Macroeconomic #1 Assessment

market economy

Economic decisions are made by individuals or the open market.

The primary factors underlining economic growth are

Expanding resources and improving technology

An economic model is a complex version of reality used to analyze real world economic situations

False

All command economies (centrally planned economies)

Have been political dictatorships

Which of the following results in higher standard of living

Higher levels of education

Which of the following is a positive economic statement

If the price of iPhones falls, a larger quantity of iPhones will be purchased.

A change from an inefficient mix to an efficient mix of output would best be represented with a production possibilities frontier as a

Movement from inside the PPF onto the PPF

The slope of the budget constraint is

Negative, since to purchase more of one good means giving up some of the other good

Increasing opportunity cost occur along the PPF because

Not all resources are equally well-suited to produce all goods

Which of the following statement about the economic decisions consumers, firms, and the government have to make is false

Only individuals face scarcity; firms and the government do not

All the following are part of economic model except

Opinions

The government of Spain decides to spend less on the military and more on healthcare, the forgone spending on military items represents the

Opportunity cost of the extra healthcare

Production possibility frontier will have a curved or bowed out shape if

Opportunity costs are increasing

Which of the following is a normative economic statement

Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

Full employment on a PPF is shown by

Points along the front of the PPF

Economic models do all of the following except

Portray reality and all its minute details

Which of the following is a problem inherent in command economies

Production managers are more concerned with satisfying governments orders and then with satisfying customers wants

Economics does not correct or incorrect behaviors but rather it assumes that economic agents _____, meaning they make the best decisions given their knowledge of the cost and benefits

Rationally

Which of the following would not be an investment in human capital

Researching automated production techniques

When an economy is operating efficiently, the production of one more unit of a good result in the production of less of another good because

Resources are limited and efficiency implies that all resources are already in use

In economics, choices must be made because we live in a world of...

Scarcity

Which of the following is a positive economic statement

Scarcity necessitates that people make trade-offs.

Which of the following statements about scarcity is true?

Scarcity refers to the situation in which unlimited wants exceed limited resources.

When income decreases the budget constraint

Shift inward

Economic Growth is shown as a

Shift the right of the PPF

Economic growth is shown as a

Shift to the right of the PPF

The lesson of _____ is to forget about the money that's irretrievable gone and instead focus on the marginal cost and benefits of future options

Sunk costs

Households _____ factors of production and ______ good and services

Supply ; demand

Which of the following is not an opportunity cost you incur if you see a Yankees baseball game

The $50 ticket that were given to you by friend who could not go to the game

Which of the following is a micro economic question

What factors determine the price of carrots?

Allocative efficiency best describes ______, and productive efficiency best explains ______

Why some thing will be produced; what will be produced

Which of the following is a micro economic question

Will the merger of American Airlines and US airlines increase or decrease airfares

sunk cost

a cost that has already been paid and cannot be recovered

economic model

a simplified version of reality

Voluntary exchange between buyers and sellers generates ______ in a market economy

allocative efficiency

When production reflects consumer preferences, _____ occurs

allocative efficiency

Economics assume that individuals

are rational and respond to incentives

Which of the following is part of an economic model

assumptions

Production levels to the left of the PPF are

attainable but inefficient

Markets promote

competition and voluntary exchange

Which of the following is part of an economic model

data

In economics, the term equity means

economic benefits are distributed fairly.

Economists assume that rational behavior is useful in explaining choices people make

even though people may not behave rationally all the time.

A free lunch

getting something without giving up something else

capital goods

goods that are used in producing other goods, rather than being bought by consumers.

The basic economic problem of scarcity

has always existed and will continue to exist

Micro economics is the study of

how individual households and firms make decisions.

Which of the following is part of an economic model

hypotheses

The opportunity cost of an action

is a subjective valuation that can be determined only by the individual who chooses the action.

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

Economists reason that the optimal decision is to continue any activity up to the point where

marginal benefit equals marginal cost

Recession

period of reduced economic activity

In a modern mixed economy, who decides what goods and services will be produced?

producers, consumers, government

Every society faces economic trade-offs. This means

producing more of one good means less of another good can be produced.

_______ is a situation in which a good or service is produced at the lowest possible cost

productive efficiency

consumer goods

products and services that satisfy human wants directly

An increase in the quantity and/or quality of labor available could be due to each of the following except

strict immigration policy enforcement.

Allocative efficiency is achieved when firms produce goods and services

that consumers value most

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources

The concept of opportunity cost is that

the economic cost of using a factor of production is the alternative use of that factor that is given up.

Macro economics is the study of

the economy as a whole

opportunity cost is defined as

the total value of all alternatives that must be given up to engage in an activity.

The derivation of the production possibilities frontier assumes

there is a fixed quantity of resources and technology available.

Who receives the most of what is produced in a market economy?

those who are willing and able to buy them

Scarcity exist because of

unlimited wants and limited resources

Which of the following is a result of a market economy

voluntary exchange

allocative efficiency

when the mix of goods being produced represents the mix that society most desires

Which is fine would be most likely to cause the production possibilities frontier to shift to the left

A decrease in size of the labor force

A countries production inside the PPF frontier. This could happen because of

A recession

A country's output is inside the frontier of the PPF. this could happen because of

A recession

command economy

An economic system in which the government controls a country's economy.

All the following are part of economic model

Assumptions, hypothesis, and data

Who in a market economy, decides what goods and services will be produced with the scarce resources available in the economy

Consumers and producers

Which of the following can lead to a decrease (leftward shift) in the PPF

Banning technology due to it's adverse environmental effects

Which of the following factor(s) are easiest to influence the government policies

Capital and labor

Suppose that the government could stimulate spending in one of the following expenditure categories. In which of these categories would the spending increase contribute most of an expansion of production possibilities

Capital goods

Which of the following generates production efficiency

Competition among sellers

Which of the following statements about competition in a market is true

Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production.

The decision about what goods and services will be produced in a market company is made by

Consumers and firms choosing which goods and services to buy or produce

A country operating outside of the production possibilities frontier is

Impossible. A country cannot operate outside the production possibilities frontier

What are two key factors that must be known to be able to drive a budget constraint

Income and prices

If an Economy produces computers and pizzas and a technological innovation makes the production of computers cheaper, we would expect economies production of pizzas to

Increase

A production possibilities frontier with a bowed outward shape indicates

Increasing opportunity cost as more and more of a good is produced

What is an economic model?

It is a simplified version of some aspect of economic life used to analyze an economic issue.

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called

Macroeconomics

In economics, the term _____ means "additional" or "extra"

Marginal

Which of the following contributes to the efficiency of markets?

Markets are able to bring about an equitable distribution of goods and services

The branch of economics which studies how household and firms make choices, interact in markets, and how government attempts to influence their choices is called

Microeconomics

Fredo decides to spend an hour playing baseball rather than studying. His opportunity cost is

The benefit of his grades from studying for an hour

Opportunity cost is a measure of

The goods in individual or economy must for go to produce or consume more of some other good

Who, in command economy (centrally planned economy), decides what goods and services will be produced with the scarce resources available in that economy?

The government

How are fundamental economic decisions determined in North Korea?

The government decides because North Korea is a command economy (centrally planned economy)

What's the following is a normative economic statement

The price of gasoline is too high

If societies PPF shift to the right

The society standard of living may increase

A country can use it's given resources to produce capital goods or consumer goods this implies that

There is a trade-off between the current and the future standard of living

Which of the following statements about positive economic analysis is false

There is much more disagreement among economists over positive economic analysis than over normative economic analysis.

Which of the following is a problem inherent in command economies (centrally planned economies)?

There is too little productive of low cost, high-quality goods and services

Which of the following is a macro economic question

What determines minimum wage

Which of the following is a macro economic question

What determines the growth rate of gross domestic product

Which of the following is a macro economic question

What determines the inflation rate