Download What is deflation? A continual decline in the average price level of


What is deflation?
A continual decline in the average price level of goods and services

Which macro theory recommends government intervention for addressing
recessionary and inflationary gaps?
Keynesian

What is the name of the system created by the Clean Water Act to regulate point
sources of water pollution?
National Pollutant Discharge Elimination System (NPDES)

What test is used to look for evidence of autocorrelation?
The Durbin-Watson test

What is a null hypothesis?
The condition assumed to be true unless there is evidence from the sample to reject it.

Price index adjusted GDP is known as _________.
Real GDP

What depreciation schedule had the same amount depreciated each year?
Straight line depreciation

What does SS-AAEA stand for?
Student Section- American Agricultural Economics Association

What is the risk associated with using debt capital?
Credit or financial risk

What is the term used for increased algae growth and oxygen depletion in surface
water due to nitrate and phosphate pollution?
Eutrophication

What are the 6 crops which are considered the “basic commodities” and covered by
price support programs?
Corn, cotton, peanuts, rice, tobacco, and wheat

What was the Natural Resource Conservation Service formerly known as?
The Soil Conservation Service

How is the basis calculated in the futures market?
Cash price – futures price, or vice versa

The ratio of a firm’s sales revenue or unit sales to those of the industry is known as
what?
Market Share

Name 3 competition- oriented pricing approaches
Customary pricing (traditional), above-at-or below market pricing, Loss leaders

In what type of agreement do 2 organizations purchase each other’s products and
services?
Reciprocal

Displays located in high-traffic areas in stores and warehouses, frequently near
check-out counters, are known as?
Point of purchase displays

What are the properties and resources owned and controlled by the business?
Assets

What are the two primary capital budgeting methods which take into account the time
value of money?
Net present Value (NPV) and Internal Rate of Return (IRR)

If interest rates increase, what will happen to the price of a zero-coupon bond?
It will fall

___________ is the ability of a business plan to satisfy agreed upon financing terms
and performance criteria.
Financial Feasibility

This says that a 1% increase in the unemployment rate reduces the GDP by 2.5%
Okun’s Law

The ________ is the number of dollars that the banking system can create.
Money Multiplier

Name 3 types of unemployment
Seasonal, frictional, structural, cyclical

Given the equation, Price ($) =500=+ .25 Yea r- .05Quantity , What is the average
annual rate of change in price?
$.25 per year

What measures the proportional responsiveness of one variable with respect to
changes in another?
Elasticity

If demand is elastic and price falls, what will happen to revenues?
It will rise as quantity grows relatively faster than price falls

A shift in product demand may be caused by any factor except?
A change in price

The proportional change in the quantity of a good X divided by a given proportional
change in the price of a good Y represents what?
The cross price elasticity of demand

Health and sanitary standards established by a country which restricts international
trade is known as what kind of barrier?
Non-Tariff Barrier

Who wrote “The New Industrial State”?

John Kenneth Galbraith
What is the variance of the error terms differ at different levels of X known as?
Heteroskedasticity

Allocating goods or resources on a first come first served basis is known as what?
Queuing

When using a sample to test a hypothesis, the mean of that sample is represented by
what symbol?
X-bar

According to the Central Limit Theorem, if a random sample of n observations is
selected from a population, and when n is sufficiently large, the sampling distribution
of X-bar will have approximately what type of distribution?
Normal (Bell shaped)

What is the difference between “good” and “bad” error terms?
“Good” error terms occur randomly whereas “bad” error terms have a discernable
relationship between them.

An allowance for wear, tear, and obsolescence is called what?
Depreciation

What rental arrangement is generally least risky to the landowner?
Cash-rent

What costs are most important in a management decision?
Marginal Costs (Those that can be affected)

What type of budget uses a calendar year?
A cash budget

The increase in price which causes an increase in the quantity supplied is called?
The Law of Supply

Name two types of supply side inflation
Wage push, cost push

Name three methods of income
Wages, rent, profits, interest, adjustments

What is the money multiplier?
The number of dollars of money that the banking system can create from $1 of excess
reserves

What are the two types of money?
Commodity and fiat money

Personal income less personal taxes is _________
Disposable income

What is the common reference to the 1980 law that was directed at cleaning up past
hazardous disposal sites?
Superfund

The analytical tool used in Keynesian theory to study the simultaneous determination
of aggregate output and then interest rate
IS-LM Model

The 3 demands that compose the demand for money
Transactions, precautionary, speculative

The amount by which desired spending at full unemployment exceeds full
employment output is called _________.
Inflationary gap


The difference between what consumers pay for food and what farmers actually
receive is the ________
Marketing bill
What instrument can a government use to encourage producers to sell their product
abroad even if market prices are low?
Export subsidy

What type of tax occurs when the average tax rate falls as income rises?
Regressive

What type of policy seeks to influence the level of aggregate demand?
Stabilization policy

Whose law states that bad money drives out good money?
Gresham’s Law

What is the first step in the managerial decision process?
Identify (and define) the problem

For the farm family, how is addition to owner equity calculated?
Net farm income minus family expenses and income taxes

What is a Production Possibility Frontier?
Combination of final goods and services that could be produced in a given time
period with all available and limited resources

What type of economic environment would suggest the use of easy money policy?
Economic slowdown or recession

What is the definition of full employment?
Occurs when only frictional and structural unemployment exists

What type of goods are purchased for resale and for further processing or
manufacturing?
Intermediate goods

What does COLA stand for and what is it used for?
Cost of Living adjustment and used to adjust wages for inflation

A multi-line code found on products that can be read by scanners is called?
UPC or Universal Product Code

Monetary and fiscal policies that lead to greater economic growth of the economy are
said to be what type of policies?
Expansionary

What ratio defines that marginal propensity to consume?
Change in consumption over change in disposable income

What is price discrimination?
Charging different prices in different markets or to different consumers for
essentially the same good

What is the name of the legislation that prevents monopolies?
Sherman Anti-trust

What theory says that wages and prices are sticky, private demand is inherently
unstable thus requiring active government action, and persistent unemployment
requires demand side policies?
Keynesian theory

In the short run as a firms’ output expands even with fixed inputs, price levels
increase because of what?
Law of diminishing returns

Name the four types of unemployment
Seasonal, Frictional, structural, and cyclical

The study of how scarce resources are allocated among competing uses?
Economics

What is the largest component of the money supply?

Demand deposits/ checking accounts
How is the real interest rate calculated?
Nominal interest rate – inflation rate

What does the money multiplier estimate?
The number of dollars the banking system creates from every dollar of excess
reserves

What is the difference between GDP and GNP?
GDP: total value of goods/services produced within a country’s physical borders,
GNP: included those also produced outside the physical borders

What does CPI stand for and what is the CPI?
Consumer price index, a weighted average of prices of consume goods relative to a
base year

What do we call the interest rate charged to banks by the fed?
Discount

Then length in time that a spell of unemployment is expected to last is called the
_______.
Duration of unemployment

Smaller up front payments are characteristic of equal principal loans or amortized
payment loans?
Amortized payment loans

Which business form can limit personal liability to the initial investment?
Corporation or limited partnership

____ inflation which is composed of wage push and/or cost push inflation
Supply side inflation

In the Is-LM model, what does the LM curve represent?
All combinations of income and interest rates where the money market is in
equilibrium or where real supply of money equals real demand for money

What curve identifies all of the technically efficient input combinations that will
result in a like output?
Isoquant

What 2 assumptions must occur for maximum money creation?
1. All dollars deposited, no increase in cash
2. Banks lend or spend all excess reserves

Low reserve requirements, low discount rate, and open market purchases would be
considered a ________ money policy by the Fed.
Easy

Define a regressive Tax System
Tax payers pay a lower ATR as income increases

What is horizontal equity and vertical equity with respect to characteristics of a good
tax?
Horizontal-people in equal circumstances taxed the same
Vertical-people in unequal circumstances taxed the same

How does a tight money policy effect AD?
Lower AD

What are 3 reasons for demanding for money?
Transactions, precautionary, speculative

What are the 3 monetary tools for the FED and which is most preferred?
Reserves, discount rate, open market operations (open market preferred)

What is the main difference between the Keynesian view and the Classical view of
adjustments to GAPS?
Keynesian- government intervention
Classical- no government intervention

Define M1, M2, and M3
M1 = currency outside banks + demand deposits
M2 = M1 + savings and small time deposits (lt; 100000)
M3 = M2 + large time deposits (gt; 100000)

A rock that is water bearing
Aquifer

Referring to a rock, sediment, or soil that does not permit the passage of fluids.
Impermeable

A single location, such as a smoke stack or pipe, from which pollution emanates is
called _________.
Point source

The part of a reserve base of mineral resources that borders on being economically
producible if referred to as ______.
Marginal reserve

Universality, exclusivity, transferability, and enforceability are the 4 main
characteristics of what structure?
Efficient property rights structure

What type of inflation is caused by an increase in aggregate demand?
Demand pull

____ shows those alternative combinations of two outputs that can be produced with
fixed quantities of inputs if those inputs are employed efficiently.
Production possibility frontier

Market livestock, inventories and growing crops represent what category of asset?
Current assets

The Phillips Curve shows the economic relationship between which two rates?
Unemployment and inflation

What are three of the four characteristics of a good tax?
Horizontal equity, vertical equity, efficiency, and simplicity

What is the formula for average tax rate?
Taxes divided by income

What are the four phases of the business cycle, in order?
Expansion, peak, contraction, trough

Define the marginal propensity to consume and the marginal propensity to save
(without referring to each other)
MPC = Change in C/Change in Y
MPS = Change in S/Change in Y

What is the result of adding the MPC to the MPS? APC + APS?
One, one

Describe 3 actions the Fed might take to pursue a tight money policy
High reserve requirement, high discount rate, open market sales

What is it called when total savings is negative?
Dissavings

What is a worker called that has stopped looking for work after being convinced it is
not possible to find a suitable job?
Discouraged worker

The unanticipated shift in the A-D schedule
Demand shock

________ exists if the equilibrium level of output exceeds the natural level of output
Inflationary gap

The unemployment associated with the changing of jobs in a dynamic economy
Frictional

Mean, median, and mode are measures of _______.
Central tendency

Dispersion refers to the variability or spread in the data. What are two important
measures of dispersion>
Average dispersion, variance, or standard deviation

What does the acronym BLUE stand for with respect to Ordinary Least Squares?
Best linear unbiased estimator

What problem is likely to arise when inflation rate and the consumer price index are
used as explanatory or independent variables in the same model?
Multicollinearity

A model which refers to the case in which the dependent variable in one or more
equations is also an explanatory variable in some other equation of the system is
called ______?
A simultaneous- equations system

Puny jumped for joy when she won the first award. Puny smiled when she won the
second award. What economic concept describes this behavior?
Law of diminishing marginal utility

Describe the expected demand elasticity for water
Inelastic

Identify the concept that suggests what’s good for the whole is good for the
individual
Fallacy of composition

If the supply elasticity for U.S. wheat production is 0.6, then what will happen to
production if the price increases form $4 to $4.40?
Supply will increase by 6%

Where does the MC curve intersect the average cost curve?
At the minimum of the AC curve, total or variable

What effect does an increase in interest have on aggregate consumption?
Decrease in demand

Who is currently responsible for dictating policy at the fed?
Alan Greenspan

What describes the ease and quickness that an asset can be exchanged for goods,
services, or other assets?
Liquidity

If an investment may potentially yield high returns then what other characteristic is
probably associated with the investment?
High risk

What name is given to transactions where the central bank either buys or sells
government bonds to control the money supply?
Open market operations

There are more suppliers of feeder cattle than feedlot operations. So, what market
structure characterizes feedlot operations with respect to their purchases of feeder
cattle?
Oligopsonists

What type of competition is characterized by many sellers with differentiated
products?
Monopolistic

How do we characterize products that are considered to be virtually identical by the
potential buyers?
Undifferentiated, homogenous, or commodities

A law that defines a service area boundary as taking into account the product price
and transportation costs?
The Law of Marketing Areas

What is the difference between oligopoly and oligopsony?
Oligopoly is few sellers, and oligopsony is few buyers

What is the “balance” in balance sheet?
Total assets = debt + equity

Give an example of a cash equivalent asset
Checking account balance, certificate of deposit

What describes the ability of a business to use its resources to achieve a desired result
with minimal waste?
Economic efficiency

Characterize a firm that could not retire their debt even after converting all assets to
cash
Insolvent or bankrupt

Name the largest commodity trading company in the U.S.
Cargill

What type of analysis illustrates the effects of changes in selling price, variable costs,
or fixed costs to break even points?
Sensitivity analysis

What is a federated cooperative?
A cooperative owned by other cooperatives

What is left when we subtract the cost of goods sold, selling expenses, and fixed
expenses from net sales and divide this number by net sales?
Net profit margin

What does CBOT stand for?
Chicago Board of Trade

What government agency provides credit subsidies to farm borrowers who may not
otherwise qualify for credit?
Farm Service Agency which once was called the Farmer’s Home Administration

What 3 federal government agencies monitor the safety of the U.S. food supply?
FDA, USDA, EPA

What is the rate used to convert future values to present values?
Discount rate

Provide 3 reasons why a government may intervene in a nation’s food and fiber
industry
Support or protect an industry, curb market power, national food security, health and
safety, environmental quality

What term refers to difficulty that farmers may have in disposing of tractors, plows,
and silos when downsizing or shutting down due to little or no alternative uses?
Asset fixity

What functional form is characterized by the following demand equation? Q = a + bP
Linear

For any given matrix A, what term refers to the maximum number of linearly
dependent row vectors in the matrix?
Rank

From the following equation, provide the marginal effect of P with respect to Q: Q =
142 + 3(P squared)
6P

For a linear regression, what test statistic is used to test the null hypothesis that all
slope parameter estimates are equal to zero?
F

When estimating market demand, what types of explanatory variables besides own
price are normally desired? Name at least 3.
Own price, price of sub, price of comp, income, and tastes and preferences

What is GMO?
Genetically modified organism

What is a plant that grows from seed and dies in less than a year or so?
Annual

What term is given to chicken raised primarily for meat production?
Broilers

Name 2 popular crops that are legumes
Alfalfa, soybeans, peanuts

HFCS has replaced sugar as the primary sweetener in non-diet soft drinks. What
does HFCS stand for?
High fructose corn syrup

Provide 3 types of objectives that a business unit may have to gauge their
performance
Profit, sales growth, market share, risk control, innovation, reputation

A good for which demand decreases when income increases is called a?
Inferior good

What ratio equals CA-CL?
Working capital

Name a common profitability ratio
Return on assets, return on equity

What is a common liquidity ratio?
Current assets divided by current liabilities

A (an) ______ cost industry is described by entry which reduces input costs and
where the long run supply curve is negatively sloped.
Decreasing cost

Name the curve that describes all the various combinations of 2 resources used to
produce a fixed level of output, ceteris paribus?
Isoquant

What does WTO and GATT and CWB stand for?
World Trade Organization, General Agreement on Trade and Tariff, and Canadian
Wheat Board

What is the term used to describe soil being washed away by water or wind?
Erosion

Respected citizens (opinion leaders) who adopt new ideas quickly but with caution
are called?
Early adopters

Which effects directly effects trade in less countries, trade results from NAFTA or
WTO negotiations?
NAFTA negotiations

Name 3 of the commonly used depreciation methods
Strait line, sum of years digits, double declining balance, and accelerated cost
recovery system (ACRS)

What does APT stand for?
Arbitrage Pricing Theory

What is CA-CL?
Working capital

What is the marketing bill?
The difference between what the processing/manufacturing sector pays for raw
commodities and what consumers pay for food and fiber retail

The yield curve is generally ______ sloping reflecting the liquidity preference theory
and the expectation that short term interest rates will rise.
Upward

What system represents the largest cooperative Ag lending system in the US?
The Farm Credit System

What do AS and AD stand for?
Aggregate supply, aggregate demand

Principal loan payments for land come from ___________.
Net after tax income

Define gross margin
Gross sales less COGS or costs of variable inputs

If satisfaction or utility does not change along isoquant, what does change?
The quantities of goods in question

What is a Giffen good?
Price goes up, buy more

The law of supply says what?
As price goes up, more will be supplied

What are the 4 P’s when referring to marketing mix?
Product, price, place, promotion

Correlation of the independent variables can result in which problem in regression
analysis?
Multicollinearity

What are the three measures of central tendency?
Mean, median, mode

The separation of farm programs from the price and level of production is called
_________.
Decoupling

The cost of reducing the quantity of residuals being emitted into the environment or
lowering the ambient concentrations is called _______.
Abatement costs

The right of governments to take private property for public use is called ______.
Eminent domain

Property rights are granted to individuals by ________.
Society

Market _____ is the strategy of developing alternative product versions to appeal to
different consumer’s needs and wants.
Segmentation

What type of accounting system requires both a credit and debit entry for each
transaction?
Double entry

What is a free rider?
Someone who is able to benefit from the use of a good or service without paying for
it

What is the primary reason for a producer to hedge a growing crop on the futures
market?
Protect against downside risk

What is an increase in the ration of capital to workers in an economy?
Capital deepening

Refers to an economy isolated from the rest of the world
Closed economy

A macro theory that wages and prices are flexible and the economy self adjusts
without the need for government intervention is called the ________.
Classical theory