop)
6. A purchase of the rights to use Zaxby’s
name and product
Business Franchise
7. A business that is designed to help society,
not make money
Non-Profit
8. An organization focused on negotiating for
the laborers of a firm
Labor Union
Economics Daily Ten #3
Which of the following two are disadvantages of a partnership?
a. Easy to start up
b. Shared decision making and specialization
c. Larger pool of capital
d. Potential for conflict
e. Unlimited liability
Which of the following two are disadvantages of a corporation?
a. Limited liability
b. More potential for growth
c. Double taxation
d. Loss of control
e. Long life
Economics Daily Ten #4
1. Which of the following sets are arranged from most competitive to least competitive?
a. absolute competition, monopolistic competition, imperfect competition
b. perfect competition, oligopoly, monopolistic competition, monopoly
c. perfect competition, monopolistic competition, oligopoly, monopoly
d. oligopoly, perfect competition, monopolistic competition, monopoly
e. absolute competition, imperfect competition, monopolistic competition, monopoly
2. Describe the following as perfect competition, monopolistic competition, monopoly
or oligopolies.
a. Fast food companies
Monopolistic competition
b. Automobile industry
Oligopoly
c. Agricultural industry
Perfect competition
d. National Football League Monopoly
Economics Daily Ten #5
Identify the proper term for each of the following:
Scenario
1. The stock market
2. The clothing industry
3. Major League Baseball
Term
Perfect Competition
Monopolistic Competition
Monopoly
4. The airline industry
Oligopoly
5. Identical goods such as tomatoes
Commodity
6. The ability to control the market and
dictate prices
Market Power
7. When firms charge different customers
different prices
Price Discrimination
8. When firms work together to price-fix
Collusion
Economics Daily Ten #6
1. Price discrimination occurs when one company
a. offers the same price
b. offers one price to one individual and another price to another individual
c. offer a price set by a government price ceiling
d. offers a price set by a government price floor
2.
a.
b.
c.
d.
The level of difficulty incurred by a firm when entering a market is a
Business Roadblock
Market Wall
Barrier to Entry
Power of the Market
Economics Daily Ten #7
Which of the following would not be considered Price discrimination?
a. Kids eat free
b. Senior citizen discount at a restaurant
c. Student discount at the movies
d. 10% discount at Target
Which of the four forms of nonprice competition would reflect the following?
Physical Characteristics
a. A new shape for a bottle of coke
Service Level
b. “Be our guest” Disney motto
c. Ralph Lauren vs. Wal-mart brand clothing Advertising, Image, or Status
d. A fast food restaurant near I-95
Location
Economics Daily Ten #1
1. Classify the following components of GDP
Investment (I)
a. Dell opens a new factory in Seattle, WA. _______________________
Government (G)
b. Congress approves the purchase of a new fleet of Boeing Jets. ______________________
Consumption (C)
c. A family buys a new Honda Accord. __________________________
Net Exports (NX)
d. China imports soybean from the U.S. _________________________
2. All of the following are accurate regarding the definition of GDP EXCEPT
a. The market value
b. Of all final goods and services
c. Produced by a country’s companies, domestically and abroad
d. In a given period of time
Economics Daily Ten #2
1. Complete the following in order to classify the stages of the business cycle
Peak
Trough
2.
a.
b.
c.
d.
Two quarters of economic decline is known as a ______
Trough
Recession
Depression
Recovery
Economics Daily Ten #3
1. What would you conclude about an economy characterized by
increasing real (GDP), low unemployment?
a. This economy is in a slowdown.
b. The government needs to address the unemployment problem.
c. This economy is in the expansion phase of a business cycle.
d. This economy is in the trough phase of a business cycle.
2. What is the best measure of a country’s standard of living?
a. Real GDP
b. Nominal GDP
c. The amount of wealthy people
d. Per Capita GDP
1.
•
•
Economics Daily Ten #4
Calculate the GDP deflator using the following figures:
Real GDP 2011 ($11.9 trillion)
Nominal GDP 2011 ($14.7 trillion) using the following formula:
Nominal GDP X 100 =__14.7 = _______X
1.24
124
100 = _____
Real GDP
11.9
2. Calculate Real Per Capita GDP by using the following formula:
Real GDP 2009
Total Pop. 2009
*2009 Real GDP – $14,658 trillion
_14658_ = _$47,746_
*2009 Total Pop. – 307 million
.307
3. Determine the nominal and real GDP for each year.
Nominal GDP 2003 - 1470
Nominal GDP 2004 - 1830
Real GDP 2003 - 1470
Real GDP 2004 - 1560
Economics Daily Ten #3
Country
2011 (Trillions)
Population
USA
$14.582
307,007,000
China
$5.879
1,338,000,000
Japan
$5.498
127,558,000
Germany
$1,740,000,000,000
82,080,000
France
$1,340,000,000,000
58,800,000
UK
$1,240,000,000,000
58,970,000
Brazil
$1,040,000,000,000
169,800,000
Mexico
$694,300,000,000
98,550,000
Russia
$692,000,000,000
146,860,000
Canada
$658,000,000,000
30,680,000
Per Capita GDP
Population Rank
Per Capita GDP
Rank
Use the first table to fill in the information, including population.
1. Describe how population might affect GDP.
2. What does Per Capita GDP tell you about a country's economy and standard of
living?
4. Based on the table above, which country has the highest standard of living? The
lowest?
5. Why are the citizens of the countries with high Per Capita GDP more likely to have a
better quality of life than other countries?
Economics Daily Ten #3
Country
1998 GDP
Population
USA
$8,080,000,000,000
270,310,000
China
$4,250,000,000,000
Japan
Per Capita GDP
Population Rank
Per Capita GDP
Rank
$29, 892
2
1
1,240,000,000
$3,427
1
10
$3,080,000,000,000
125,930,000
$24,458
5
2
Germany
$1,740,000,000,000
82,080,000
$21,199
7
5
France
$1,340,000,000,000
58,800,000
$22,789
9
3
UK
$1,240,000,000,000
58,970,000
$21,028
8
6
Brazil
$1,040,000,000,000
169,800,000
$6,125
3
8
Mexico
$694,300,000,000
98,550,000
$7,045
6
7
Russia
$692,000,000,000
146,860,000
$4,712
4
9
Canada
$658,000,000,000
30,680,000
$21,447
10
4
Use the first table to fill in the information, including population.
1. Describe how population might affect GDP. In general, the larger the population, the larger the gdp.
Larger population can reduce per capita gdp.
2. What does Per Capita GDP tell you about a country's economy and standard of
living? The higher the per capita gdp, the higher the standard of living.
3. Based on the table above, which country has the highest standard of living? The
lowest? United States, China
4. Why are the citizens of the countries with high Per Capita GDP more likely to have a
Positive Externalities, people benefit from the “spillover”
better quality of life than other countries? of social benefits created by the pursuit of self-interest.
GDP Country Comparison
Country
1998 GDP
Population
USA
$8,080,000,000,000
270,310,000
China
$4,250,000,000,000
1,240,000,000
Japan
$3,080,000,000,000
125,930,000
Germany
$1,740,000,000,000
82,080,000
France
$1,340,000,000,000
58,800,000
UK
$1,240,000,000,000
58,970,000
Brazil
$1,040,000,000,000
169,800,000
Mexico
$694,300,000,000
98,550,000
Russia
$692,000,000,000
146,860,000
Canada
$658,000,000,000
30,680,000
Per Capita GDP
Population Rank
Per Capita GDP
Rank
Use the first table to fill in the information, including population.
1. Describe how population might affect GDP.
2. What does Per Capita GDP tell you about a country's economy and standard of
living?
3. Based on the table above, which country has the highest standard of living? The
lowest?
4. Why are the citizens of the countries with high Per Capita GDP more likely to have a
better quality of life than other countries?
Economics Daily Ten #1
1. Determine the unemployment rate based on the following
information:
Unemployed: 8.5 million
Labor Force: 190 million
8.5/190 = .0447 X 100 = 4.5%
2. What range of the unemployment rate would indicate
that a fully employed economy?
a. 4-6%
b. 7-8%
c. 10-12%
d. 14-16%
Economics Daily Ten #2
1. Determine the CPI for 2010 based on the following information:
Market Basket 2010: $3907.56
1982-1984 Market basket: $1792.00
3907.56/1792 = 2.18056 x 100 = 218.1
2.
Determine the inflation rate from 2009 to 2010 based on the following
information:
CPI 2010 = 218.1
CPI 2009 = 214.5
218.1 – 214.5 = 3.6
3.6/214.5 = .0167 x 100 = 1.67%
Economics Daily Ten #2
1. Determine the unemployment rate based on the following information:
Unemployed: 8.5 million
Labor Force: 190 million
2. Determine the CPI for 2010 based on the following information:
Market Basket 2010: $3907.56
1982-1984 Market basket: $1792.00
3907.56/1792 = 2.18056 x 100 = 218.1
3.
Determine the inflation rate from 2009 to 2010 based on the following
information:
CPI 2010 = use answer from above
CPI 2009 = 214.5
218.1 – 214.5 = 3.6
3.6/214.5 = .0167 x 100 = 1.67%
Economics Daily Ten #1
1. List the function that each of the following serves:
1. Money can earn interest in the bank. Store of Value
2. Money can buy things. Medium of Exchange
3. Money is a way to keep track of debts/investments.
Unit of Account
2. List the following in order from most liquid to least: House, car,
checking account, savings account.
Checking account, savings account, car, house
Economics Daily Ten #2
1.
Which of the following is responsible for the control of the money supply?
a. the United States Treasury
b. the Federal Reserve System
c. the Federal Deposit Insurance Corporation
d. the Comptroller of the Currency
2.
When the Federal Reserve buys government securities (bonds) on the open
market, what effect does this action have on the nation’s money supply?
Money Supply
a. increases
b. falls
c. stays the same
d. decreases
Economics Daily Ten #3
1.
The Federal Reserve System conducts its business directly with
a. the government and banks
b. stock markets
c. individuals and firms
d. product markets and factor markets
2.
The policy of the Fed to increase the money supply during a downturn in the
economy reflects
a. tight-money policy
b. center-money policy
c. easy-money policy
d. hard-money policy
Economics Daily Ten #4
A $3000 deposit is made in the bank and the RRR is 9%.
1. How much must be held as required reserves?
3000 x .09 = $270
2. How much will be available in excess reserves?
3000 – 270 = $2730
3. How much could the initial deposit increase the money supply?
MM = 1/.09 = 11.11 3000 x 11.1 = $33,333.33
Economics Daily Ten #1
1. The BEST example of a progressive tax in the United States is
a. the federal excise tax on gasoline
b. the Social Security tax
c. the federal personal income tax
d. state sales taxes
2. Which of the following taxes is MOST regressive?
a. the federal income tax
b. a sales tax on food
c. a luxury tax
d. the corporate income tax
Economics Daily Ten #1
1. The BEST example of a progressive tax in the United States is
a. the federal excise tax on gasoline
b. the Social Security tax
c. the federal personal income tax
d. state sales taxes
2. Which of the following taxes is MOST regressive?
a. the federal income tax
b. a sales tax on food
c. a luxury tax
d. the corporate income tax
Economics Daily Ten #1
1. The BEST example of a progressive tax in the United States is
a. the federal excise tax on gasoline
b. the Social Security tax
c. the federal personal income tax
d. state sales taxes
2. Which of the following taxes is MOST regressive?
a. the federal income tax
b. a sales tax on food
c. a luxury tax
d. the corporate income tax
Economics Daily Ten #2
1. If the federal government is attempting to encourage spending by
consumers and businesses, a fiscal policy BEST serving this purpose
would be
a. decreasing taxes
b. decreasing government spending
c. reducing the investment tax credit
d. balancing the budget
2. Which of the following results when federal government
expenditures are less than the federal government’s total
revenue?
a. a trade surplus
b. a federal budget deficit
c. a negative balance of payments
d. a federal budget surplus
Economics Daily Ten #2
1. If the federal government is attempting to encourage spending by
consumers and businesses, a fiscal policy BEST serving this purpose
would be
a. decreasing taxes
b. decreasing government spending
c. reducing the investment tax credit
d. balancing the budget
2. Which of the following results when federal government
expenditures are less than the federal government’s total
revenue?
a. a trade surplus
b. a federal budget deficit
c. a negative balance of payments
d. a federal budget surplus
Economics Daily Ten #2
1. If the federal government is attempting to encourage spending by
consumers and businesses, a fiscal policy BEST serving this purpose
would be
a. decreasing taxes
b. decreasing government spending
c. reducing the investment tax credit
d. balancing the budget
2. Which of the following results when federal government
expenditures are less than the federal government’s total
revenue?
a. a trade surplus
b. a federal budget deficit
c. a negative balance of payments
d. a federal budget surplus
Economics Daily Ten #3
•
Use an aggregate demand and aggregate supply diagram to illustrate and explain how
each of the following will affect the equilibrium price level and real GDP:
1. Consumers spending declines as a result of a recession
2. Government spending increases
3. Foreigners prefer Chinese products over U.S. products
Price
Level
Aggregate supply (AS)
Equilibrium
price level
Aggregate demand (AD)
Equilibrium
output
Quantity of
Output
Economics Daily Ten #4
Economics Daily Ten #1
China and the United States are considering trade of two products, Cars
and Cheese. The U.S. can produce 15 cars, while in China they can
produce 4. In the U.S. they can produce 5 tons of cheese, while in
China can only produce 2.
Productivity
Cars
1.
2.
3.
4.
Cheese
US
15
5/15
China
4
2/4
1/3 cheese
= _____
= _____
1/2 cheese
5
2
3
cars
15/5 = ______
cars
2
4/2 = ______
US
Who has absolute advantage in this situation?
US
________
has a comparative advantage when producing cars
China has a comparative advantage when producing cheese.
________
US
China
Therefore, ___________
should produce cars and __________
should produce
cheese.
Explain: Absolute advantage exists when one country can produce better than
another (lower financial cost). Comparative advantage is determined by lower
opportunity cost.
Economics Daily Ten #2
Japan and the Canada are considering trade of two products, CDs and
Beef. Japan can produce 4 cds, while in Canada they can also produce
4. In Japan they can produce 2 pounds of beef, while in Canada they
can produce 6.
Productivity
CDS
1.
2.
3.
4.
Pounds of Beef
Japan
4
2/4
or .5 beef
= 1/2
_____
Canada
4
6/4
or 1.5 beef
= 3/2
_____
2
6
4/2
4/6
2
= ______
cds
2/3 cds
= ______
Neither
Who has absolute advantage in producing Cds? _________________
Japan has a comparative advantage when producing cds
________
Canada has a comparative advantage when producing beef.
________
Japan should produce cds and __________
Canada should produce
Therefore, ___________
beef.