Macroeconomics Quiz 2

refer to figure 2-1. Which arrow represents the flow of spending by households?

A (top right facing Markets/Goods&Services)

Adam Smith said products and services get distributed by:

The invisible hand

The production possibilities frontier shows the ___________ of making cars or computers for a country, or playing basketball or tennis for recreation, or studying or sleeping for students.

opportunity cost

Refer to table 2-4. What is the opportunity cost to picnic land of increasing the production of hotdogs to from 450 to 900?

225 burgers

Refer to figure 2-6. If this economy devotes all of its resources to the production of blankets, then it will produce

360 blankets and 0 pillows

Refer to table 2-4. What is the opportunity cost to picnic land of increasing the production of burgers from 450 to 750

450 hotdogs

Who said, "the whole of science is nothing more than the refinement of everyday thinking"?

Albert Einstien

"The government should raise the minimum wage". This is an example of what type of statement?

B. Normative

Refer to figure 2-1 (Circular-flow diagram), which arrow represents the flow of labor

C (bottom right facing Markets/Productions)

In the social science iceberg, _______ are on top, and ______ are below water.

Constructs, concepts

Economist generally support

Free international trade

Countries should decide what to make and what not to make , based on comparative advantage. To make that calculation they analyze

Opportunity cost

When a country considers whether it can make a product using fewer resources, it is applying:

absolute advantage

"Ceteris paribus" means

all else brings equal

Trade between countries

allows each country to consume at a point outside its production possibilities frontier

Economists build economic models by

making assumptions

Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative advantage in semiconductors while Mexico has a comparative advantage in auto parts. If the US exports semiconductors to Mexico and imports auto parts from Mexico,

both countries, as a whole, will be better off.

Refer to figure 2-4. This economy has the ability to produce at which point(s)?

c. R, U

Macroeconomics studies what level?

country

Refer to figure 2-4. At which point is this economy producing its maximum possible quantity of doors?

d. U

When two countries trade with one another, it is most likely because

the two countries wish to take advantage of the principle of comparative advantage.