Economics BM Review

Front

If milk is priced at $2/gallon, there would be a shortage of 20 million gallons.

Back

Based on the graph, a price of $2 per gallon leads to a shortage.

Front

Gains from trade arise mainly because:

Back

Total world output increases when each country specializes.

Front

Free trade can lead to trade imbalances. What is it called when a country exports more than it imports?

Back

Trade surplus.

Front

Reasons for the shift in the production possibilities curve (BB to BD):

Back

1. Increased demand for consumer goods 2. Increased demand for capital goods 3. New technology for capital goods 4. New technology for consumer goods Correct Answer: New technology for consumer goods

Front

Action Congress would likely take to combat inflation:

Back

Decrease government spending or increase taxes.

Front

FOMC's action to increase money supply:

Back

Buy government bonds.

Front

What does NOT shift the supply of goods in the market?

Back

An increase in the number of consumers.

Front

If the price moves from p3 to p2 in the widget market, what happens?

Back

No supply of widgets left over.

Front

Graph shows demand (D) and supply (S1) for Great Smoothie Co. After upgrading equipment, how does supply change?

Back

Shift in supply from S1 to S2.

Front

Price where quantity demanded equals quantity supplied?

Back

.64 cents per pound