Bachelor of Social Science Economics Flashcards
7 cards from real BSocSc Bachelor of Social Science practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Bachelor of Social Science Economics flashcards as text
If the cross-price elasticity of demand between two goods is negative, the goods are best described as:
Answer: Complements
Negative cross-price elasticity means a rise in one good's price reduces demand for the other, indicating the goods are complements used together.
The multiplier effect in macroeconomics suggests that an initial increase in government spending leads to:
Answer: A proportionally larger increase in national income
Each dollar of government spending cycles through the economy as recipients spend a portion, amplifying the total impact on national income beyond the initial injection.
Which of the following is an example of a negative externality?
Answer: A factory emitting pollution into a river used by fishers
Factory pollution imposes costs on third parties (fishers) who are not part of the production transaction, making it a classic negative externality.
In long-run equilibrium under perfect competition, economic profit is:
Answer: Zero, as entry eliminates excess profits
Free entry of firms in perfect competition drives prices down to average total cost, eliminating economic profit in the long run.
The Phillips Curve illustrates a short-run trade-off between:
Answer: Inflation and unemployment
The original Phillips Curve depicted an inverse relationship where lower unemployment was associated with higher inflation and vice versa.
Purchasing Power Parity (PPP) theory predicts that in the long run, exchange rates will adjust so that:
Answer: Identical goods cost the same in different countries when expressed in a common currency
PPP holds that exchange rates should reflect relative price levels, so the same basket of goods costs the same internationally once converted to one currency.
A monopsony in the labor market is characterized by:
Answer: A single employer with market power over wages
A monopsony is a market with a single buyer — in labor markets this means one dominant employer can pay wages below competitive levels.