Chapter 1- Macroeconomics
The statement that the United States has too many illegal immigrants is a _______ statement since it describes what people __________.
normative, ought to do
Equilibrium describes a situation where __________________.
no one would benefit from changing his or her behavior
The opportunity cost of an activity is a measure of ________ when you do that activity.
opportunity cost
Optimization describes a situation where __________________.
people weigh costs and benefits when making a decision
Free riding occurs when _________ are out of sync with _______.
people's private benefits, the public interest
For a market to be in equilibrium, the amount produced by sellers must be __________ the amount purchased by the buyers.
equal to
Which of the following is subject to the free-rider problem?
All of the above.
When deciding whether to install visible countdown timers for pedestrians at crosswalks, which of the following would be considered in the cost-benefit analysis?
ALL OF THESE ARE CORRECT The higher maintenance bill associated with fixing these more complex signals when they break down. The cost in terms of dollars of installing these new timers all over the city. The value of the lives lost by drivers who watch the countdown timers and try to make it through a light. The value of the pedestrians' lives saved by having the timers to assist in crossing the street.
In which of the following areas will taking an economics course help benefit you throughout your life?
All of the above.
Which of the following could be considered an economic agent?
All of these: Consumers. Criminals. Students. Senators.
Which of the following are considered scarce resources?
All of these: Time Mechanical pencils Gas. Gold.
Suppose that you allocate $20 each week for your entertainment budget. This money is spent on two items: either renting movies for $1 each at Redbox or downloading songs from iTunes at $1 each. Given this information, which of the following would represent your budget constraint for entertainment?
Amount spent on iTunes + Amount spent at Redbox = $20.
Suppose your New Year resolution is to get back in shape. You are considering various ways of doing this: you can sign up for a gym membership, walk to work, take the stairs instead of the elevator, or watch your diet. How would you evaluate these options and choose an optimal one?
Do a cost-benefit analysis to compare the alternatives.
Which of the following is true regarding the concept of causation?
It describes how one event can bring about change in another.
Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following order: going to class, sleeping in late, going to work early, getting lunch, going to the gym to exercise, and watching television. If you decide to go to class, then what do we know about the opportunity cost of your decision?
The opportunity cost would be sleeping in late, since it was your next-best option.
Which of the following is more susceptible to the free-rider problem: government−funded symphonies or city−wide pest control?
Use of city−wide pest control is more susceptible since even those who don't pay taxes still benefit, while government−funded symphonies can charge for admission, so that everyone who goes pays their share
Which of the following is not an example of causation?
Wearing your lucky socks while watching the football game will lead to your team winning.
Economics is divided into two broad fields of study: microeconomics and macroeconomics. Microeconomics studies _________, while macroeconomics studies _________.
a small piece of the overall economy; the economy as a whole
The definition of economics states that it is the study of how _________.
agents choose to allocate scarce resources and the impact of those choices on society
A surge in cocoa prices is _______ and a pest attack on the cocoa crop is ____.
an effect, the cause
Low infant mortality is _____ and an improvement in nutrition is ______.
an effect, the cause
When making your decision about which activity to choose, you should consider the monetary cost ________ the opportunity cost of the activities. The goal is to choose the option that offers the greatest _____
as well as, net
Policy decisions made by the government are analyzed by _________.
both microeconomics and macroeconomics
Comparing a set of feasible alternatives and picking the best one is an optimization process called _________.
cost-benefit analysis
Empiricism describes a situation where __________________.
economists use data to analyze what is happening in the world
For a market to be in equilibrium, buyers must place a value on the uses of the product that is _________ the cost of buying the product.
greater than
For a market to be in equilibrium, the cost of making a product must be _________ the final price at which the product sells.
less than
A policy such as whether to increase the money supply would be studied under _______ , since it deals with ____.
macroeconomics, the economy as a whole
The ethical implications of a hotly debated government policy would best be considered a _________.
normative question, since it deals with a subjective issue based on personal preferences
The statement that the United States has a lower unemployment rate than Spain is a _____ statement since it describes what people _____.
positive, actually do
Your budget constraint for entertainment illustrates the concept of ________, since as you increase your purchases of one item, you ____.
trade-offs, must decrease your purchase of the other item
Scarcity is the situation of having ________ wants in a world of _______ resources.
unlimited, limited