Macroeconomics-Test 1

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Which of the following is a distinguishing feature of a market system?

central planning

Command systems are also known as:

communism or socialism

The regulatory mechanism of the market system is

competition

Copyrights and trademarks are examples of:

property rights

Which of the following would most likely be a topic of study in macroeconomics?

the effect of an increase in the price of imported oil on the U.S. inflation rate

Which of the following is best identified as a positive statement?

the general price level rose by 4.4 percent last year

An example of market power is

the last gas station in New Mexico for 100 miles

The four factors of production are

land, labor, capital, and entrepreneurial ability

The French Term "laissez faire" means:

let it be

In economics, the cost of something is

the dollar amount of obtaining it

The invisible hand concept suggests that

assuming competition, private and public interests will coincide.

Economic theories

are generalizations on a careful observation of facts

The term "invisible hand" was coined by

Adam Smith

Which course of action is consistent with the rational decision making process?

Any of the above

Economic scarcity:

Applies to all economies

Of the following countries, the one that best exhibits the characteristics of a market economy is:

Canada

Examples of command economies are:

Cuba and North Korea

Well-defined property rights:

Encourage owners to maintain or improve their property

The pursuit of self interest:

Gives direction to the market system

Which of the following is not a characteristic of the market system?

Government ownership of the major industries.

Which would not be true in a market economy?

Government policies directly control the decisions of firms and households.

Which of the following observations was made by the famous Adam Smith in his book "The Wealth of Nations"?

Households and firms interacting in markets are guided by an "invisible hand" that leads the, to desirable market outcomes.

An economic system

Is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.

The term used to describe a situation in which market fail to allocate resources efficiently is called

Market Failure

The decisions of firms and households are guided by profit and self-interest in a

Market economy

A competitive market economy differs from a command economy in that economic decisions are made by

Millions of firms and households

Market Power refers to the

Power of a single person or group to influence market prices

The "invisible hand" directs economic activity through competition and

Prices

Which of the following is a fundamental characteristic of the market system?

Property rights

Economics deals primarily with the concept of

Scarcity

A fundamental difference between the command system and the market system and the market system is that, in command systems:

The division of output is decided by central planning rather than by individuals operating freely through markets.

A market economy rewards people according to

Their ability to produce things that other people are willing to pay for.

Competition means that

There are independently-acting buyers and sellers in each market

Which of the following is NOT included in the decisions that every society must make?

What determines consumers preferences

Which of the following is not one of the five fundamental questions that every economic system must answer?

What prices will be charged for goods and services

The invisible-hand concept suggest that

When firms maximize their profits, society's output will also be maximized

Economic systems differ according to what two main characteristics?

Who owns the factors of production, and the methods used to coordinate economic activity.

Which of the following is a distinguishing feature of the market system?

Wide-spread private ownership of capitol.

Which of the following is a labor resource?

a computer programmer

Which of the following is a capital resource?

a piece of software used by a firm

Which of the following is not considered to fall under government's function of redistributing income

anti-monopoly laws

Government may lessen income inequality by

doing all of these

Macroeconomics is the study of

economy-wide phenomena

One necessary role of government in a market economy is to

enforce property rights

The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by

government actions that control and distort prices

The Sherman Act of 1890 is an example of

government attempting to maintain competition

The term Laissez-faire suggests that

government should not interfere with the operations of the economy.

The pure food and drug act is an illustration of

governmental provision of public goods

Microeconomics is the study of

how individual households and firms make decisions

Broadly defined, competition involves

independently-acting buyers and sellers in each market

Both the "Wealth of Nations" and the Declarations of Independence share the point of view that

individuals are best left to their own devices without the government guiding their actions.

A rational decision maker takes an action only if the

marginal benefit is greater than the marginal cost.

The two general types of economic systems that exist today are

market systems and command systems

The invisible hand refers to the

notion that, under competition, decisions motivated by self-interest promote the social interest

The latin term "ceteris parbus" means:

other things equal

The U.S. food stamp program, which provides coupons that allow low-income individuals to buy food is an illustration of

the re-distributional function of government

The economic policies and programs of government affect all of the following except

the underlying motives of consumers, workers, and firms

The opportunity cost of an item is

what you give up to get the item


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