Test 1, Macroeconomics

Let: A=2/5 and B=4/7. Then A/B equals: (Choose all that apply.)

2/5 times 7/4 0.4 times 1.75

Which of the following represents Human Kapital resources: (Mark all that apply)

-Entrepreneurship -Skills learned on the job -Artistic talent

TRUE OR FALSE: If the economy pictured above was producing at point G ( inside the ppc), then, without governmental interference or force, voluntary trade among rational citizens would allow the economy to reach point F (on the ppc).

False

In a centrally planned economy:

The government sets prices and decides how much of each good is to be produced

Which of the following represent the main macroeconomic goals of government in a mixed economy?

Maintaining stable prices achieving full employment, and ensuring real economic growth

An external cost occurs when:

The production or consumption of some good or service inflicts cost on a third party without compensation

A political candidate promises voters more funding for AIDS research and assures them they will not have to sacrifice any other goods or services to obtain the additional programs. Which of the following is true?

This may be possible if the economy has unemployed resources

Use the following information to find the value for Y* Let: C=75+0.8Y* I=50 G=20 (X-M)=(-10) S*=C+I+G+(X-M) AND S*=0+1Y*

Y*=675

Find the value of 1 / (1-X) when X=3/4

4

If the economy was producing at point C and chooses to move to point B Points: B 40 units consumer goods, 16 units capital goods C 72 units consumer goods, 12 units capital goods

4 units of capital goods would be gained, while the capacity to produce 32 consumer goods would be lost.

When resources are not allocated efficiently, we have:

A market failure

Capital (Kapital) is:

All of the above •The crucial element in every economic system •The key to every society's standard of living •The result of saving

Most economists in the US believe that the price mechanism leads to:

An efficient allocation of resources

The role of (_______) in the production process is central to why the US is rich and most of the rest of the world is poor.

Capital (Kapital)

The production possibilities curve illustrates the basic principle that:

If all the resources of an economy are in use, more of one good can be produced only if less of another good is produced

What was the most important consequence of suburbanization?

It left the cities with large concentrations of poor people

Which US governmental agency is responsible for "controlling the money supply"?

The Federal Reserve System

The recovery phase of the business cycle ends when:

The economy once again attains the level of the previous peak.