Ch. 1 Review (test 1)

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Suppose that the following headlines appeared in a newspaper. Which would most clearly represent a macroeconomic issue?

"Central Bank Raises Interest Rates"

Economics is the study of choice under conditions of

Scarcity

The study of economics would be superfluous if __________ did not exist.

Scarcity

The statement "The unemployment rate in the U.S. is 5 percent" is

a positive statement that can be falsified

Economic models come in the form of

all of the following: 3D objects Words Diagrams Mathematical equations

An economic model is

an abstract representation of reality

Which of the following would be strictly a microeconomic topic?

an increase in the price of the Ford Taurus

Microeconomics deals with which of the following?

how producers and consumers interact in individual markets

Positive economics deals with

how the economy does work

The opportunity cost of a particular activity

may include both monetary costs and forgone income

The statement that "at 10 percent, the interest rate is too high for families to buy the home they deserve," is a(n)

normative statement

What an economic decision maker must give up when choosing one economic activity over others is known as the

opportunity cost

"The Consumer Price Index increased by 4.2 percent in the first quarter of this year." What type of statement is this?

positive

An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of

positive economics

Individuals must make choices because

resources are scarce and wants are unlimited

Positive economics deals with

statements of fact

Microeconomics is the branch of economics that concerns

the behavior of individual households, firms, and governments

Macroeconomics is the branch of economics that concerns

the overall health of the economy

All the problems studied in economics arise from

the scarcity of resources

Macroeconomics is the study of

what is happening in the economy as a whole


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