Macroeconomics 1-4 test

Improvements in the productivity of labor will tend to: A.) decrease wages. B.) decrease the supply of labor. C.) increase wages. D.) increase the supply of labor.

C.) increase wages.

The United States has approximately ________ credit card holders. A.) 1.8 million B.) 18 million C.) 80 million D.) 180 million

D.) 180 million

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that: A.) the price of Good Y will increase. B.) Goods X and Y are normal goods. C.) Goods X and Y are substitute goods. D.) Goods X and Y are complement goods.

D.) Goods X and Y are complement goods.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy? A.) China B.) Cuba C.) Canada D.) Chile

B.) Cuba

In countries like _______ the command economy predominates. A.) China and Vietnam B.) Cuba and North Korea C.) South Africa and Kenya D.) Germany and France

B.) Cuba and North Korea

Are markets always in equilibrium? A.) No, they never "settle down" into a stable price and quantity. B.) No, but if there is no outside interference, they tend to move toward equilibrium. C.) Yes, because very few things tend to alter supply and demand. D.) Yes, they are always at the equilibrium point, or very close to it.

B.) No, but if there is no outside interference, they tend to move toward equilibrium.

In 2010, Americans had about ________ outstanding in credit card debts not paid on time. A.) $900 billion B.) $90 billion C.) $900 million D.) $90 million

A.) $900 billion

On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be? A.) Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate. B.) Low income workers will be better able to survive the recession at the new, higher wage rate. C.) More people will be hired at the higher wage rate offsetting the effects of the recession. D.) The higher wage will increase the supply of labor offsetting the effects of the recession.

A.) Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market." A.) The statement is correct. B.) The statement would be correct if "quantity of wheat demanded" were substituted for "quantity of wheat supplied". C.) The statement is incorrect because it confuses a change in quantity supplied with a change in supply. D.) The statement would be correct if it read that a " decrease in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market".

A.) The statement is correct.

The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _________. A.) allocative efficiency B.) the production possibilities frontier C.) trade-offs D.) scarcity

A.) allocative efficiency

Which of the following best describes a fiscal policy tool? A.) government spending B.) bank lending C.) financial capital markets D.) household spending

A.) government spending

Which of the following best describes a monetary policy tool? A.) interest rates B.) taxes C.) household savings D.) government spending

A.) interest rates

In a ________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers. A.) market-oriented economy B.) macroeconomy C.) microeconomy D.) command economy

A.) market-oriented economy

Philosophers draw a distinction between positive statements, which describe the world as it is, and ____________s, which describe how the world should be. A.) normative statement B.) budget constraint C.) trade-off D.) opportunity cost

A.) normative statement

The "law of supply" functions in labor markets; that is, a higher _______ for labor leads to a higher quantity of labor supplied. A.) price B.) demand C.) supply D.) quantity

A.) price

The lesson of ______ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. A.) sunk costs B.) opportunity costs C.) marginal analysis D.) budget constraints

A.) sunk costs

The opportunity cost of attending university is likely to include all except which of the following? A.) the cost of haircuts received during the school term B.) the income you forgo in order to attend classes C.) tuition fees D.) the cost of required textbooks

A.) the cost of haircuts received during the school term

A change in price of a good or service typically causes _______ for that specific good or service. A.) a new equilibrium price B.) a change along the supply curve C.) the supply curve to shift D.) a decreased demand

B.) a change along the supply curve

Which of the following would most likely shift the production possibilities curve inward? A.) an increase in the number of hours factories are in use B.) a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time C.) an increase in the production of capital goods D.) technological progress

B.) a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: A.) a decline in college tuition. B.) a sharp increase in the demand for and construction of wood-frame homes. C.) an increase in the supply of lumberjacks. D.) an end to government regulations that limit timber harvesting in national forests.

B.) a sharp increase in the demand for and construction of wood-frame homes.

The term "ceteris paribus" means that: A.) everything is variable. B.) all variables except those specified are constant. C.) no one knows which variables will change and which will remain constant. D.) what is true for the individual is not necessarily true for the whole.

B.) all variables except those specified are constant.

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _______, sometimes also called the opportunity set, a diagram which shows what choices are possible. A.) consumption set B.) budget constraint C.) original budget D.) income cap

B.) budget constraint

Specialization: A.) leads to greater self-sufficiency. B.) can lead to an increase in overall production. C.) allows workers to develop skills by working on a large number of tasks D.) is always the result of an inefficient use of the resources

B.) can lead to an increase in overall production.

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected _________ doesn't change. A.) market B.) economy C.) production D.) firm

B.) economy

The ________ is the quantity where quantity demanded and quantity supplied are equal at a certain price. A.) quantity demanded B.) equilibrium quantity C.) demand schedule D.) supply schedule

B.) equilibrium quantity

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves ________ spending. A.) business B.) government C.) household D.) capital market

B.) government

Which of the following would reduce the supply of microcomputers? A.) a technological improvement that lowers the cost of producing the computers B.) higher wage rates for the workers that assemble the computers C.) a reduction in the price of computer chips used to produce the computers D.) a reduction in the price of computers.

B.) higher wage rates for the workers that assemble the computers

Scarcity implies that: A.) consumers would be willing to purchase the same quantity of a good at a higher price. B.) it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. C.) at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. D.) consumers are too poor to afford the goods and services available.

B.) it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

Many economists believe that the trend toward greater wage inequality across the U.S economy was primarily caused by ______. A.) the recession B.) new technologies C.) the rise of global markets D.) inflation

B.) new technologies

Philosophers draw a distinction between ___________, which describe the world as it is, and normative statements, which describe how the world should be. A.) negative statements B.) positive statements C.) tradeoffs D.) utilitarianism

B.) positive statements

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and _________, shown on the horizontal axis. A.) demand B.) quantity C.) quantity supplied D.) quantity demanded

B.) quantity

If new manufactures enter the computer industry, then (ceteris paribus): A.) the supply curve shifts to the left. B.) the supply curve shifts to the right. C.) the demand curve shifts to the left. D.) some established manufacturers must exit the industry.

B.) the supply curve shifts to the right.

But nearly all supply curves share a basic similarity: they slope _________. A.) down from left to right B.) up from left to right C.) up from right to left D.) down from right to left

B.) up from left to right

In economics, the demand for a good refers to the amount of the good that people: A.) would like to have if the good were free. B.) will buy at various prices. C.) need to achieve a minimum standard of living. D.) will buy at alternative income levels.

B.) will buy at various prices.

Why is there scarcity? A.) Because the opportunity set determines this. B.) Because theory dictates it. C.) Because our unlimited wants exceed our limited resources D.) Because human wants are limited.

C.) Because our unlimited wants exceed our limited resources

________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines. A.) Skill B.) Specialization C.) Economies of scale D.) Division of labor

C.) Economies of scale

Which of the following will not result in a rightward shift of the market supply curve for labor? A.) a decrease in non-wage income B.) an increase in the working-age population C.) an increase in labor productivity D.) an increase in immigration

C.) an increase in labor productivity

When _________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right. A.) prices rise B.) equilibrium is achieved C.) costs of production fall D.) there is a population increase

C.) costs of production fall

The labor ________ curve(s) will shift _________ if there is an increase in productivity or an increase in the demand for the final product. A.) demand; left B.) supply; left C.) demand; right D.) supply; right

C.) demand; right

If the demand for software engineers _______ slower than does supply, then wages of software engineers will. A.) increase; remain constant B.) increases, rise C.) increases; fall D.) decreases; fall

C.) increases; fall

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: A.) shift to the right, increasing the price of the drug. B.) shift to the left, increasing the price of the drug. C.) shift to the right, decreasing the price of the drug D.) shift to the left, decreasing the price of the drug.

C.) shift to the right, decreasing the price of the drug

As the _________ substitute for the low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. A.) high-skill labor B.) lower wage C.) technology D.) market

C.) technology

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: A.) nothing, because he enjoys playing basketball more than studying. B.) the increase in skill he obtains from playing basketball for that hour. C.) the benefits to his grades from studying for an hour D.) nothing, because he had a free pass into the sports complex to play basketball.

C.) the benefits to his grades from studying for an hour

When consumers and businesses have greater confidence that they will be able to repay in the future, _________. A.) the quantity demanded of financial capital at any given interest rate will remain unchanged. B.) the quantity demanded of financial capital at any given interest rate will shift to the left. C.) the quantity demanded of financial capital at any given interest rate will shift to the right. D.) the quantity demanded of financial capital at any given interest rate will achieve equilibrium.

C.) the quantity demanded of financial capital at any given interest rate will shift to the right.

Whenever there is shortage at a particular price, the quantity sold at that price will equal: A.) the quantity demanded at that price B.) the quantity supplied minus the quantity demanded. C.) the quantity supplied at that price. D.) (quantity demanded plus quantity supplied)/2.

C.) the quantity supplied at that price.

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages _________. A.) will stay the same B.) will decrease C.) will increase D.) may increase, decrease or stay the same depending on the relative slopes.

C.) will increase

The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if: A.) the economy moves along the production possibilities in the direction of a greater quantity of defense. B.) the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve. C.) the production possibilities frontier shifts outward due to an improvement in technology. D.) either b) or c) occurs, but not as a result of a).

D.) either b) or c) occurs, but not as a result of a).

The opportunity cost of an action: A.) can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. B.) can be determined by adding up the bills incurred as a result of the action. C.) can be objectively determined only by economists. D.) is a subjective valuation that can be determined only by the individual who chooses the action.

D.) is a subjective valuation that can be determined only by the individual who chooses the action.

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. A.) utility B.) opportunity cost C.) benefit analysis D.) marginal analysis

D.) marginal analysis

Scarcity exists because of: A.) the market mechanism. B.) specialization and division of labor. C.) the allocation of goods by prices D.) unlimited wants and limited resources.

D.) unlimited wants and limited resources.