Macroeconomic 202

Scarcity is a problem: a. of the poor, but not the rich b. Because human wants are unlimited while resources are limited c. only in industrialized economies d. measured by the amount of goods available

b. Because human wants are unlimited while resources are limited

Bill has $20 to spend on a Superman, Batman or an X-Men t-shirt. Bill buys the Superman t-shirt and the Batman t-shirt was a close second choice. What is Bill's opportunity cost? a. The Batman t-shirt. b. Nothing, since he got his preferred choice. c. The X-Men t-shirt. d. The amount he spent, $10.

a. The Batman t-shirt.

Which of the following is a normative statement? a. People would be better off if government expenditures were higher. b. Incomes grow more rapidly in low-tax states that high-tax states. c. People will buy less butter at $1.50 a pound than they will at $1.00 per pound. d. A decrease in price leads to an increase in quantity demanded.

a. People would be better off if government expenditures were higher.

Exhibit 1 Production Possibilities Curve data Consumption Goods Capital Goods 10 0 9 1 7 2 4 3 0 4 In Exhibit 1, according to the information, the opportunity cost of producing 3 units of capital is: a. 3 units of consumption goods. b. 7 units of consumption goods. c. 6 units of consumption goods. d. 4 units of consumption goods.

a. 3 units of consumption goods.

Which would not cause the Production Possibilities curve to shift to the right? a. A decrease in unemployment. b. Improvement in the education and training of workers. c. An increase in the number of workers. d. Improved methods of production.

a. A decrease in unemployment.

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37% of the population. How would this affect the Production Possibilities Curves for the countries of Europe at that time? a. The Production Possibilities Curves for these countries would have shifted inward. b. The Production Possibilities Curves for these countries would have been unaffected. c. This would have been illustrated by a movement along the Production Possibilities Curves for these countries, but it would not have shifted them. d. The Production Possibilities Curves for these countries would have shifted outward.

a. The Production Possibilities Curves for these countries would have shifted inward.

In the context of the Production Possibilities Curve, opportunity cost is measured in: a. the quantity of other goods given up. b. units of satisfaction. c. dollars paid for the goods. d. the value of the resources used. e. changing technology.

a. the quantity of other goods given up.

Economic growth is represented by a (an): a. Production Possibilities Curve that remains fixed. b. rightward or outward shift of a Production Possibilities Curve. c. movement along a Production Possibilities Curve. d. leftward or inward shift of a Production Possibilities Curve.

b. rightward or outward shift of a Production Possibilities Curve.

Given a Production Possibilities Curve, a point: a. inside the curve represents unemployment. b. on the curve represents full employment. c. All of the answers are correct. d. outside the curve is currently unattainable.

c. All of the answers are correct.

Natural resources are: a. available in unlimited quantities b. not considered scarce because no one pays for them. c. Included in the category of resources called land. d. only desired for use in producing other goods

c. Included in the category of resources called land.

Macroeconomics deals with the analysis of all of the following questions except: a. how does a central bank influence inflation. b. what determines a nation's savings c. how does Microsoft price its software packages. d. why do national economies grow. e. why does a country experience recessions

c. how does Microsoft price its software packages.

Which of the following is true of the Production Possibilities Curve? a. It assumes resources are fully employed. b. You Answered It assumes resources are fixed. c. It assumes a fixed level of technology. d. All of the answers are correct.

d. All of the answers are correct.

Which of the following is a statement of positive economics? a. Raising taxes provides additional revenue that should be used to finance health care. b. Too much government spending is the biggest problem facing the U. S. economy. c. Creating jobs is the most serious problem facing the U. S. economy. d. If taxes are over 50% of national income, job creation falls.

d. If taxes are over 50% of national income, job creation falls.

Which of the following is the best example of a microeconomic topic? a. The impact that the money supply has on inflation. b. The effect that federal budget deficits have on the interest rate. c. The tradeoff between inflation and unemployment. d. The reasons for increases in the price of soft drinks

d. The reasons for increases in the price of soft drinks

Using a Production Possibilities Curve, a improvement in technology would be illustrated as a (an): a. movement from a point on the curve to a point inside the curve. b. movement from one point to another point along the curve. c. flattening of the curve. d. outward shift of the curve.

d. outward shift of the curve.

Exhibit 10 Production Possibilities Curve data A B C D E Capital Goods 0 1 2 3 4 Consumer Goods 25 23 19 13 0 Suppose an economy is faced with the Production Possibilities Table shown in Exhibit 10. The second unit of capital goods production will cost_______ units of consumer goods, and the third unit of capital goods production will cost_______ units of consumer goods. a. 25; 23 b. 23; 19 c. 2; 19 d. 1; 23 e. 4; 6

e. 4; 6