Economics

If the labor force is 50 million and 48 million are employed then the unemployment rate​ is:

4%

Which of the following does not constitute an act of​ "investment" as economists use the​ term?

A retiree buys 50 shares of stock at​ $10 a share and then sells the stock at a profit for​ $20 a share.

Monetary policy includes changing the level of household taxes.

False

Which of the following statements is not​ correct?

If poverty was eliminated there would be no reason to study economics.

What is the primary difference between income and​ wealth?

Income is a flow​ variable; wealth is a stock variable.

An increase in the wage rate of steel workers will reduce the supply of steel.

True

Contractionary fiscal policy includes raising taxes.

True

Which of the following is an assumption used by Classical​ economists?

Wages adjust both upward and downward.

An institution through which buyers and sellers interact and engage in exchange is

a market

The government should extend the duration of unemployment benefits to those workers who lost their jobs due to outsourcing. This statement is best described as

a normative statement.

Better insurance benefits increase the incentive of some individuals to work. This statement is best described as

a positive statement

Which of the following is a topic studied in​ Macroeconomics?

aggregate behavior of households and industries

According to the theory of comparative​ advantage, specialization and free trade will benefit

all trading​ parties, even when some are absolutely more efficient producers than others.

Inflation and unemployment

are a focus of macroeconomics.

Someone has a comparative advantage in producing a good if she can produce that good

at a lower opportunity cost.

Unemployment means that

at the going wage​ rate, there are people who want to work but cannot find work.

The concept of opportunity cost

can be applied to the analysis of any​ decision-making process.

The diagram that shows the income received and payments made by each sector of the economy is the

circular flow diagram.

If an economy begins to use its resources more​ efficiently, it will move

closer to its production possibilities frontier​ (ppf).

According to the Classical​ model, unemployment

could not persist because wages would fall to eliminate the excess supply of labor.

There is a possibility that a national sales tax will be implemented. Many economists argue that items such as food and clothing should be exempt from such a tax because​ low-income people spend a greater percentage of their income on these goods than do​ high-income individuals.

equity.

Because resources are​ scarce, the opportunity cost of investment in capital is

forgone present consumption.

In the circular flow of economic​ activity, there are two kinds of markets in which firms and households interact. In the product​ market:

goods or services are exchanged.

If the demand for sardines increases as income​ decreases, sardines are​ a(n)

inferior good.

Which of the following is not a resource as the term is used by​ economists?

money

Suppose you are deciding whether to spend your tax rebate check on a new iPod or a new digital camera. You are dealing with the concept of

opportunity costs.

Whenever the Democrats gain control of​ Congress, spending on social programs​ increases; whenever Republicans gain control of​ Congress, spending on defense increases.​ Hence, we know what the next party in control will do.

post​ hoc, ergo propter hoc fallacy.

The basic coordinating mechanism in a​ free-market system is

price

An efficient market is a market in which

profit opportunities are eliminated almost instantaneously.

The reason that opportunity costs arise is that

resources are scarce.

The concept of opportunity cost is based on the principle of

scarcity.

The marginal rate of transformation is the

slope of the production possibility frontier.

Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are

sticky prices.

uppose the demand for books goes down when the price of video games goes down. We can say that these two goods are

substitutes.

In a​ laissez-faire economy​ ________ what gets​ produced, how it is​ produced, and who gets it.

the behavior of buyers and sellers determines

Which of the following is the best definition of​ economics?

the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided

The term business cycle refers to the

​short-term ups and downs in the level of economic activity.