Ch. 1 Review (test 1)
Suppose that the following headlines appeared in a newspaper. Which would most clearly represent a macroeconomic issue?
"Central Bank Raises Interest Rates"
Economics is the study of choice under conditions of
Scarcity
The study of economics would be superfluous if __________ did not exist.
Scarcity
The statement "The unemployment rate in the U.S. is 5 percent" is
a positive statement that can be falsified
Economic models come in the form of
all of the following: 3D objects Words Diagrams Mathematical equations
An economic model is
an abstract representation of reality
Which of the following would be strictly a microeconomic topic?
an increase in the price of the Ford Taurus
Microeconomics deals with which of the following?
how producers and consumers interact in individual markets
Positive economics deals with
how the economy does work
The opportunity cost of a particular activity
may include both monetary costs and forgone income
The statement that "at 10 percent, the interest rate is too high for families to buy the home they deserve," is a(n)
normative statement
What an economic decision maker must give up when choosing one economic activity over others is known as the
opportunity cost
"The Consumer Price Index increased by 4.2 percent in the first quarter of this year." What type of statement is this?
positive
An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of
positive economics
Individuals must make choices because
resources are scarce and wants are unlimited
Positive economics deals with
statements of fact
Microeconomics is the branch of economics that concerns
the behavior of individual households, firms, and governments
Macroeconomics is the branch of economics that concerns
the overall health of the economy
All the problems studied in economics arise from
the scarcity of resources
Macroeconomics is the study of
what is happening in the economy as a whole
