Chapter 1 Review- Macroeconomics

The circular flow diagram of economic activity is a model of the:

A. flow of goods, services, and payments between households and firms.

Which of the following best denotes the reason for the existence of substantial black markets?

B. A command economy

The basic difference between macroeconomics and microeconomics is:

C. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

Which of the following lies primarily within the realm of macroeconomics?

B. a study of how tax cuts stimulate aggregate production.

In the circular flow diagram model:

(both a and b are correct ) // businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. // households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses.

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

A. market-oriented economy.

Which of the following statements most likely lies within the realm of macroeconomics?

C. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.

C. Economies of sale

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

C. Environmental pollution

In the ______________, households receive goods and services and firms pay for them.

C. Goods and service market

In the ____________, households work and receive payment from firms.

C. Labor market

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:

C. Low inflation

If macroeconomics looks at the economy as a whole, it focuses on which of the following?

C. Unemployed people

21. Macroeconomics primarily examines:

C. broad issues such as national output, employment and inflation.

Which of the following is most likely a topic of discussion in macroeconomics?

D. A decrease in the unemployment rate

Which of the following statements most likely lies within the realm of microeconomics?

D. An increase in labor costs will increase the additional cost of producing another bus.

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

A. Division of labor

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

A. Government

Which of the following best describes a fiscal policy tool?

A. Government spending

Which of the following best describes a monetary policy tool?

A. Interest rates

Which of the following best characterizes the circular flow of income?

B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

B. Buyers and sellers

22. Specialization:

B. Can lead to and increase in overall production

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

B. Circular flow diagram

In which of the following countries will the national government have the greatest influence with respect to the nation's economy?

B. Cuba

In countries like _____________ the command economy predominates.

B. Cuba and North Korea.

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change.

B. Economy

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

B. Government

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization?

B. International Trade

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers?

B. The macroeconomy

The basic difference between macroeconomics and microeconomics is that:

C. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

Macroeconomics:

D. is concerned with the expansion and contraction of the overall economy.

Macroeconomic topics do not usually include:

the profit maximizing decisions of an individual manufacturer.