ECON 102 Lecture Notes - Lecture 11: Market Clearing, Thermometer, Price System

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oliveferret918

27 Dec 2015

School

University of Illinois

Department

Economics

Course

ECON 102

Professor

Isaac Di Ianni

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ECON 102 Full Course Notes

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The economic theory of price controls: direction of causation is: the causal relationship between one event and another. Say temp is lower, heater kicks on; opposite effect desired. Effective law creates a shortage (below market clearing price: minimum price control law (price floor) is: a law that prohibits people from trading at a price below a legal minimum. Effective law creates a surplus (above market clearing price) Rent controls: rent control law means: a maximum price control on rental housing. Economists predict quantity supplied will fall, shortage will be created. Effects of rent control: housing shortage sellers don"t build new apartment buildings, let existing buildings deteriorate b/c not making money to update, slums people move into abandoned buildings. One of few restrictions still in effect after ww11. Create rationing laws to keep one person from buying all the cheap gas from us: rationing laws are laws that restrict people"s consumption of certain goods.

Related Questions

1.Under rent controls, Select one:

a. the quantity supplied of rental units is greater than it would be under freely competitive markets.

b. there is a shortage of rental units.

c. there is less government involvement in rental markets overall because there is a better supply of low-income housing.

d. all renters are better off than under freely competitive markets.

2.Which of the following is NOT a function of rental prices?

Select one:

a. To stimulate the construction of new housing

b. To allocate existing scarce housing among different people

c. To provide housing to individuals below market value

d. To ration the existing housing stock

3. price floors are designed to

a. establish a minimum allowable price

b. create shortages when none existed before

c. none of these

d. allow free market prices to be achieved

4.what are the effects of an increase in the minimum wage? who would be most affected?

5. the minimum wage laws seek to

a. help teenagers find work

b. assure that all workers are paid the same wage rate

c. assure a minimum standard of payment for work

d. penalize employers that are not complying with labor laws

6. A black market s a market in which

a. goods are sold at outlet prices

b. sales taxes are effectively doubled

c. sales take place exclusively at outlet prices.

d. goods are traded at price above their legal maximum prices

viridianalpaca10

1.The desired reserve ratio is 3 percent. Robert deposits $3,000 in Bank America. Bank America keeps its minimum desired reserves and lends the excess to Fredrica. How much does Bank America lend to Fredrica?

A. $2,910
B. $300
C. $2700
D. $3,000
E. $900

2. Suppose a price ceiling has no effect; this means that

A. people are finding a way to circumvent the law.
B. it has no legal enforcement mechanism.
C. the equilibrium price is below the price ceiling.
D. the equilibrium price is above the price ceiling.

3. An example of household production excluded from GDP is

A. plumbing work completed by Joe Fix-it.
B. household cleaning services provided by Merry Maids Incorporated.
C. child care provided by a certified nanny.
D. lawn care provided by a local lawn care company.
E. tree trimming you provide at your parents' home.

4.In the United States, between 1961 and 2011, there has been

i. a consistent , non-changing growth rate of potential GDP per person.
ii. an increase in the standard of living based on real GDP per person.
iii. fluctuations in real GDP per person around potential GDP per person.

A. ii only
B. ii and iii
C. i only
D. i and ii only
E. i, ii and iii

5. When goldsmiths issued receipts to gold owners, and those gold receipts circulated while gold stayed in the goldsmiths' safes,

A. the gold receipts were considered money because they were used as a means of payment.
B. an infant banking system developed in sixteenth century Europe.
C. money was invented.
D. fiat money was created.
E. Both A and B are correct.

6.The "double coincidence of wants" is B??

A. what is needed to use money.
B. eliminated when we barter instead of using money.
C. money's role as a unit of account.
D. how value is stored when we transact with money.
E. eliminated with the use of money.

7. The process of money creation by the banking system is limited, in part, by the

A. laws passed each year by the U.S. Congress.
B. number of banks.
C. number of depositors.
D. Comptroller of the Currency.
E. desired reserve ratio.

8. Which of the following is a policy tool of the Fed?

i. setting the required reserve ratios
ii. conducting open market operations
iii. quantitative easing

A. i, ii, and iii
B. Both i and ii
C. i only
D. ii only
E. iii only

ECON 102 Lecture Notes - Lecture 11: Market Clearing, Thermometer, Price System

ECON 102 Full Course Notes

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