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Solutions for Chapter 2: Economic Systems and the American Economy

Full solutions for Economics: Today and Tomorrow | 1st Edition

ISBN: 9780078747663

Solutions for Chapter 2: Economic Systems and the American Economy

Solutions for Chapter 2
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Textbook: Economics: Today and Tomorrow
Edition: 1
Author: McGraw-Hill Education
ISBN: 9780078747663

Since 24 problems in chapter 2: Economic Systems and the American Economy have been answered, more than 4351 students have viewed full step-by-step solutions from this chapter. Economics: Today and Tomorrow was written by and is associated to the ISBN: 9780078747663. This textbook survival guide was created for the textbook: Economics: Today and Tomorrow, edition: 1. This expansive textbook survival guide covers the following chapters and their solutions. Chapter 2: Economic Systems and the American Economy includes 24 full step-by-step solutions.

Key Business Terms and definitions covered in this textbook
  • ability-to-pay principle

    the idea that taxes should be levied on a person according to how well that person can shoulder the burden

  • automatic stabilizers

    changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action

  • business cycle

    fluctuations in economic activity, such as employment and production

  • compensating differential

    a difference in wages that arises to offset the nonmonetary characteristics of different jobs

  • complements

    two goods for which an increase in the price of one leads to a decrease in the demand for the other

  • cost–benefit analysis

    a study that compares the costs and benefits to society of providing a public good

  • diminishing marginal product

    the property whereby the marginal product of an input declines as the quantity of the input increases

  • diversification

    the reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks

  • elasticity

    a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants

  • elasticity

    the quantity of output that minimizes average total cost

  • equilibrium price

    the price that balances quantity supplied and quantity demanded

  • income effect

    the change in consumption that results when a price change moves the consumer to a higher or lower indifference curve

  • inflation tax

    the revenue the government raises by creating money

  • marginal revenue

    the change in total revenue from an additional unit sold

  • monetary neutrality

    the proposition that changes in the money supply do not affect real variables

  • net exports

    spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)

  • open economy

    an economy that interacts freely with other economies around the world

  • open-market operations

    the purchase and sale of U.S. government bonds by the Fed

  • risk aversion

    a dislike of uncertainty

  • value of the marginal product

    the marginal product of an input times the price of the output

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