Economics BM Review

Based on the information provided in the graph above, what would likely occur if milk were priced at $2 per gallon?

• there would be a surplus of 10 million gallons

• there would be a shortage of 10 million gallons

• there would be a surplus of 20 million gallons

  
  

• 
  there would be a shortage of 20 million gallons

The gains from trade are due primarily to the fact that

• the wealth of large, industrialized nations can be spread throughout the world.

• total world output increases when each country specializes.

• countries can boost their economies by increasing exports.

• perfect competition

Free trade can result in growing trade imbalances between countries.  Which occurs when a country exports more than it imports. 

• Trade surplus
• Crash

• phenomenon

• Trade deficit

What are some possible reasons why the production possibilities curve might shift from the original curve (BB) to the new curve (BD)?

• An increased demand for consumer goods

• An increased demand for capital goods

• New technology for capital goods

• New technology for consumer goods

If government fiscal policy is intended to stop spiraling inflation rates, which action would Congress be MOST likely to take?

• Implement a universal basic income program
• Decrease government spending or increase taxes
• Maintain current government spending and taxes
• Increase government spending and decrease taxes

Through open market operations directed by the Federal Open Market Committee (FOMC), the Federal Reserve buys and sells government securities to influence the money supply. If the FOMC intends to increase the money supply in the economy, what would it recommend?

• Sell government securities
• Increase interest rates
• Decrease the reserve requirement
• Buy government bonds.

When the determinants of supply change, there is a shift in supply. All things being equal, which of the following does NOT shift the supply of goods in the market?

• A change in input cost

• An increase in number of consumers

• An increase of taxes by the government

• Changes in supply

According the market for widgets represented by the graph, what situation would exist if the price was moved from p3 to p2?

• The price would be lowered

• There would be no supply of widgets left over  

• 
  The price would be too high

• There would be a shortage of widgets

In the graph above, lines D and S1 show the demand and supply curves for the Great Smoothie Company for the last month.   Great Smoothie Company recently upgraded its capital equipment when it purchased a machine that makes smoothies faster and cheaper than the original machine. Based on this change, which of the following descriptions best reflects the change in supply?

• A shift in supply from S2 to S1

• A shift in supply from S1 to S2

• A change in price from P2 to P1

• A shift in supply from S1 to S3

At which price does quantity demanded equal quantity supplied?

• .64 cents per pound

• $1.05 per pound

• 800 pounds

• .30 per pound