MAC EXAM ONE

According to Keynesian economics, economic downturns are caused by

Inadequate spending

Which of the four options best represents specialization and its relationship with trade?

comparative advantage

Select the correct definition of inflation.

A general and ongoing rise in the average level of prices in the economy

Which statement is positive? Which statement is normative?I. The federal minimum wage in 2016 was $7.25 an hour.II. The minimum wage should be high enough that families will not livein poverty. A) I is positive; II is normative. B) I is positive; II is positive. C) I is normative; II is positive. D) I is normative; II is normative.

A) I is positive; II is normative.

The circular-flow diagram illustrates how households _____ goods and services and _____ factors of production. A) buy; sell B) buy; buy C) own; buy D) own; sell

A) buy; sell

A resource is anything that: A) can be used in production. B) you pay for. C) is in scarce supply. D) can be consumed.

A) can be used in production.

The market for soybeans is initially in equilibrium, with an upward-sloping supply curve and a downward-sloping demand curve. Because of mad cow disease, producers decide to replace bone meal with soybeans in cattle feed. The likely effect is that the: A) equilibrium price and quantity of soybeans will rise. B) equilibrium price and quantity of soybeans will fall. C) equilibrium quantity of soybeans will rise, but we can't determine what will happen to the equilibrium price. D) equilibrium price of soybeans will rise, but we can't determine what will happen to the equilibrium quantity

A) equilibrium price and quantity of soybeans will rise.

When markets fail: A) government intervention may help. B) the market realizes the maximum possible gains from trade given the available resources. C) there may still be an efficient allocation of resources. D) no goods and services are produced.

A) government intervention may help.

People who live in large cities decide to spend less in their day-to-day activities. This will MOST likely lead to: A) less income for other people B) more income for other people. C) no impact on other people. D) inflation.

A) less income for other people

A simplified representation that is used to study a real situation is called a(n): A) model. B) production possibility frontier. C) assumption. D) trade-off.

A) model

Marla will make $10 by tutoring for an additional hour, but she will lose an hour of studying for her economics test. Marla decides to study, rather than tutor. Marla's choice indicates that she: A) values an additional hour of studying more than the $10 she would earn tutoring. B) values an hour of studying less than the $10 she would earn tutoring. C) does not understand that there is no benefit from studying. D) doesn't need the money.

A) values an additional hour of studying more than the $10 she would earn tutoring.

1. Scarcity in economics means that: A) we often do not have sufficient resources to achieve our objectives. B) the wants of people are limited. C) there must be poor people in rich countries. D) shortages exist in nearly all markets.

A) we often do not have sufficient resources to achieve our objectives.

Which statement illustrates the law of demand? A) An increase in tuition encouragesmore students to enroll in college because the quality of education has risen. B) Consumers buy more personal computers because prices have fallen. C) Oil companies drill for new sources because prices are higher. D) Fewer people play golf because incomes are lower.

B) Consumers buy more personal computers because prices have fallen.

Suppose small business owners decide to spend less. How will this affect an economy? A) It will have no impact since this group makes up a small portion of any economy. B) It will decrease the level of income of other people since one person's spending is someone else's income. C) It will cause prices for many goods to increase. D) It will increase the level of income in the economy since other groups will spend more

B) It will decrease the level of income of other people since one person's spending is someone else's income.

Raclette is a popular wintertime dish in Switzerland. It is essentially melted Raclette cheese overboiled new potatoes. If the price of Raclette cheese decreased, we would expect to see: A) an increase in demand for Raclette cheese. B) an increase in demand for new potatoes. C) no effect on the demand for either of the Raclette ingredients sincethis is a traditional dish and its consumption does not depend on the prices of the ingredients. D) an increase in demand for both Raclette cheese and new potatoes.

B) an increase in demand for new potatoes.

A beneficial technological change is developed in the production of cranberries. At the same time, scientists discover that cranberries have significant health benefits. This will result in: A) an increase in both the equilibrium price and quantity in the cranberry market. B) an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cranberries. C) a decrease in both the equilibrium price and quantity in the cranberry market. D) a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cranberries

B) an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cranberries.

The _____ apples will decrease when apple prices rise. A) demand for B) quantity demanded of C) supply of D) equilibrium of

B) quantity demanded of

We have to make choices because: A) we have unlimited income. B) resources are scarce. C) resources are infinite. D) with good planning, trade-offs can be avoided.

B) resources are scarce.

You can spend $100 on either a new economics textbook or a new tablet computer. If you choose to buy the new economics textbook, the opportunity cost is: A) $100. B) your enjoyment of the new tablet computer. C) both the $100 and your enjoyment of the new tablet computer. D) impossible to determine.

B) your enjoyment of the new tablet computer.

A choice made _____ is a choice whether to do a little more or a little less of an activity. A) at the front end B) in the beginning C) at the margin D) ceteris paribus

C) at the margin

Jim is being paid $7.25 an hour to work at a restaurant. In the circular flow, this is an example of a: A) business selling goods and services in the product market. B) household buying goods and services in the product market. C) business buying a resource in the factor market. D) household buying a resource in the factor market.

C) business buying a resource in the factor market.

Which decision is the BEST example of making a choice at the margin? A) buying a new car B) quitting your job C) drinking another cup of coffee D) attending college

C) drinking another cup of coffee

Resources are being used efficiently when: A) scarcity is no longer an issue. B) they are also used equitably. C) every opportunity to make people better off without making others worse off has been seized. D) gains from trade are still available.

C) every opportunity to make people better off without making others worse off has been seized.

37. A high-school graduate who gets a college degree is adding to the economy's stock of: A) labor. B) capital. C) human capital. D) financial capital.

C) human capital.

The market for corn in Kansas is considered to be competitive. This means there are _____ buyers and _____ sellers of corn in Kansas. A) many; few B) few; many C) many; many D) few; few

C) many; many

A central and fundamental theme in economics is that: A) wants are limited. B) the United States is a rich country, but we are simply not aware of it. C) people have unlimited wants but limited means to satisfy them. D) resources are unlimited.

C) people have unlimited wants but limited means to satisfy them.

If a market is in disequilibrium: A) it will continue unless there is government intervention. B) no individual will be better off doing something different. C) there are opportunities for some people to make themselves better off. D) it must be because the government has intervened in themarket, resulting in the market's failure to reach equilibrium.

C) there are opportunities for some people to make themselves better off.

The demand curve for monthly subscriptions to HBO has shifted to the right. What could have caused it? A) a fall in the price of HBO subscriptions B) an increase in the price of HBO subscriptions C) an increase in the supply of HBO subscriptions D) an increase in the incomes of buyers

D) an increase in the incomes of buyers

62. In the market for tacos, a normal good, you observe that the equilibrium price and quantity have increased. This can be caused only by: A) an increase in the price of beef. B) an increase in the wages of taco shop workers. C) fewer taco shops. D) an increase in the incomes of people who eat tacos.

D) an increase in the incomes of people who eat tacos.

In the circular-flow diagram, the factor market is where: A) households buy factors of production. B) households buy goods and services. C) businesses buy goods and services. D) businesses buy factors of production.

D) businesses buy factors of production.

A dozen friends got together to celebrate a birthday. If the birthday cake is cut into 12 pieces of the same size and each of the 12 partygoers gets a slice, this cake distribution is: A) efficient but not equitable. B) equitable but not efficient. C) efficient and equitable. D) equitable.

D) equitable

In the circular-flow diagram, an organization that produces goods or services for sale is a: A) market. B) household. C) factor. D) firm.

D) firm.

After graduation from college, you might have an increase in your income from a new job. If as a result you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger is a(n) _____ good. A) normal B) substitute C) complementary D) inferior

D) inferior

You are planning to study eight hours this week for your economics final and are considering studying a ninth hour. You should: A) compare the benefits of one more hour of study with the cost of one less hour of sleep. B) compare the benefits of one more hour of study with the cost of one less hour of studying calculus. C) compare the benefits of one more hour of study with the cost of one less hour of work at your part-time job. D) make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study.

D) make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study.

Which factor is NOT an example of a resource? A) land B) labor C) capital D) production

D) production

The basis of the circular-flow diagram is that: A) the best models avoid making assumptions. B) goods and services flow in a circle in the factor market. C) resources are sold along with goods and services in the resource market. D) the flow of money into each market or sector is equal to the flow of money coming out of that market or sector.

D) the flow of money into each market or sector is equal to the flow of money coming out of that market or sector.

The opportunity cost of something is: A) larger during periods of rising prices. B) equal to the monetary cost. C) smaller during periods of falling prices. D) what is given up to acquire it.

D) what is given up to acquire it.

Peter is a compulsive gamer. He decides to buy World of Warcraft, all of its expansions, Starcraft 2, a PS3, a Wii, and an Xbox 360, since prices in general have been rising at an alarming rate. Melissa decides to start her own personal library by amassing a private collection of books and magazines about world religions, cooking, comics, and economics. As she reads an issue of The Economist, she discovers that overall price levels have changed only 0.01% in the past two years, and decides it does not matter whether she starts the project now or later. Linda postpones her wedding even though most food prices and most service prices were dropping this year, which would help keep the cost of the wedding down. Out of these individuals, whose money gained the most value during their time period?

Deflation price stability inflation linda

Which of these agencies offically determines when the economy is in a recession?

National Bureau of Economic research

Prior to most economists believed that the economy Had society known at the time of the selected event what it knows now about the macroeconomy, what course of action might federal policymakers have taken?

The Great Depression was Self-Regulating decreased taxes, supported decreased interest rates, or both

Suppose a report on CNN says that the United States is heading into a recession. As a result, Bert's family, as well as many other like-minded families and individuals, reduces their spending and instead fills up their savings accounts for potential hard times. As a result of this behavior In macroeconomics, this result is known as

The economy is actually harmed, because their is a sharp decrease in consumer spending. The Paradox of thrift.

The actions of individuals in an economy can compound upon one another, leading to outcomes that magnify the actions of individuals. This can be summarized using which phrase?

The whole market is greater than the sum of its parts.

Why is the shape of the production possibilities frontier (PPF) often curved instead of straight?

Typically, some resources are better suited for producing one good than another. This means there are diminishing returns when moving such resources away from producing what they are best suited for.

Which of the events is likely to occur when the business cycle is in a period of recession (contraction) Which of the events is likely to occur when the business cycle is in a period of expansion?

an increase in unemployment an increase in economic growth

Recessions typically hurt The most common indicator in the labor market is Since 1900, what has been the long-term pattern of growth in the United States?

firms and individuals unemployment rates increase in real GDP (gross domestic product) per capita

When the government changes either its spending or tax policy to pursue economic objectives, it has changed its Changing the amount of money in circulation to pursue economic objectives changes the

fiscal policy monetary policy

What is the main goal of policymakers in regard to the business cycle?

limit the volatility of the business cycle by reducing the size of both recessions and economic booms