Macroeconomics Ch. 1

Economics is best defined as the study of how a. individuals decide to use scarce resources in an attempt to satisfy their unlimited wants b. to make money c. the government should deal with unemployment and inflation d. to eliminate the problem of scarce resources e. to run a business

A. Individuals decide to use scarce resources in an attempt to satisfy their unlimited wants

Households a. own and sell resources b. play a very minor role in the economy c. supply goods and services d. are the largest purchasers of resources e. none of the above

A. Own and sell resources

Goods and services are exchanged in a. product markets b. resource markets c. inventory markets d. classified markets e. government markets

A. Product Markets

Which of the following would be a topic considered in the field of macroeconomics? a. Studying the amazing recent growth of the Chinese economy. b. Studying the movement of US manufacturing firms to China. c. Studying the differences in wages between men and women in the United States. d. Studying the effect of rent controls on the housing market in New York City. e. Studying the impact of environmental regulations on the well-being of human populations.

A. Studying the amazing recent growth of the Chinese economy

An example of a positive economic statement is, "An increase in the price of a product causes consumers to purchase more of that product." a. True b. False

A. True

Normative economic statements refer to what should be. a. True b. False

A. True

The numerical value of the slope of a line depends in part on the units of measurement used. a. True b. False

A. True

A resource is something that a. is used to produce goods and services b. is provided by nature, not made by society c. exists in unlimited quantities d. must be produced by a firm e. consumes goods and services

A. is used to produce goods and services

A U-shaped curve has a positive slope everywhere. a. True b. False

B. False

Rational self-interest is equivalent to pure selfishness a. True b. False

B. False

"There should be less discrimination against women" is an example of a positive statement. a. True b. False

B. False, a positive economic statement is factual and normative is opinion

In a circular-flow model, households supply all of the following except a. labor b. goods and services c. capital d. entrepreneurial ability e. natural resources

B. Goods and services

Microeconomics is the study of a. marginal or inferior products b. the economic behavior of individual decision makers c. the behavior of the economy as a whole d. how to use the fewest natural resources to produce goods and services e. government's role as a producer in the economy

B. The economic behavior of individual decision makers

One might commit the fallacy of composition by concluding that a. statements that are true during prosperity are necessarily true during depression b. what is good for the individual is necessarily good for the group c. an event that precedes another is necessarily the cause of the latter d. intentions need not coincide with actions e. the composition of a complex product is not revealed by its exterior appearance

B. What is good for the individual is necessarily good for the group

In economics, capital is defined as a. natural resources, such as water, oil, and iron ore b. the natural, unskilled abilities of people c. human creations used in the production process d. money and other financial assets e. the willingness of business owners to take risks

C. Human creations used in the production process

A normative economic statement a. is a hypothesis used to test economic theory b. is a statement of fact c. is a statement of what ought to be, not what is d. indicates what will occur if certain assumptions are true e. enables economists to test hypotheses

C. is a statement of what ought to be, not what is

A rational decision maker will take only those actions for which the expected marginal benefit a. is positive b. is at its maximum level c. is greater than or equal to the expected marginal cost d. is less than the expected marginal cost e. exactly equals the expected marginal cost

C. is greater than or equal to the expected marginal cost

Which of the following is an example of a positive statement? a. Workers with families should be paid at least the minimum wage. b. If crime rates were reduced, the world would be a better place in which to live. c. Marginal tax rates should be reduced for individuals in the highest tax brackets. d. An increase in the price of gasoline will cause a reduction in the amount purchased. e. Corrupt politicians ought to be voted out of office.

D. An increase in the price of gasoline will cause a reduction in the amount purchased.

The labor market is an example of a a. government market b. classified market c. communication market d. resource market e. product market

D. Resource market

A market a. is often a physical place b. facilitates exchanges between buyers and sellers c. typically involves monetary transactions d. might not have well-defined geographical limits e. all of the above

E. All of the above

The difference between positive economic statements and normative economic statements is that a. both c and e are true b. positive statements are based on opinion while normative statements are based on fact c. positive statements are true and normative statements are often false d. positive statements are often false and normative statements are true e. positive statements are based on fact while normative statements are based on opinion

E. Positive statements are based on fact while normative statements are based on opinion

Moderate exercise is better than none, but excessive exercise is harmful. What is the shape of the graph of health benefits versus hours of exercise per week if health benefits are measured on the vertical axis and exercise is measured on the horizontal axis? a. a positively sloped straight line b. a negatively sloped straight line c. a vertical straight line d. a U-shaped curve e. a hill-shaped curve

E. a hill-shaped curve

If slope = -2 for a line on a graph with x on the horizontal axis and y on the vertical axis, then if a. x increases by 4, y increases by 8 b. x increases by 4, y increases by 2 c. y increases by 4, x increases by 8 d. x = 4, y = 8 e. x increases by 4, y decreases by 8

E. x increases by 4, y decreases by 8