Microecon quiz Ch1

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? - international trade - economies of scale - command economy - division of labor

- international trade

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:

low inflation

In a _________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

market-oriented economy

The basic difference between macroeconomics and microeconomics is that:

microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

Which of the following statements most likely lies within the realm of microeconomics? - An increase in labor costs will increase the additional cost of producing another bus. - A rapid acceleration of the supply of money may create inflation. - An increase in government spending will increase the aggregate demand for goods and services in the economy. - Unemployment rises during a recession and falls during an expansion.

An increase in labor costs will increase the additional cost of producing another bus.

_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.

Economies of scale

Which of the following lies primarily within the realm of macroeconomics? - a study of the demand for gasoline - a study of the impact of "mad cow" disease on the price of beef worldwide - an analysis of supply and demand conditions in the electricity market - a study of how tax cuts stimulate aggregate production

a study of how tax cuts stimulate aggregate production

Macroeconomics primarily examines: - broad issues such as national output, employment and inflation. - the behavior of individual households and firms. - how prices are determined within individual markets. - the output levels that maximize the profits of business firms

broad issues such as national output, employment and inflation.

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers.

Economic models like the _____________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

circular flow diagram

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

division of labor

The circular flow diagram of economic activity is a model of the:

flow of goods, services, and payments between households and firms.

In the __________, households receive goods and services and pay firms for them.

goods and services market

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

government

Which of the following best describes a monetary policy tool? government spending household savings taxes interest rates

interest rates

In the ____________, households work and receive payment from firms.

labor market

Macroeconomic topics do not usually include: -economic growth -the rate of inflation -the rate of unemployment -the profit maximizing decisions of an individual manufacturer

the profit maximizing decisions of an individual manufacturer