Exam 2: Economics and Banking

Mae's oven bakes 50 cinnamon rolls an hour.She bakes 200 cinnamon rolls a day.The cost of power for running her oven each day is $30.Mae has decided that she would like to bake the same amount of cinnamon rolls in less time in order to save on energy costs.What should she do?

A rise in the general level of prices over time is called ________.

Products manufactured in foreign countries by U.S.companies are included in the U.S.'s gross domestic product (GDP).

Mae's Restaurant is the only establishment in town that sells cinnamon rolls.Mae therefore has a monopoly on the cinnamon roll business in town.

The value of currency is based on an underlying commodity.

What does the monthly consumer price index (CPI)measure?

________ occurs when there is only one provider of a service or product and no substitutes for the service or product exist.

Traditional economies are the most common economies found in the world today.

________ occurs when there are a few sellers in a given market and each seller has a fairly large share of that market.

What are the possible consequences of a continual expansion in the money supply?

John is an employee at a car manufacturer.Today he has come into work to find that production has stopped because the government has determined that the steel used in the cars will be better used in the manufacture of a new railway line.John doesn't mind,because although his wages are low,he gets paid whether there is any work for him to do or not.John MOST likely lives in a ________.

Explain the relationship between monopoly as a form of economic competition and the failures of communism as an economic system.

Competition in an oligopoly is centered more on making one product stand out from another than it is on price.

Explain the differences between how a market economy and a mixed economy decide what to produce,how to produce it,and for whom to produce it.

The gross domestic product (GDP)measures ________.

All of the following statements about open market operations are true EXCEPT:

How do consumer preferences for popular goods affect the demand curve? Give an example using a specific product.

Define economics and explain the difference between microeconomics and macroeconomics.

The supply of services is not part of the study of economies because it does not involve the exchange of goods.

A supply curve illustrates ________.