Macro Exam 1

. If average labor productivity decreases while population and the number of employed workers remain constant, then total output: A. increases. B. decreases. C. remains constant. D. may increase or decrease.

b

10. If a nation can produce a more computers per year than any other nation, that nation has a(n) ______ advantage in the production of computers. A. comparative B. absolute C. relative D. natural

b

13. If a country is producing at point where an increase in the production of one good requires a reduction in the production of another good, then it must be producing at an: A. inefficient point. B. efficient point. C. unattainable point. D. undesirable point.

b

16. The Principle of Increasing Opportunity Costs states that: A. productive people do the hardest tasks first. B. when increasing production, resources with the lowest opportunity costs should be used first. C. when increasing production, resources with the lowest opportunity costs should be used last. D. opportunity costs increase when too little is produced.

b

2. Economists recognize that because people have limited resources: A. government intervention is necessary. B. they have to make trade-offs. C. they will never be happy. D. our future is bleak.

b

21. As the price of a good rises: A. firms generally decrease the supply of the good. B. more firms can cover their opportunity cost of producing the good. C. firms generally increase the supply of the good. D. government regulation becomes more justified.

b

23. If the demand for a good decreases as income decreases, then the good is a(n): A. complementary good. B. normal good. C. inferior good. D. substitute good.

b

28. If the production of oranges reduces global warming, then the equilibrium quantity of oranges will be ______ the socially optimal quantity. A. higher than B. lower than C. equal to D. more valuable than

b

32.A particularly strong expansion is called a(n): A. output excess. B. boom. C. growth recession. D. bonanza.

b

36. The adding up of individual economic variables to obtain economy wide totals is called: A. average labor productivity. B. aggregation. C. normative analysis. D. monetary policy.

b

17. Which of the following jobs is least likely to be outsourced? A. Flipping hamburgers B. Technical assistance over the phone for your computer C. Transcription of physicians' records D. Software design

a

24. Suppose that the price of doughnuts decreases. Given that doughnut holes are a by-product of producing doughnuts, one would expect: A. the supply of doughnut holes to decrease. B. the supply of doughnuts to decrease. C. the supply of doughnut holes to increase. D. the supply of doughnuts to increase.

a

34. A government is running a budget surplus if: A. government revenue exceeds government spending. B. government revenue is less than government spending. C. exports exceed imports. D. imports exceed exports.

a

38. Macro theory suggest that healthcare is best thought of as a: A. substitute so spending should increase over time if incomes rise. B. complement so spending should increase over time if incomes rise. C. superior good so spending should increase over time if incomes rise. D. inferior good so spending should decrease over time if incomes rise.

b

4. Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. The benefit to Matt of driving to campus to buy the concert ticket last week was: A. $2 B. $4 C. $9 D. $16

b

40. One of the largest determinants of fertility (births per woman) around the world has been female education. Core principles from economics suggest this may be because: A. additional education teaches people about the dangers of raising large families. B. increasing education opens new jobs and raises incomes, increasing the opportunity cost of children. C. education makes condom use more prevalent. D. children are an inferior good.

b

30. People who enjoy high standards of living usually have all of the following EXCEPT: A. higher literacy rates. B. longer life expectancies. C. freedom from scarcity. D. better general health.

c

33. The determination of the nation's money supply is called: A. structural policy. B. trade policy. C. monetary policy. D. fiscal policy.

c

35. "If the Federal Reserve raises interest rates, demand for housing is likely to fall" is a _______ statement about ________ policy. A. positive; fiscal B. normative; fiscal C. positive; monetary D. normative; monetary

c

37. Gertie saw a pair of jeans that she was willing to buy for $35. The price tag, though, said they were $29.99. Therefore: A. Gertie should not buy the jeans because they will be of lower quality than she expected. B. Gertie should not buy the jeans because the price is not equal to her reservation price. C. Gertie should buy the jeans because the price is less than her reservation price. D. Gertie should buy the jeans because the price is more than her reservation price.

c

5. Suppose the most you would be willing to pay for a plane ticket home is $250. If you buy one for $175, then your economic surplus is: A. $250. B. $175. C. $75. D. $0.

c

9. The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell. Why? A. Higher gas prices lowered the benefit of driving an SUV. B. Higher gas prices increased the benefit of driving an SUV. C. Higher gas prices increased the cost of driving a SUV. D. Higher gas prices lowered the cost of driving a SUV.

c

The Great Depression: A. occurred only in the United States. B. resulted in the development of microeconomics. C. was a period of low production and high unemployment. D. ended a few months after the stock market crash of 1929.

c

18. A good example of central planning at work in the U.S. is: A. car manufacturers establishing suggested retail prices. B. McDonald's fries being the same everywhere. C. unions working with businesses to establish wages. D. New York City's rent control program.

d

19. Which of the following is NOT true of a demand curve? A. It has negative slope. B. It shows the amount consumers want to buy at various prices. C. It relates the price of an item to the quantity demanded of that item. D. It reflects sellers' reservations prices.

d

20. Suppose that as the price of apples rises, people switch from eating apples to eating oranges. This is known as: A. the normal effect of a price change. B. the income effect of a price change. C. a decrease in the demand for apples. D. the substitution effect of a price change.

d

22. Excess demand occurs: A. whenever the market is in equilibrium. B. whenever the market is not in equilibrium. C. when price is above the equilibrium price. D. when price is below the equilibrium price.

d

27. A decrease in both the equilibrium price and the equilibrium quantity of rice is best explained by: A. an increase in the demand for rice. B. an increase in the supply of rice. C. a decrease in the supply of rice. D. a decrease in the demand for rice.

d

3. Amy is thinking about going to the movies tonight. A movie ticket costs $15, and she'll have to cancel a $20 dog-sitting job that she would have been willing to do for free. The opportunity to Amy cost of going to the movies is: A. $5. B. $15. C. $20. D. $35

d

39. Westworld is a: A. show you should watch as it is almost as good as Justified which everyone knows is the best show of all time. B. show you should watch so you get your professor's jokes in class. C. show that stole my ideas and turned them into a slightly less awesome tv series. D. all of the above.

d

41. The consumption (purchase and use) of automobiles may be higher than socially optimal because autos pollute, crowd streets, and hit one another: A. these are examples of positive externalities. B. these are examples of negative externalities. C. this can be improved (from a social surplus point of view) with the right set of subsidies. D. this can be improved (from a social surplus point of view) with the right set of taxes. E. A + C F. B + C

f

1. Economics is best defined as the study of: A. the financial concerns of businesses and individuals. B. the role of government in limiting the choices people make. C. choice in the face of limited resources. D. whether we will have enough resources in the future.

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