Macro Test 1

The term dollar votes means: A. Consumers "vote" for certain products to be produced by how they spend their incomes B. Voters may be offered dollars to help elect certain political candidates C. Government is responsible for determining what will be considered legal tender

A. Consumers "vote" for certain products to be produced by how they spend their incomes

Macroeconomics focuses on: A. The workings of the whole economy or large sectors of it B. The pricing decisions of a large company in an economy C. Studies of how competition in an industry affects economic efficiency

A. The workings of the whole economy or large sectors of it

All economic systems must answer certain fundamental economic questions. Which is not one of these questions? A. Which actions should government take to reduce inflation? B. How will the goods and services be produced? C. What goods and services will be produced?

A. Which actions should government take to reduce inflation?

Product A B C D E F ---------------------------------- Tanks 0 1 2 3 4 5 Autos 1000 950 850 650 350 0 The total opportunity cost of the three units of tanks is: A. 200 units of autos B. 350 units of autos C. 650 units of autos The marginal opportunity cost of the fourth unit of tanks is: A. 200 B. 300 C. 350

B. 350 units of autos B. 300

A basic fact upon which the study of economics is based is that people: A. Have unlimited resources, but limited economic wants B. Have unlimited economic wants, but limited resources C. Have limited economic wants and limited resources

B. Have unlimited economic wants, but limited resources

Which statement is an economic rationale for the law of increasing opportunity cost? A. The economy is employing all its available resources B. Many economic resources are better at producing one product than another C. In any economy, the state of technology is changing and resources are variable

B. Many economic resources are better at producing one product than another

Increases in resources or improvements in technology will tend to cause a society's production possibilities curve to: A. Shift inward or to the left B. Shift outward or to the right C. Become horizontal

B. Shift outward or to the right

The ceteris paribus (other things equal) assumption is employed in economic analysis to: A. State economic goals B. Simplify the complex world C. Evaluate an economic system

B. Simplify the complex world

The economizing problem for society is: A. To achieve a more equitable distribution of income in society B. That productive resources are scarce relative to economic wants C. To establish prices which are fair for both producers and consumers

B. That productive resources are scarce relative to economic wants

The process of developing hypotheses, testing them against facts, and using the results to construct theories is called: A. Opportunity cost calculation B. The scientific method C. Marginal analysis

B. The scientific method

The term consumer sovereignty means that: A. Consumers are controlled by the actions of the marketplace B. What is produced is ultimately determined by what consumers buy C. There are no limits on what consumers may buy under capitalism

B. What is produced is ultimately determined by what consumers buy

Which of the following is a normative economic statement? A. The Federal budget surplus rose by 10 billion dollars B. A fall in the unemployment rate was forecast for next month C. A trade deficit of 20 billion dollars will harm the economy

C. A trade deficit of 20 billion dollars will harm the economy

Which of the following statements is correct? A. The operation of a market system eventually results in an equal distribution of income B. Producers are "kings" in a market economy because they determine what is produced C. Freedom of choice and enterprise are essential elements of the market system

C. Freedom of choice and enterprise are essential elements of the market system

As a consequence of the condition of scarcity: A. There is never enough of anything. B. Production has to be planned by government. C. Individuals have to make choices from among alternatives.

C. Individuals have to make choices from among alternatives.

From an economic perspective, when a consumer decides to buy more life insurance, the consumer has most likely concluded that the: A. Marginal costs of more insurance coverage is negative B. Marginal benefits of more insurance coverage is greater than zero C. Marginal benefits of more insurance coverage are greater than the marginal costs

C. Marginal benefits of more insurance coverage are greater than the marginal costs

Consumers express self-interest when they: A. Reduce business losses B. Collect economic profits C. Seek the lowest price for a product

C. Seek the lowest price for a product

Another description for capitalism is: A. The command system B. The socialist economy C. The market system

C. The market system

Opportunity cost can be defined as: A. Marginal cost minus marginal benefit B. The time spent on an economic activity C. The value of the best forgone alternative

C. The value of the best forgone alternative

Which of the following is an economic explanation for why most college-aged movie stars do not attend college: A. they are too dumb to get into college B. they would find college life boring C. the opportunity cost in terms of reduced income is too great

C. the opportunity cost in terms of reduced income is too great