Macroeconomics HW 1

Suppose that you allocate​ $20 each week for your entertainment budget. This money is spent on two​ items: either renting movies for​ $1 each at Redbox or downloading songs from iTunes at​ $1 each. Given this​ information, which of the following would represent your budget constraint for​ entertainment?

Amount spent on iTunes​ + Amount spent at Redbox​ = $20.

Suppose your New Year resolution is to get back in shape. You are considering various ways of doing​ this: you can sign up for a gym​ membership, walk to​ work, take the stairs instead of the​ elevator, or watch your diet. How would you evaluate these options and choose an optimal​ one?

Do a​ cost-benefit analysis to compare the alternatives.

Which of the following statements would not be considered a positive​ statement? A. In the last 10 years comma the annual unemployment rate was at its peak in 2010In the last 10 years, the annual unemployment rate was at its peak in 2010. B. The vending machine outside the classroom needs a better selection of foodThe vending machine outside the classroom needs a better selection of food. C. The growth rate of college tuition for 2013 minus 2014 was 2.9 percentThe growth rate of college tuition for 2013−2014 was 2.9 percent. D. The U.S. automobile industry had its highest growth in 5 years in 2012The U.S. automobile industry had its highest growth in 5 years in 2012.

B

Which of the following is not an example of​ causation? A. Graduating collegeGraduating college will lead to being smarterbeing smarter. B. Playing contact sportsPlaying contact sports will lead to knee injuriesknee injuries. C. Wearing your lucky socks while watching the football gameWearing your lucky socks while watching the football game will lead to your team winningyour team winning. D. All of the above are examples of causation.

C

Which of the following is true regarding the concept of​ causation? A. It states that if event A causes event​ B, then event B cannot have a causal effect on event A. B. It states that if event A causes event​ B, then event B must also cause event A. C. It describes how one event can bring about change in another. D. For any two events that​ occur, economists state that the first must have caused the​ second, since it came first.

C

Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following​ order: going to​ class, sleeping in​ late, going to work​ early, getting​ lunch, going to the gym to​ exercise, and watching television. If you decide to go to​ class, then what do we know about the opportunity cost of your​ decision?

The opportunity cost would be sleeping in​ late, since it was your​ next-best option.

The statement that the U.S. government should increase carbon taxes to reduce carbon emissions that cause global warming is​ ___________.

a normative​ statement, since it describes what ought to be done and is therefore not possible to confirm with data.

Economics is divided into two broad fields of​ study: microeconomics and macroeconomics. Microeconomics studies​ _________, while macroeconomics studies​ _________.

a small piece of the overall​ economy; the economy as a whole.

The definition of economics states that it is the study of how​ _________.

agents choose to allocate scarce resources and the impact of those choices on society.

A surge in cocoa prices is ______ and a pest attack on the cocoa crop is ______

an effect; the cause

Lower infant mortality is ______ and an improvement in nutrition is ______

an effect; the cause

When making your decision about which activity to​ choose, you should consider the monetary cost______ the opportunity cost of the activities. The goal is to choose the option that offers the greatest_____benefit.

as well as; net

Policy decisions made by the government are analyzed by​ _________.

both microeconomics and macroeconomics.

Empiricism describes a situation where

economists use data to analyze what is happening in the world

When economists test their theories using​ evidence-based analysis, they are most likely using​ __________.

empiricism through the use of data.

For a market to be in​ equilibrium, three conditions must hold. Fill in the blanks below to complete these conditions. The amount produced by sellers must be __________ the amount purchased by buyers. The costs of making a product must be __________ the final price at which the product sells. Buyers must place a value on the uses of the product that is __________ the cost of buying the product.

equal to; less than; greater than

A policy such as whether to increase the money supply would be studied under_____, since it deals with___________.

macroeconomics; the economy as a whole

Equilibrium describes a situation where

no one would benefit from changing his or her behavior

Optimization describes a situation where

people weigh costs and benefits when making a decision

In​ equilibrium, everyone​ ___________.

simultaneously​ optimizes, so that nobody benefits by changing his or her own behavior.

Your budget constraint for entertainment illustrates the concept of_______, since as you increase your purchases of one​ item, you _______.

trade-offs; must decrease your purchase of the other item

The opportunity cost of an activity is a measure of _____ when you do that activity.

what is given up