Intro to Macro Chapter Review and Quiz Questions (CH 1, 2, 3, 4, 10)

5. When a single person (or small group) has the ability to influence market prices, there is a. competition. b. market power. c. an externality. d. a lack of property rights.

b. market power

8. The adage, "There is no such thing as a free lunch," is used to illustrate the principle that a. goods are scarce. b. people face tradeoffs. c. income must be earned. d. households face many decisions.

b. people face tradeoffs

Which of the following best describes a rising unemployment rate above 10% and falling consumers' income? a. inflation b. recession c. recovery d. prosperity

b. recession

3. Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because a. the Federal Reserve is worried about inflation. b. the Federal Reserve is worried about unemployment. c. the Federal Reserve is hoping to reduce the demand for goods and services. d. the Federal Reserve is worried that the economy is growing too quickly

b. the Federal Reserve is worried about unemployment.

When government expands supplemental nutrition assistance program (SNAP), which provides nutrition benefits to supplement the food budget of needy families. The expanded SNAP will improve: a. Neither equality nor efficiency b. Both equality and efficiency c. Equality d. Efficiency

c. Equality

7. Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit? a. only the one with a low level of output per person. b. only the one with a high level of output per person. c. both d. neither

c. both

When a large company has an ability to influence market prices, there is: a. a positive externality b. an increased market competition c. market failure d. a negative externality

c. market failure

In a particular country in 1998, the average worker needed to work 40 hours to produce 100 units of output. In that same country in 2008, the average worker needed to work 36 hours to produce 72 units of output. In that country, the productivity of the average worker a. decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly. b. increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly. c. decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly. d. increased between 1998 and 2008, so we would expect inflation to have increased accordingly.

d. decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly Solution: Productivity in 1998 = 100/40 = 25 units per hour Productivity in 2008 = 72/36 = 2 units per hour

Your neighbors have a beautiful garden, which makes you feel happy. It is an example of: a. negative externality b. market power c. market competition d. positive externality

d. positive externality

10. Efficiency means that a. society is conserving resources in order to save them for the future. b. society's goods and services are distributed equally among society's members. c. society's goods and services are distributed fairly, though not necessarily equally, among society's members. d. society is getting the maximum benefits from its scarce resources.

d. society is getting the maximum benefits from its scarce resources.

The self-interest of the participants in an economy is guided into promoting general economic self-interest by: a. Business Cycle b. Government intervention c. the market power d. the invisible hand

d. the invisible hand

Mrs. Nicole Waldman quits her job, which pays $50,000 a year to start her bachelor's degree in nursing. Her annual college expenses are $10,000 for tuition and $2,000 for textbooks. Which of the following is her opportunity cost of attending college for the year? a. $62,000 b. $50,000 c. $2,000 d. 10,000

a. $62,000

4. Air pollution from burning fossil fuels causes damages to crops and public health. This is an example of a. a market failure caused by an externality. b. a market failure caused by market power. c. a market failure caused by equality. d. There is no market failure in this case.

a. a market failure caused by an externality.

1. Productivity is defined as the a. amount of goods and services produced from each unit of labor input. b. number of workers required to produce a given amount of goods and services. c. amount of labor that can be saved by replacing workers with machines. d. actual amount of effort workers put into an hour of working time.

a. amount of goods and services produced from each unit of labor input.

9. Economists use the word equality to describe a situation in which a. each member of society has the same income. b. each member of society has access to abundant quantities of goods and services, regardless of his or her income. c. society is getting the maximum benefits from its scarce resources. d. society's resources are used efficiently.

a. each member of society has the same income

6. The self-interest of the participants in an economy is guided into promoting general economic self-interest by a. the invisible hand. b. market power. c. government intervention. d. All of the choices

a. the invisible hand