Macroeconomics HW 1
Suppose that you allocate $20 each week for your entertainment budget. This money is spent on two items: either renting movies for $1 each at Redbox or downloading songs from iTunes at $1 each. Given this information, which of the following would represent your budget constraint for entertainment?
Amount spent on iTunes + Amount spent at Redbox = $20.
Suppose your New Year resolution is to get back in shape. You are considering various ways of doing this: you can sign up for a gym membership, walk to work, take the stairs instead of the elevator, or watch your diet. How would you evaluate these options and choose an optimal one?
Do a cost-benefit analysis to compare the alternatives.
Which of the following statements would not be considered a positive statement? A. In the last 10 years comma the annual unemployment rate was at its peak in 2010In the last 10 years, the annual unemployment rate was at its peak in 2010. B. The vending machine outside the classroom needs a better selection of foodThe vending machine outside the classroom needs a better selection of food. C. The growth rate of college tuition for 2013 minus 2014 was 2.9 percentThe growth rate of college tuition for 2013−2014 was 2.9 percent. D. The U.S. automobile industry had its highest growth in 5 years in 2012The U.S. automobile industry had its highest growth in 5 years in 2012.
B
Which of the following is not an example of causation? A. Graduating collegeGraduating college will lead to being smarterbeing smarter. B. Playing contact sportsPlaying contact sports will lead to knee injuriesknee injuries. C. Wearing your lucky socks while watching the football gameWearing your lucky socks while watching the football game will lead to your team winningyour team winning. D. All of the above are examples of causation.
C
Which of the following is true regarding the concept of causation? A. It states that if event A causes event B, then event B cannot have a causal effect on event A. B. It states that if event A causes event B, then event B must also cause event A. C. It describes how one event can bring about change in another. D. For any two events that occur, economists state that the first must have caused the second, since it came first.
C
Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following order: going to class, sleeping in late, going to work early, getting lunch, going to the gym to exercise, and watching television. If you decide to go to class, then what do we know about the opportunity cost of your decision?
The opportunity cost would be sleeping in late, since it was your next-best option.
The statement that the U.S. government should increase carbon taxes to reduce carbon emissions that cause global warming is ___________.
a normative statement, since it describes what ought to be done and is therefore not possible to confirm with data.
Economics is divided into two broad fields of study: microeconomics and macroeconomics. Microeconomics studies _________, while macroeconomics studies _________.
a small piece of the overall economy; the economy as a whole.
The definition of economics states that it is the study of how _________.
agents choose to allocate scarce resources and the impact of those choices on society.
A surge in cocoa prices is ______ and a pest attack on the cocoa crop is ______
an effect; the cause
Lower infant mortality is ______ and an improvement in nutrition is ______
an effect; the cause
When making your decision about which activity to choose, you should consider the monetary cost______ the opportunity cost of the activities. The goal is to choose the option that offers the greatest_____benefit.
as well as; net
Policy decisions made by the government are analyzed by _________.
both microeconomics and macroeconomics.
Empiricism describes a situation where
economists use data to analyze what is happening in the world
When economists test their theories using evidence-based analysis, they are most likely using __________.
empiricism through the use of data.
For a market to be in equilibrium, three conditions must hold. Fill in the blanks below to complete these conditions. The amount produced by sellers must be __________ the amount purchased by buyers. The costs of making a product must be __________ the final price at which the product sells. Buyers must place a value on the uses of the product that is __________ the cost of buying the product.
equal to; less than; greater than
A policy such as whether to increase the money supply would be studied under_____, since it deals with___________.
macroeconomics; the economy as a whole
Equilibrium describes a situation where
no one would benefit from changing his or her behavior
Optimization describes a situation where
people weigh costs and benefits when making a decision
In equilibrium, everyone ___________.
simultaneously optimizes, so that nobody benefits by changing his or her own behavior.
Your budget constraint for entertainment illustrates the concept of_______, since as you increase your purchases of one item, you _______.
trade-offs; must decrease your purchase of the other item
The opportunity cost of an activity is a measure of _____ when you do that activity.
what is given up
