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final exam micro
| Question | Answer |
|---|---|
| When the allocation of resources in a free market is such that a different allocation would increase social welfare economists say | the marginal social benefit equals the marginal social cost |
| The behavior of the balance of payments on goods and services os determined in the international ______ market | goods and services |
| if the value if a us dollar changes from ¥110 to ¥120 | US services become more expensive for Japanese firms |
| from 2014 to 2015 many us companies that sell alot overseas experienced declining profits due to the | appreciation of the dollar |
| in 2019 the 471 billion deficit on the US CURRENT ACCOUNT was offset by a surplus of 445 billion on the US FINANCIAL ACCOUNT. The statisitical discrepancy in 2019 was | 26 billion |
| Adriana stops at a propane station to fill up her tank for the bbq. The propane in her tank for the bbq is best described as a | private good |
| Public goods are not produced in efficient quantities because | once supplied to a buyer, they can be made available at no cost to someone else |
| If people were not compelled to pay for public goods, many people would not, as there is no charge fot obtaining their benefits this is called the | free-rider problem |
| Purchasing power parity | price in one country/price in another country |
| Other things equal, an increase in the value of the dollar against the euro _____ US net net exports and shifts the aggregate demand curve to the ____ | decreases: left |
| The sweatshop fallacy is | the belief that trade must be bad for workers in poor exporting countries because our standards pay those workers very low wages |
| In the united states, income inequality fell | during the 1930s and 1940s |
| Comparitive advantage in international trade | is used to determine the benefits of trade, based on opportunity cost |
| Which US welfare program offers a means tested in kind benefit | food stamps |
| which program introduced in the 1990s replaced aid to families with dependent children | temporary assistance to needy families. |
| with a system of cap and trade, one of the main problems is determining the _______, while with emissions taxes, the main problme is determining the | optimal quantity of pollution: optimal tax rate |
| balance of payments | (exports-imports)+-(all income)+transfers = |
| If the market for a nations currency is in equillibrium | a financial account surplus necessarily means a current account surplus |
| For nonrival goods like movies on demand from amazon prime, the private market will lead to | inefficiently low consumption |
| Assume that tariff is imposed on canadian imports into the US. This tariff is likely to ____ american producers and _____ candian producers | benefit: penalize |
| Both the US and Mexico produce automobiles and their components, however, each particular model or component is produced in only one of the two countries. Which factor explains this pattern of production and trade? | increasing returns |
| A book purchased at barnes and noble is a example of a | private good |
| If a pigouvian tax is set to high | there will be little to no pollution |
| The coase theorem implies that | Given low transaction costs, private individuals can achieve an efficient solution without the involvement of the government |
| What is the difference about using cost benefit analysis to estimate the level of a public good that will maximize social welfare? | it is difficult to estimate the marginal social benefits of supplying a public good |
| Market failures are | a situation in which the invisible hand pushes in a way that individual decisions do not load to socially desieable outcomes |
| Market failures can be caused by | Externalities, public goods and imperfect information |
| Externalities are | The effects of a decision on a third party that are not taken into account by the decision maker |
| When there are negative externalities | the marginal social cost differs from the marginal private cost |
| when there are positive externalities | the marginal social benefit differs from the marginal private benefit |
| The optimal policy | marginal cost of undertaking the policy equals the marginal benefits of that policy |
| Public goods are | Nonexclusive (no one can be excluded from its benefits Non rival (consumption by one does not preclude consumption of others) |
| A adverse selection problem | occurs when buyers and sellers have different amounts of information about the good for sale |
| moral hazard problem | arises when people dont have to bear the negative consequences of their actions |
| Signaling refers to | a action taken by a informed party that reveals info to a uninformed party that offsets the false signal that caused the adverse selection in the first place |
| screening is a | action taken by a uninformed party that induces the informed party to reveal info |
| Pigouvian tax | imposed on market transactions that create negative externalities which are costs incurred by individuals not directly involved in the transaction |
Created by:
abbypennewell