Macroeconomics-Test 1
Which of the following is a distinguishing feature of a market system?
central planning
Command systems are also known as:
communism or socialism
The regulatory mechanism of the market system is
competition
Copyrights and trademarks are examples of:
property rights
Which of the following would most likely be a topic of study in macroeconomics?
the effect of an increase in the price of imported oil on the U.S. inflation rate
Which of the following is best identified as a positive statement?
the general price level rose by 4.4 percent last year
An example of market power is
the last gas station in New Mexico for 100 miles
The four factors of production are
land, labor, capital, and entrepreneurial ability
The French Term "laissez faire" means:
let it be
In economics, the cost of something is
the dollar amount of obtaining it
The invisible hand concept suggests that
assuming competition, private and public interests will coincide.
Economic theories
are generalizations on a careful observation of facts
The term "invisible hand" was coined by
Adam Smith
Which course of action is consistent with the rational decision making process?
Any of the above
Economic scarcity:
Applies to all economies
Of the following countries, the one that best exhibits the characteristics of a market economy is:
Canada
Examples of command economies are:
Cuba and North Korea
Well-defined property rights:
Encourage owners to maintain or improve their property
The pursuit of self interest:
Gives direction to the market system
Which of the following is not a characteristic of the market system?
Government ownership of the major industries.
Which would not be true in a market economy?
Government policies directly control the decisions of firms and households.
Which of the following observations was made by the famous Adam Smith in his book "The Wealth of Nations"?
Households and firms interacting in markets are guided by an "invisible hand" that leads the, to desirable market outcomes.
An economic system
Is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.
The term used to describe a situation in which market fail to allocate resources efficiently is called
Market Failure
The decisions of firms and households are guided by profit and self-interest in a
Market economy
A competitive market economy differs from a command economy in that economic decisions are made by
Millions of firms and households
Market Power refers to the
Power of a single person or group to influence market prices
The "invisible hand" directs economic activity through competition and
Prices
Which of the following is a fundamental characteristic of the market system?
Property rights
Economics deals primarily with the concept of
Scarcity
A fundamental difference between the command system and the market system and the market system is that, in command systems:
The division of output is decided by central planning rather than by individuals operating freely through markets.
A market economy rewards people according to
Their ability to produce things that other people are willing to pay for.
Competition means that
There are independently-acting buyers and sellers in each market
Which of the following is NOT included in the decisions that every society must make?
What determines consumers preferences
Which of the following is not one of the five fundamental questions that every economic system must answer?
What prices will be charged for goods and services
The invisible-hand concept suggest that
When firms maximize their profits, society's output will also be maximized
Economic systems differ according to what two main characteristics?
Who owns the factors of production, and the methods used to coordinate economic activity.
Which of the following is a distinguishing feature of the market system?
Wide-spread private ownership of capitol.
Which of the following is a labor resource?
a computer programmer
Which of the following is a capital resource?
a piece of software used by a firm
Which of the following is not considered to fall under government's function of redistributing income
anti-monopoly laws
Government may lessen income inequality by
doing all of these
Macroeconomics is the study of
economy-wide phenomena
One necessary role of government in a market economy is to
enforce property rights
The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by
government actions that control and distort prices
The Sherman Act of 1890 is an example of
government attempting to maintain competition
The term Laissez-faire suggests that
government should not interfere with the operations of the economy.
The pure food and drug act is an illustration of
governmental provision of public goods
Microeconomics is the study of
how individual households and firms make decisions
Broadly defined, competition involves
independently-acting buyers and sellers in each market
Both the "Wealth of Nations" and the Declarations of Independence share the point of view that
individuals are best left to their own devices without the government guiding their actions.
A rational decision maker takes an action only if the
marginal benefit is greater than the marginal cost.
The two general types of economic systems that exist today are
market systems and command systems
The invisible hand refers to the
notion that, under competition, decisions motivated by self-interest promote the social interest
The latin term "ceteris parbus" means:
other things equal
The U.S. food stamp program, which provides coupons that allow low-income individuals to buy food is an illustration of
the re-distributional function of government
The economic policies and programs of government affect all of the following except
the underlying motives of consumers, workers, and firms
The opportunity cost of an item is
what you give up to get the item
