Macro Chapter 1 & 2

Which of the following statements best describes the effects of trade? a. Trade increases wealth by making both parties better off. b. One trading partner usually wins, whereas the other loses. c. Trade increases opportunity costs and reduces specialization. d. Trade benefits corporations but does little for average workers.

a

The price of a popular smartphone model goes up from $499 to $749. The price increase ______. a. gives the phone a comparative advantage b. might decrease demand for the phone c. serves as a positive incentive to buyers d. will not likely impact supply or demand

b.

1) Which person would most likely use many normative statements? a. an economist making a report based on an empirical analysis b. a politician giving a speech to win an election c. a scientist writing a critique debunking a hypothesis d. a lawyer stating the facts of a case

B

2) An online shopper purchased contact lens solution, a phone-charging cord, and printer ink to be delivered to his apartment. These items are examples of ______ goods. a. industrial b. tangible c. capital d. intangible

B

1) Which of the following is a normative statement? a. The government increased tariffs to support domestic industries. b. The consumer bought ten yogurts at a discount of 20 percent. c. The CEO should raise the price of his product line to increase profits. d. The economist projects that the stock market will decline sharply within a month.

C

chap 1) Ella does the best she can based on her values and information, and under current and possible future circumstance. Economists would say that Ella is acting in a ______ manner. a. creative b. selfish c. rational d. logical

C

1) Many controversies in economics revolve around policy considerations that use ______. a. only positive analysis b. the fallacy of composition c. statements of correlation d. a mix of positive and normative analysis

D

1) Which of the following is used to predict behavior? a. correlations b. resources c. normative statements d. models

D

1) Which of the following is an example of something that would be studied in microeconomics? a.. the cause of a 2 percent increase in unemployment b. the inflation rate in European Union c. a stimulus to start economic growth d. the price of cell phones

D

1)The fallacy of composition is the incorrect view that what is true for the ______ is always true for the ______. a. microeconomy; macroeconomy b. macroeconomy; microeconomy c. group; individual d. individual; group

D

1)Which of the following is a testable proposition? a. normative statement b. ceteris paribus c. correlation d. hypothesis

D

2) A homeowner is considering investing in a solar power system. He learns that having the panels installed will cost about $30,000 and that it will take several years to recoup his investment in utility savings. He also learns that his state offers a 30 percent tax rebate on installation costs and the value of his home will increase significantly. The tax benefit and improved home value are examples of ______. a. negative incentives b. absolute advantages c. comparative advantages d. positive incentives

D

The patients who receive a vaccine benefit by gaining immunity to the disease. In addition, society benefits because fewer people will catch the disease, costs to treat the disease will be lower, and overall health in the society will be improved. Which of the following statements is the best analysis of this scenario? a. Externalities include the negative consequences that spill over to those in society who are not producing a good. b. Externalities include the additional benefits that spill over to those in society who are not consuming a good. c. Opportunity cost is the highest valued foregone opportunity resulting from a decision. d. Marginal choices are choices of how much of something to do rather than whether to do something.

Externalities include the additional benefits that spill over to those in society who are not consuming a good.

What is the relationship between productivity and standard of living? a. Countries with more workers have higher productivity growth and standards of living. b. Productivity growth is measured by annual increases in total spending and wealth distribution. c. Productivity growth leads to higher wages, which allow people to buy more goods and services. d. Minimum-wage workers have lower productivity than people who are paid higher wages.

Productivity growth leads to higher wages, which allow people to buy more goods and services.

A state law that sets a minimum price for a unit of alcohol is an example of ______. market efficiency monetary policy positive incentives price controls

price controls

Unemployment occurs when ______. a. the economy is producing at less than its capacity b. the government is printing too much money c. the overall price level in the economy increases d. people start to lose faith in the value of money

the economy is producing at less than its capacity

1) Which of the following describes what should be done? a. a normative statement b. a hypothesis c. a positive statement d. a theory

A

1) Which of the following deals with an aggregate economy? a. the projection for economic growth in France b. the price of blue cheese in Paris c. the impact of unions on Metz's industries d. the supply of tennis shoes in Marseilles

A

1)Which is the best example of someone exhibiting rational behavior? a. Jin enrolls in statistical analysis rather than a film class that interests him because statistics will help his career. b. Erik is really tired and hungry when he goes grocery shopping, so he fills his cart with impulse purchases. c. Malia has two drinks before dinner and, during the meal, eats without any self-control. d. Lupe breaks up with her boyfriend while she is under the influence of strong pain medication, and she later regrets it.

A

1)Which of the following accurately describes the difference between correlation and causation? a. Correlation means two events often occur together; causation means one event brings about another event. b. Correlation means one event brings about another event; causation means two events often occur together. c. Correlation means one event sometimes causes another event; causation means one event always causes another event. d. Correlation means two events occur together but not on a regular basis; causation means two events occur together on a regular basis.

A

1)Which of the following pairs of components are key to empirical analysis in economics? a. data; real-world analysis b. data; laboratory analysis c. opinion; real-world analysis d. opinion; laboratory analysis

A

2) Which of the following can be used to explain and predict changes in individual behavior? a. changes in incentives b. entrepreneurial ability c. scarcity of resources d. market competition

A

2) Which of the following statements about scarcity is true? a. Resources are scarce because they are desirable and limited. b. Most resources used in production are not scarce. c. Scarcity reduces market competition and lowers prices. d. Because they are rich, millionaires do not face scarcity.

A

chap 1) A ______ is an input used to produce goods and services a. resource b. correlation c. composition d. hypothesis

A

chap 1) Which of the following does rational behavior often involve? a. anticipating future events b. an indifference to values c. thinking about the past d. unpredictable acts

A

1) Lower oil prices will increase the demand for oil over the next year if all other variables are constant. What section of this statement deals with ceteris paribus? a. "lower oil prices" b. "if all other variables are constant" c. "will increase the demand" d. "over the next year"

B

1) Which of the following is an example of something that would be studied in macroeconomics? a. how healthcare costs affect families b. the causes of a nation's economic expansion c. the reasons entrepreneurs start businesses d. the factors that increase a firm's productivity

B

2) Which of the following statements correctly describes the difference between absolute advantage and comparative advantage? Absolute advantage ______, whereas comparative advantage ______. a. refers to individuals and companies; refers to regions and countries b. refers to using fewer resources; refers to lower opportunity cost c. is measured in money costs; is measured in non-money costs d. refers to labor and entrepreneurial ability; refers to land and capital

B

2) In economics, the physical and mental effort expended by people in the production of goods and services is called ______. a. work b. labor c. efficiency d. capital

B

2) Positive incentives are those that ______. a. use the fewest scarce resources b. increase benefits or reduce costs c. decrease related activity or behavior d. discourage production or consumption

B

2) Switching lanes in rush hour traffic to make better time is an example of which concept in economics? a. comparative advantage b. marginal thinking c. market efficiency d. negative incentive

B

2) Which of the following equations accurately depicts the rule of rational choice? a. E(MB) - E(MC) b. E(MB) > E(MC) c. E(MB) + E(MC) d. E(MB) < E(MC)

B

2)One of the eight powerful ideas that serve as the foundation for the study of economics is that ______. a. people respond unpredictably to incentives b. people face scarcity and costly trade-offs c. increasing productivity leads to specialization d. markets cannot improve economic efficiency

B

chap 1) What causes the "economic problem"? a. Earning money is more difficult than it appears. b. Scarcity forces us to give up opportunities of value. c. Buying what we need means we can't buy what we want. d. Advertising makes us choose among limited options.

B

chap 1) Which of the following is an accurate statement about self-interest? a. It has little concern for other people. b. It is a motivation based on what benefits a person. c. It is concerned mainly about material gain. d. It is a desire based on greed.

B

chap 1) Iron ore is used to make steel. In this example, iron ore is being used as a(n) ______. a. output b. resource c. composition d. artifact

B

1) Which of the following is most likely an example of causation? a. Lauren threw the baseball as a hot dog vendor ran out of food. b. The stadium lights went on and the sun set. c. Lauren swung the bat and hit a home run. d. The manager made a pitching change while Chun cheered.

C

1)Positive analysis is based on ______. a. aggregate economics b. making good estimates c. the scientific method d. debating two viewpoints

C

2) A student gave up a trip to Europe with her friends to complete an internship at the company she hopes to work for after graduation. Her decision to pursue her career meant that she gave up her chance to travel abroad and share that experience with her friends. In economic decision making, missing out on this adventure is called an ______. a. investment option b. educational expense c. opportunity cost d. employment loss

C

2) Taylor is a college student who also works part-time at her community bank. In which of the following situations must she use marginal thinking? a. evaluating whether the part-time job gives relevant experience for her major b. identifying what extracurricular activities she has given up in order to work c. deciding whether it would be worth it to work an extra five hours a week at her job d. identifying the tangible and intangible benefits she gains from her job

C

Chap 1) Christina buys a car that has economical gas mileage because her income is very limited. According to economists, Christina most likely acted based on her own ______. a. egotism b. benevolence c. self-interest d. selfishness

C

chap 1) Which of the following is both objective and testable? a. policy suggestions and normative statements b. policy suggestions and positive statements c. empirical analysis and normative statements d. empirical analysis and positive statements

D

chap 1) Which of the following is the best synonym for self-interest? a. egotism b. greed c. selfishness d. self-satisfaction

D

Which of the following examples shows specialization? a. Employees in a law office are trained to use the new phone system. b. The human resources staff interviews candidates for all departments. c. A fast-food taco restaurant begins selling chicken dinners and pizza. d. A company that manufactures sheets buys a farm producing cotton.

b.

Which of the following policies would a government be most likely to use to help reduce unemployment? a. print less money b. decrease taxes c. raise interest rates d. reduce spending

decrease taxes

Which of the following effects might occur when price controls are imposed on a market system? enhanced market communication distorted buy-and-sell relationship improved allocation of resources natural supply-and-demand process

distorted buy-and-sell relationship

Differentiate between the effects of spending on unemployment and inflation. Unemployment occurs when total spending is ______, and inflation occurs when total spending is ______. a. insufficient; excessive b. excessive; insufficient c. stagnant; controlled d. controlled; stagnant

insufficient; excessive

Which of the following policies might a government pursue to help increase productivity? a. raising interest rates b. printing more money c. investing in education d. setting price controls

investing in education

Productivity is measured by ______. a. goods per capita b. output per worker c. total national output d. wages per hour

output per worker

A lifeguard with annual income of $10,000 pays 15 percent of her income in federal taxes, whereas a business owner making $100,000 pays 28 percent. Instituting a progressive tax system is a government's attempt to ______. a. minimize scarcity b. prevent monopolies c. redistribute income d. regulate inflation

redistribute income