Macroeconomics Review: Module 1-5

Suppose that you prefer reading a book you already own to watching TV and that you prefer watching TV to listening to music. If these are your only three choices, what is the opportunity cost of reading? a. watching TV and listening to music b. watching TV c. listening to music d. sleeping e. the price of the book

b

The other things equal assumption allows economists to a. avoid making assumptions about reality. b. focus on the effects of only one change at a time. c. oversimplify. d. allow nothing to change in their model. e. reflect all aspects of the real world

b

Which of the following statements is/are normative? I. The price of gasoline is rising. II. The price of gasoline is too high. III. Gas prices are expected to fall in the near future. a. I only b. II only c. III only d. I and III only e. I, II, and III

b

What are the four categories of resources?

Land, labor, capital, and entrepreneurship

Why do we talk about business cycles for the economy as a whole, rather than just talking about the ups and downs of particular industries?

Recessions and expansions are not confined to a few industries.

Describe who gets hurt in a recession and how they are hurt.

Workers lose jobs and can't find new ones, the standard of living is reduced, rise in the number of people living below the poverty line, number of people who may lose their houses increases, percentage of Americans with health insurance falls, profits of firms are reduce

During the recession phase of a business cycle, which of the following is likely to increase? a. the unemployment rate b. the price level c. economic growth rates d. the labor force e. wages

a

Refer to the module 3 graph in notes. This production possibilities curve shows the trade-off between consumer goods and capital goods. Since capital goods are a resource, an increase in the production of capital goods today will increase the economy's production possibilities in the future. Therefore, all other things equal (ceteris paribus), producing at which point today will result in the largest outward shift of the PPC in the future? a. A b. B c. C d. D e. E

a

Which of the following questions is studied in microeconomics? a. Should I go to college or get a job after I graduate? b. What government policies should be adopted to promote employment in the economy? c. How many people are employed in the economy this year? d. Has the overall level of prices in the economy increased or decreased this year? e. What determines the overall salary levels paid to workers in a given year?

a

True or false? Explain your answer. a. An increase in the amount of resources available to Tom for use in producing coconuts and fish does not change his production possibilities curve. b. A technological change that allows Tom to catch more fish relative to any amount of coconuts gathered results in a change in his production possibilities curve. c. Points inside a production possibilities curve are efficient and points outside a production possibilities curve are inefficient.

a. false; an increase changes his production possibilities curve by shifting it outward because he can now produce more fish and coconuts than before. b. true; a technological change that allows Tom to catch more fish for any amount of coconuts gathered results in a change. c. false; points on the curve are efficient, points below are inefficient, and points above are unobtainable

What type of resource is each of the following? a. time spent flipping hamburgers at a restaurant b. a bulldozer c. a rive

a. labor b. capital c. land

Identify each of the following statements as positive or normative. a. Society should take measures to prevent people from engaging in dangerous personal behavior. b. People who engage in dangerous personal behavior impose higher costs on society through higher medical costs.

a. normative b. positive

You make $45,000 per year at your current job with Whiz Kids Consultants. You are considering a job offer from Brainiacs, Inc., which would pay you $50,000 per year. Which of the following are elements of the opportunity cost of accepting the new job at Brainiacs, Inc.? Answer yes or no, then explain. a. the increased time spent commuting to your new job b. the $45,000 salary from your old job c. the more spacious office at your new job

a. yes; the increased time spent commuting is a cost you will incur if you accept the new job b. yes; you have to give up your current salary in order to obtain the new benefit c. no; you will not have to give up something else

Refer to the module 3 graph in notes. Which point(s) on the graph represent efficiency in production? a. B and C b. A and D c. A, B, C, and D d. A, B, C, D, and E e. A, B, C, D, E, and F

c

Which of the following is the most likely result of inflation? a. falling employment b. a dollar will buy more than it did before c. people are discouraged from holding cash d. price stability e. low aggregate output per capita

c

Refer to the module 3 graph in notes. For this economy, an increase in the quantity of capital goods produced without a corresponding decrease in the quantity of consumer goods produced a. cannot happen because there is always an opportunity cost. b. is represented by a movement from point E to point A. c. is represented by a movement from point C to point B. d. is represented by a movement from point E to point B. e. is only possible with an increase in resources or technology.

d

Refer to the module 3 graph in notes. An increase in unemployment could be represented by a movement from point a. D to point C. b. B to point A. c. C to point F. d. B to point E. e. E to point B.

d

The labor force is made up of everyone who is a. employed. b. old enough to work. c. actively seeking work. d. employed or unemployed. e. employed or capable of working.

d

Which of the following is an example of a resource? I. petroleum II. a factory III. a cheeseburger dinner a. I only b. II only c. III only d. I and II only e. I, II, and III

d

Which of the following situations represent(s) resource scarcity? I. Rapidly growing economies experience increasing levels of water pollution. II. There is a finite amount of petroleum in the physical environment. III. Cassette tapes are no longer being produced. a. I only b. II only c. III only d. I and II only e. I, II, and III

d

A sustained increase in aggregate output over several decades represents a. an expansion. b. a recovery. c. a recession. d. a depression. e. economic growth.

e

Refer to the module 3 graph in notes. Which of the following might allow this economy to move from point B to point F? a. more workers b. discovery of new resources c. building new factories d. technological advances e. all of the above

e