Economics IC Introduction to Macroeconomics Quiz

Which statement best describes why a government's actions are important in macroeconomics? Check all that apply.

Government controls industry through policy. Government is both a consumer and a producer. Government can use policy to influence the economy.

This is a graph showing price and total output in the short and long run. According to this graph, how does supply behave in the long run?

Output remains constant.

Which statement best describes the circular flow model?

The model represents the movement of money and resources throughout the economy.

A long-run equilibrium occurs when long-run aggregate supply and aggregate demand meet. What does having long-run equilibrium indicate about a society?

The society is using all of its resources efficiently.

Which best describes why taxes and savings are considered leakage factors?

They take money out of the economic system.

In microeconomics, what occurs when equilibrium is reached?

Prices are set.

In microeconomics, price helps determine both quantity supplied and quantity demanded. Which other factors can impact each by causing a shift to occur?

Quantity supplied is determined by production costs, and quantity demanded is determined by desire for the product.

The circular flow model examines interactions between which sectors of the economy? Check all that apply.

government business households

The circular flow model examines interactions between which two groups?

households and firms

Which best describes what occurs in the product market?

the exchange of goods and services for money