Macroeconomics Final Exam Review
Leisure Island has 50 hours of labor a day that it can use to produce entertainment and good food. The table shows the maximum quantity of each good that Leisure Island can produce with different quantities of labor.
Can Leisure Island produce 4 shows and 14 meals a week? A. No, it cannot produce these quantities. 2. If Leisure Island produces 4 shows and 9 meals a week, is production efficient? B. No, it is not efficient 3. If Leisure Island produces 8 shows and 5 meals a week, do the people of Leisure Island face a tradeoff? 4. Suppose that Leisure Island produces 4 shows and 12 meals a week. Calculate the opportunity cost of producing 2 additional shows a week. The opportunity cost of producing 2 additional shows per week is 3 meals per week.
Which of the following statements about entrepreneurship is correct?
Entrepreneurs make business decisions
_____, is an example of a choice in the self-interest. _____, is an example of a choice in the social interest.
I buy pizza for lunch I am collecting funds to help the flood victims
Which of the following statements about rational choice is correct?
It is a rational choice to quit university and train to become a plumber when the benefit you receive from working as a plumber exceeds the cost of becoming a plumber.
Which of the following illustrates scarcity?
Megan wants to buy a CD that costs $25 but only has $10 to spend
Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise but does not want to go skiing. Part 3 Who faces a tradeoff?
Pam, Pat, and Pru face a tradeoff.
Which of the following is an example of entrepreneurship?
Sam Walton created the multinational retail corporation brand Walmart in 1962
Which items involve a microeconomic issue and which involve a macroeconomic issue? A. U.S. inflation expectations at highest level since 2015 B. Why are incomes growing faster in China than in the United States? C. Satisfaction with standard of living greater now than in 2000 D. Is Disney Plus a better value for your money than Netfilx?
Statement A involves a macro issue. Statement B involves a macro issue. Statement C involves a macro issue and Statement D involves a micro issue
Which of the following illustrates an efficient outcome?
Ted cuts the price of his sausages and his profit increases
Kanye West has teamed with Los Angeles inner-city schools to offer free passes for students. When Kanye West gave away tickets, what was free and what was scarce?
The seats available for the concert are scare because there are only a certain number available
What is the fundamental fact of life from which all economic problems arise?
Wants can't be satisfied with the available resources.
Which of the following questions is NOT a microeconomic question?
Why is unemployment falling?
Which of the following topics is NOT a macroeconomic question?
Would a higher alcohol tax decrease the quantity sold?
A rise in the money wage rate with no change in potential GDP creates _______.
a leftward shift of the SAS curve and no change in the LAS curve
Economics is
a subject that studies choices
A choice on the margin is a choice that is made by comparing all the relevant _____ systematically and _____. Marginal cost is the _____ that arises from one unit _____ in an activity. Marginal benefit is the _____ that arises from one unit _____ in an activity.
alternatives; incrementally; opportunity cost; increase; benefit; increase
Opportunity cost is the best forgone alternative because _______.
although you have many alternatives, it is the highest-valued alternative that you give up
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _____ and decreases during _____.
a recession; an expansion
Rational choice is a choice that uses the available resources to _____ of the person making the choice.
best achieve the objective
he production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.
can be produced and the combinations that cannot be produced
Full employment is when there is no _____ unemployment or, equivalently, when all the unemployment is _____ or _____.
cyclical; frictional; structural
If the price level and the money wage rate rise by the same percentage, the quantity of real GDP supplied _______ and there is a movement up along the _______ aggregate supply curve.
does not change; long-run
Land is the _____ that we use to produce goods and services.
gifts of nature of natural resources
A tradeoff is _______.
giving up one thing to get something else
How does the production possibilities frontier illustrate opportunity cost? If Ann moves from point A to point C, her opportunity cost of producing a brownie _______.
increases
The PPF bows outward because as we move from point A to point B to point C, the opportunity cost of producing a jacket ______.
increases. Resources are not equally productive in all activities
Human capital _____ that people obtain from education, on-the-job training, and work experience. _____ that have been produced in the past and that businesses now use to produce goods and services is capital.
is the knowledge and skill; Tools, instruments, machines, building, and other items
The resources that are used to produce goods and services - _____ are factors of production.
land, labor, capital, and entrepreneurship
Rent is the income paid for the use of _____. Wages are income paid for the services of _____. Profit (or loss) is the _____ earned by an entrepreneur for running a business. Interest is the income paid for the use of _____.
land; labor; income; capital
If potential GDP increases, what happens to aggregate supply? When potential GDP increases, _______.
long-run aggregate supply and short-run aggregate supply increase. The LAS and the SAS curve shift rightward
When the unemployment rate is greater than the natural unemployment rate, the output gap is _______. When the unemployment rate is less than the natural unemployment rate, the output gap is _______.
negative; positive
A rational choice is _______.
one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice
1. An increase in the minimum wage will bring more teenage unemployment. 2.The minimum wage should be increased. Statement 1 is a _______ statement because it _______ be tested. Statement 2 is a _______ statement because it _______ be tested.
positive; can normative; cannot
The production possibilities is a boundary. What is that boundary? The production possibilities frontier is the boundary between those combinations of goods and services that can be _______ and those that _______.
produced; cannot be produced
_____ are examples of goods and _____ are examples of services.
shoes; haircuts
Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them.
social science that studies; cope with scarcity
The natural unemployment rate is _______.
the unemployment rate when the economy is at full employment
ach is a math student who is considering taking an extra course in history. What is an incentive that might encourage him to take the history course?
tougher grading in math
The graph shows a production possibilities frontier. How does the production possibilities frontier illustrate production efficiency? Production efficiency is achieved at points A, B, and C because to increase the production of x as we move from A to B to C, _______ .
we are giving up the minimum amount of y possible to increase the production of x
We can't avoid having to make choices because
we can't afford to buy all the things we'd like
The _____ that people devote to produce goods and services is labor.
work time, and work effort
Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.
cannot; less
The what, how, and for whom questions in economics are questions about _______.
what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced
If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied _______ and there is a movement up along the _______ aggregate supply curve.
increases; short-run