Macroeconomics Chapter 1

Which of the following is a positive economic statement? A. If minimum wage rates rise, then unemployment will rise. B. Full employment policies should be pursued. C. We should tax the wealthy more and use the money to provide services for the poor. D. The government should do something to help the homeless.

A. If minimum wage rates rise, then unemployment will rise.

Which of the following are not essential components of an economic model? A. Normative statements B. Assumptions C. Hypothesis D. Variables

A. Normative statements

Economics is the study of choice under conditions of: A. Scarcity B. Supply C. Opportunity D. Abundant resources

A. Scarcity

The slope of a straight line equals the change in the value on the __________ axis __________ by the change in the value of the other axis measured between any two points on the line. A. vertical, divided B. vertical, multiplied C. horizontal, divided D. horizontal, multiplied

A. Vertical, divided

Understanding economics can help policymakers devise strategies to do all of the following except: A. eliminate climate change B. increase our standard of living C. reduce poverty levels D. encourage business formation

A. eliminate climate change

Economics: A. is concerned with how people respond to incentives B. is a natural science C. is unconcerned with value judgments D. deals with assumptions and is therefore unrealistic

A. is concerned with how people respond to incentives

The resources provided by nature and used to produce goods and services are also known as: A. natural resources B. factors of production C. physical capital D. labor resources

A. natural resources

Economic models are: A. precise representations of reality that include as many details as possible in order to accurately predict behavior B. presentations of all possible outcomes under all real world circumstances C. analytical interpretations of economic behavior involving everything we know about the surrounding social and political structure of society D. simplifications of reality that focus only on key relationships and ignore less relevant details

D. Simplifications of reality that focus only on key relationships and ignore less relevant details

The vertical axis on a graph is also known as the: A. x-axis B. Slope C. z-axis D. y-axis

D. y-axis

What is the percentage change in price for a shirt that was marked down from $40 to $28? A. 70% B. 30% C. -30% D. -43%

{(P2-P1)/P1}x100 {(28-40)/40}x100= C. -30%

Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer? A. What products do we produce? B. How do we produce the products? C. Who consumes the products?

B. How do we produce the products?

Macroeconomics is concerned with all of the following except: A. Unemployment rates B. Political party affiliation C. Inflation rates D. Standard of living

B. Political party affiliation

Graphs are often used in economics because they: A. are challenging to understand B. can simplify complex topics C. make problem analysis more complex

B. can simplify complex topics

Macroeconomics can be used to understand all of the topics listed below, except: A. how the national economy works B. how a consumer decides between the purchase of two different cars C. what causes economic booms and recessions D. national unemployment trends

B. how a consumer decides between the purchase of two different cars

If the president of Columbia commented that "we should do something to reduce inflation in Columbia," this would be an example of: A. a positive statement B. a statement that has both positive and normative components C. a normative statement D. a statement that has neither positive nor normative components

C. A normative statement

Economic models often simplify the real world by holding all things equal and changing one variable to determine the impact of the change. The "all things equal" assumption is also known as: A. isolation B. simplification C. ceteris paribus

C. Ceteris paribus

The stock of computers, factory buildings and machine tools used to produce goods is known as: A. Financial capital B. Human capital C. Physical capital D. Technology

C. Physical capital