Macro Economics spring 2023

Price Ceiling

A government-imposed limit on how high a price may be.

Efficiency

Achieving a goal as cheaply as possible

Markets

Bring buyers and sellers together.

Nominal GDP is

GDP measured in current prices

product; resource

In terms of the Circular Flow Diagram, households make expenditures in the ________ market and received income from the ____________ market.

Which of the following is a normative statement?

It is too hot to play tennis today.

Ceteris Paribus

Other things being equal; i.e., a number of relevant variables are assumed to be constant.

The Opportunity Cost

The amount of other products that must be foregone or sacrificed to produce a unit of a product.

Assume that the demand schedule for product C is downsloping. If the price of C falls from $2.00 to $1.75:

The demand for C will decrease

Macroeconomics approaches the study of economics from the viewpoint of:

The entire community

slope

The ratio of the vertical change (the rise or fall) to the horizontal change (the run) in moving between two points on a line

Economics

The study of the behavior of people and institutions in the production, distribution, and consumption of scarce goods

Utility

The want-satisfying power or pleasure a consumer obtains from the consumption of a good or service.

Labor Productivity

Total output divided by the quantity of labor employed to produce the output.

Economists use the term "demand" to refer to:

a schedule of various combinations of market prices and amounts demanded.

If there is an improvement in technology one would expect

a shift downward of the supply curve.

The basic purpose of the ceteris paribus assumption is to:

allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.

If two variables are inversely related, then as the value of one variable:

increases, the value of the other decreases.

A normative statement is one which:

is based on value judgements

Microeconomics

is concerned with individual economic units and specific markets.

Real GDP

is nominal GDP adjusted for changes in the price level.

The problems of aggregate inflation and unemployment are:

major topics of macroeconomics.

A positive statement is one which is:

objective and is based on facts.

Inflation refers to an increase in the

price level

The money payments made to owners of land, labor, capital, and entrepreneurial ability are:

rent, wages, interest, and profits respectively

Gross Domestic Product is best described as the

sum of money values of all final output produced in the domestic economy within the year

​"Because of unseasonably cold weather, the supply of oranges has substantially decreased." This statement indicates that:

the amount of oranges that will be available at various prices has declined.

Microeconomics is concerned with:

the concealing of detailed information about specific segments of the economy.

In a competitive market the equilibrium price and quantity occur where:

the downsloping demand curve intersects the upsloping supply curve.

If a positive relationship exists between x and y:

the relationship will graph as an upsloping line.