Macroeconomics: Ch. 1-4
With trade
A country's consumption possibilities frontier can be outside its production possibilities frontier
Without trade
A country's production possibilities frontier is also its consumption possibilities frontier
On the production possibilities frontier shown, the economy CANNOT produce at which point or points?
A,C (outside the curved line)
When economists attempt to simplify the real world and make it easier to understand they make
Assumptions
On the production possibilities frontier shown, the economy can produce at which point or points?
B,D,E (all within the curved line)
Trade is based on
Comparative advantage
Absolute advantage is found by
Comparing the productivity of one nation to that of another
On the production possibilities frontier shown, which point or points are inefficient?
D (not located on curved line)
On the production possibilities frontier shown, which point represents the maximum possible production of tubas?
E (farthest possible place on curved line)
When a production possibilities frontier shifts outward, it is showing the concept of
Economic growth
Macroeconomics is the study of
Economy-wide phenomena
CAFE Standards, as explained in "Can Better Regulation Boost Growth?" provide regulatory certainty to the U.S. automobile industry and encourage car companies to invest in
Energy efficiency technologies
A circular-flow diagram is a model that
Explains how the economy is organized
The best way to boost the economy during a recession, as pointed out in "Unemployment Rate," is to
Extend unemployment benefits
One definition of equity would be
Fairness
In general, as noted in "Unemployment Rate," the unemployment rate begins to rise prior to the start of a recession
False
Another word used for household is
Family, Consumer, Customer
Imports are
Goods produced abroad and sold domestically
The unemployment rate, as put forth in "Unemployment Rate," is important as a gauge of joblessness, which makes it also a gauge of the economy's
Growth rate
For two people who are planning to trade, it is impossible to
Have a comparative advantage in both goods
In a market economy, the government should
Help when we experience market failure, and interfere when we have externality
Economists study all of the following EXCEPT
How societies change over time
Economists understand that people respond to
Incentives
In a circular-flow diagram
Income payments flow from firms to households, and sales revenue flows from households to firms
Emerging markets, as reported in "What Threat Do the Monetary Policies of Developed Nations Pose to Emerging Economies?" have attracted investor attention in the wake of the 2008 financial crisis as a result of all of the following factors except
Increasingly stable governance
When countries specialize according to their comparative advantage,
It is possible to increase world output of all goods
A relatively weaker currency is a key tool for emerging economies, as maintained in "What Threat Do the Monetary Policies of Developed Nations Pose to Emerging Economies?" because it
Makes their exports more appealing to developed nations
Good economic models
Omit many details to allow us to see what is truly important
On a production possibilities frontier, production is efficient if the production point is
On the frontier
The U.S. Bureau of Labor Statistics, as explained in "Unemployment Rate," releases new unemployment figures
Once a month
The word economy comes from the Greek word for
One who manages a household
What you give up to obtain an item is called your
Opportunity cost
Comparative advantage is based on
Opportunity costs
In a market, surplus refers to a situation in which
Quantity supplied is greater than quantity demanded
According to "Can Better Regulation Boost Growth?" there is a risk that regulations can impose significant costs or alter behavior in unintended ways, particularly if
Regulators lack strong technical knowledge
Both households and societies face many decisions because
Resources are scarce
The law of demand says that when price
Rises, quantity demanded falls
Economics deals primarily with the concept of
Scarcity
The country that has a comparative advantage in a product
Should export that product
Efficiency means that
Society is getting the most it can from its scarce resources
According to the graph shown, if price in this market is currently $14, there would be a
Surplus and price would tend to fall
In the circular-flow diagram shown, which arrow shows the flow of the factors of production?
The arrow that starts at households, then to markets for factors of production, and finally at firms
In the circular-flow diagram shown, which arrow shows the flow of spending by households?
The arrow that starts at households, then to markets for goods and services, and ends at firms
Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that
The nation is not using all available resources or has inefficiencies
The market demand is
The sum of all individual demands
For most students, the largest single cost of a college education is
The wages given up to attend school
Which of the following is NOT correct?
Trade is based on absolute advantage
A monopoly is a market
With one seller
According to the graph show above, in this market, equilibrium price and quantity would be
at the very center of the crossing lines
According to the graph shown, if price in this market is currently $8, quantity supplied would be
the amount between S and D