Macro economics. Chapter 1

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of

A market

Government policy makers use economic principles to make decisions, such as

All of above

When does allocative efficiency occur?

Allocative efficiency occurs when production is in accordance with consumer preferences.

Which of the following statements is correct?

An innovation is the practical application of an invention

Why are models based on assumptions

Because models have to be simplified to be useful.

Which of the following is a positive economic statement

If minimum wage rates rise, then unemployment will rise.

Which of the following statements about microeconomics and macroeconomics is correct?

Macroeconomics is the study of the economy as a whole.

Which of the following statements about microeconomics and macroeconomics is correct?

Micro= households and firms

The United States economy is best classified as a

Mixed economy

Today, which of the following countries has a centrally planned economy?

North Korea

______ is a problem that occurs when someone concludes that a change in variable X caused a change in variable Y when, I'm fact, it is the change in variable Y that caused the change in X

Reverse casualty

One of the first steps in deciding whether to complete your education is to:

evaluate the marginal cost and marginal benefit of that decision.

Economists believe that an individual or firm should continue any activity until

marginal benefit is equal to marginal cost

Economics is the study of choice under conditions of

scarcity

Which of the following statements about normative analysis is correct?

Concerned with What ought to be

Which of the following statements about positive analysis is correct?

Concerned with what is

In a market system, how does society decide what goods and services will be produced

Consumers, firms, and the government determine what goods and services will be produced by the choices they make.

Which of the following statements about a hypothesis is correct?

Could be incorrect

Which of the following is correct m?

Economists use the terms firm, company, and business interchangeably

What do economist mean by the word marginal

Extra or additional

Economists assume that the only reason people take the actions they do is in response to economic incentives

False

Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority

North Korea

When does productive efficiency occur

Productive efficiency occurs when a good or service is produced at the lowest possible cost.

In a market system, how does society decide who will receive the goods and services produced ?

Who receives the goods and services produced depends largely on how income is distributed.

__ goods and services are those bought by businesses to be used to increase efficiency or enhance production.

capital

In what type of economy does the government decide how economic resources will be allocated?

centrally planned economy

Macroeconomics can be used to understand all of the topics listed below, except

how a consumer decides between the purchase of two different cars

The resources provided by nature and used to produce goods and services are also known as

natural resources

The stock of computers, factory buildings and machine tools used to produce goods is known as:

physical capital

Which of the following is not a possible opportunity cost of attending college

the cost of housing

Economists believe that an activity should be continued up to the point where

the marginal benefit from the activity is equal to the marginal cost.

According to the rationality assumption, people

Do not intentionally make decisions that would leave them worse off.

Which of the following statements about the idea that people are rational is correct?

The idea assumes that consumers and firms use all available information as they act to achieve their goals.

Jim declined to take part in a health study on a free basis but changed his mind after being offered $1,000 to participate in the study. Jim's behavior best illustrates which economic principle?

people respond to economic incentives

Macroeconomics is concerned with all of the following except

political party affiliation

Which of the following statements about economics as a social science is correct?

Economics studies the actions of individuals

In a market system, what determines how goods and services will be produced?

Firms determine how goods and services will be produced.

Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer?

How do we produce the products?

Economics

Is concerned with how people respond to incentives

The prevalence of Alzheimer's dementia is very high among residents living in nursing homes. A student concludes that it is likely that living in a nursing home causes Alzheimer's dementia. What is the flaw in this student's reasoning?

The student is drawing false conclusion. He is making the error of reverse casualty

How are economic resources allocated in a market economy?

by the decisions of households and firms interacting in markets

What is the name given to the development of a new good?

invention

The principle of opportunity cost evolves from the concept of

scarcity

Tangible products like cars and televisions are referred to as

goods

Which of the following statements about an economic variable is correct?

Something measurable that can have different values

Which of the following is a correct statement about a mixed economy

in a mixed economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources