Macroeconomics chapter 1 quiz

Macroeconomics is best defined by which of the following statements? A) Macroeconomics is the study of the behavior of the economy as a whole. B) Macroeconomics is the study of individual households. C) Macroeconomics is the study of how the prices of individual goods are determined. D) Macroeconomics is the study of how firms attempt to maximize profits.

A) Macroeconomics is the study of the behavior of the economy as a whole.

In economics, all the items that people would consume if they had unlimited income are known as A) wants B) outputs C) aggregates D) needs

A) wants

Economics can be described as the study of how people use _______ resources to satisfy _______ wants. A) unlimited; unlimited B) limited; limited C) unlimited; limited D) limited; unlimited

D) limited; unlimited

"All Americans should have access to health care" is an example of A) a factual statement. B) a microeconomic argument. C) a positive statement. D) a normative statement.

D) a normative statement.

Which of the following is NOT an economic resource? A) low-skilled labor Incorrect Response B) coal C) an engineer Correct Answer D) money

D) money

If a teacher tells a student that those who attend the study session typically score higher on the final exam, A) the student has a negative incentive to attend the study session because she will be punished if she does not go. B) a "C" student will be making an irrational decision if she decides to skip the study session since she has plenty of time to go. C) the student has no greater incentive to attend because there is no guarantee she will get a higher grade on the exam. D) the student has a positive incentive to attend the study session because she may get a higher grade.

D) the student has a positive incentive to attend the study session because she may get a higher grade.

Which of the following is the best definition of economics? A) the study of how consumers spend their income B) the study of how the federal government allocates tax dollars C) the study of how business firms decide what inputs to hire and what outputs to produce D) the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided

D) the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided

The basic economic problem is a situation of A) unlimited incomes and limited choices. B) limited resources and unlimited wants. C) both limited resources and limited wants. D) limited incomes and unlimited choices.

B) limited resources and unlimited wants.

Resources are unlimited in a wealthy society. A) True B) False

B) False

Which of the following is an example of a positive economic statement? A) If gas prices fall, consumers should purchase more gas. B) In order to reduce the budget deficit, tax rates should be increased. C) If payroll taxes are raised, then the Social Security crisis will be resolved. D) In order to increase employment, the minimum wage should be decreased.

C) If payroll taxes are raised, then the Social Security crisis will be resolved.

The idea that people will not consciously make decisions that make them worse off is known as A) the decision duality. B) incentive assumption. C) rationality assumption. D) Adam Smith's doctrine.

C) rationality assumption.