Macroecon Test 1

Scarcity

A situation in which unlimited wants exceed the limited resources available to fulfill those wants

Recovery

the early part of an expansion, immediately after a trough

Macroeconomics is the study of

the economy as a whole, including topics such as inflation, unemployment, and economic growth

Which of the following goods is directly counted in GDP?

A 12 inch subway sandwich purchased by a student

Which of the above statements demonstrates that economic agents respond to incentives? A. consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along waikiki beach B.department stores take steps to increase security since they believe it is more costly to allow shoplifiting than to install expensive security mointoring equipment C. Farmers produce more cotton when its selling price falls

A and B

Supposed Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight kids. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?

GDP will decrease

Which of the following is a microeconomics question?

How will Apple decide on a selling price for the iPad?

Which of the following is a normative economic statement?

The price of milk is too high

Which of the following is a macroeconomics question?

What determines the unemployment rate?

Depression

a deep and long recession

In market economy, who decides what goods and services will be produced?

consumers and producers

Recession

falling in RGDP, from a peak to the next trough RGDP has to be declining for 6 consecutive months or longer

Household production

goods and services people produce for themselves

Microeconomics is the study of

how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices

Which of the following is a positive economic statement?

if the price of gasoline rises, a smaller quantity of it will be bought

Legalizing all forms of illegal activities

increase GDP and reduces the size of underground economy

The study of economics arises due to

scarcity

Peak

the highest point in real GDP at the end of an expansion and right before a contraction

Trough

the lowest point in real GDP at the end of a contraction or recession

positive analysis

the study of "what is?" (descriptive, can be tested with data, doesn't have to be a true fact though)

normative analysis

the study of "what ought to be?" (judgmental, prescriptive, reflects somebody's opinion rather than a fact)

Suppose you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2016?

the value of the service of the real estate agent