Macro 2315 Final Exam practice questions Bishop

Generally speaking,demand for a good will increase

if the price of a complement decreases

The PPF curve shows:

the maximum production of one good for every possible production level of the other good

Which of the following is the basis for an argument against free trade?

the distribution of the benefits from trade

Suppose there are two parallel highways between two cities with approximately equal traffic. What would you expect to happen if the state began charging tolls to drive on one of those highways? A.More drivers would drive on the non-toll road, making the toll road less congested. B.More drivers would drive on the toll road making the non-toll road less congested. C.Traffic would remain evenly divided between the two roads as drivers continuously sought the less-congested route. D.Traffic would decrease on both roads.

A. more drivers would drive on the non-toll road, making the toll road less congested

During times of high unemployment, colleges often observe an increase in enrollment even if tuition remains unchanged. Why?A.Students do not know about the decision pitfalls and go to college even though the net benefit is negative. B.The opportunity cost of attending college is lower because students are less likely to have good full-time jobs. C.The opportunity cost of attending college is higher because good jobs are harder to find. D.The benefit of attending college is lower because college graduates are less likely to find jobs upon graduation.

B. the opportunity cost of attending college is lower because students are less likely to have good full time jobs

Which of the following questions would not be answered in macroeconomics? A. What caused the Great Depression? B. At what rate does the US economy typically grow? C. Did the sharp increase in gasoline prices alter SUV sales? D. How does government spending affect the economy?

C. did the sharp increase in gasoline prices alter SUV sales

An editorial in the paper argues that students should only be allowed to attend school so long as the marginal cost of educating that student is less than the marginal benefit of that student's education. The writer's reasoning is an application of: A.positive economics. B.negative economics. C.normative economics. D.economic naturalism.

C. normative economics

One thing that distinguishes normative principles from positive principles is that: A.normative principles are pessimistic and positive principles are optimistic. B.normative principles reflect the social norms of the community, and positive principles reflect universal truths. C.normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions. D.normative principles tell us how people actually make economic decisions, and positive principles tell us how people should make decisions.

C. normative principals tell us how people should make economic decisions, and positive principals tell us how people actually do make decisions

Positive economic principles are those that: A.are always correct. B.are influenced by political ideology. C.predict how people should behave. D.predict how people will behave.

C. predict how people should behave

Which of the following would not be analyzed in microeconomics?A.How to make the largest profit? B.Whether to study or watch TV tonight. C.How an early freeze in California will affect the price of fruit?D.Whether the federal budget should always be balanced

D. whether the federal budget should always be balanced

If superman spends his only $10 on his favorite foods, hamburgers, rather than his 2nd fav, beans, the beans are the _____ of hamburgers

Opportunity cost

Countries that trade on the basis of comparative advantage have _____ than countries that do not

more goods and services available to them

Which of the following is NOT true of a market in equilibrium

supply equals demand

Having a comparative advantage in a particular means that:

you give up less to accomplish that task than do others

Studying how Pat allocates her time between teaching classes and assisting undergraduate students is an example of: A.microeconomics. B.macroeconomics. C.individual economics. D.economic naturalism

A.microeconomics

Which of the following statements is true?

Comparative advantage does not require absolute advantage

Application of the principle of comparative advantage leads to

greater specialization of labor and other factors of production

The PPF Curve is:

The boundary that divides all production combinations into attainable ones and unattainable ones

By convention, there are two major divisions of economics, called: A.marginal benefit and marginal cost. B.reservation price and opportunity cost. C.microeconomics and macroeconomics. D.rational economics and irrational economics.

c. Microeconomics and Macroeconomics

In a free market, if the price of a good is below the equilibrium price, then

consumers, wanting to ensure that they acquire the good, will bid the higher price

based on their comparative advantages, Matt should specialize in _____ while amy should specialize in______

rotating tires, oilchanges

The core principle that is illustrated by the production possibilities curve is

the scarcity principal

Which of the following statements about comparative advantage is true?

Australia has a comparative advantage in the production of food, Korea has a comparative advantage in the production of electronics

Several years ago there were two systems for viewing movies at home: Sony's BetaMax machines and VCR machines that played VHS tapes. Despite the higher quality of BetaMax video, VHS became the dominant format. Once VHS tapes were the dominant format, BetaMax virtually disappeared from consumer markets. Why?A.Movie producers preferred VHS to BetaMax. B.Consumers gained more benefit by using the same system that others used, allowing them to share movies. C.Movie rental stores boycotted all Sony products. D.BetaMax technology was obsolete.

B. consumers gained more benefit by using the same system that others used allowing them to share movies

A study that deals with the salaries of university professors would be considered: A.macroeconomics B.microeconomics C.economic naturalism D.marginal benefit

B. microeconomics

Normative economics is concerned with how people _____ make decisions while positive economics is concerned with how people _____ make decisions. A.in the real world; in models B.should; do C.in power; in ordinary life D.in ordinary life; in power

B. should; do

Some states have started giving tax credits to homeowners who install solar panels. This is an example of: A.A decision pitfall because homeowners will not properly account for the costs and benefits of installing solar panels. B.Using the incentive principle to encourage homeowners to switch to solar energy. C.Normative economics, because people should use clean sources of energy. D.Macroeconomic policy because it involves government tax policy

B. using the incentive principal to encourage homeowners to switch to solar energy

If the government wanted to use the incentive principle to discourage smoking, it could: A.publicize the health risks associated with second-hand smoke. B.increase taxes on cigarettes, effectively raising the price. C.subsidize hospitals treating lung disease. D.invest more money in health research.

B.increase taxes on cigs, effectively raising the price

Curly used his frequent flyer miles to fly to visit Moe. Curly told Moe that it didn't cost him anything to visit. Is Curly correct? A.Yes, because Curly's frequent flyer miles made the trip free. B.Yes, because Curly could stay at Moe's house for free. C.No, because Curly could have used his frequent flyer miles to go somewhere else, but chose to visit Moe. D.No, because Curly had to pay for earlier trips in order to earn the frequent flyer miles.

C. No, because curly could have used his frequent flyer miles to go somewhere else, but choose to visit Moe.

The incentive principle is an example of: A.an economic decision-making pitfall. B.over-estimating the benefits of an action. C.a positive economic principle. D.a normative economic principle.

C. a positive economic principal

An economic naturalist is described as someone who: A.uses economic arguments to protect forests and wetlands from development. B.has a natural talent for drawing graphs. C.applies economic insights to everyday life. D.studies the process of natural selection in a marginal cost and marginal benefit framework.

C. applies economic insights to everyday life

The number of US households with access to the Internet and those with broadband connections is growing rapidly. As an economic naturalist, one could predict that when a major purchase is being considered, families will: A.always buy online. B.never buy online. C.collect more information before making the purchase because the cost of finding and acquiring it is lower. D.collect more information before making the purchase because the benefit of information is now larger.

C. collect more info before making the purchase bc the cost of finding and acquiring is lower.

With ATMs, it is possible to retrieve cash from the bank at any time. One hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3 pm. The difference has arisen because: A.flexibility was not valued 100 years ago. B.it was impossible to provide 24-hour service 100 years ago. C.the cost of providing 24-hour service is much lower today. D.government forced banks to become more convenient

C. the cost of providing 24-hour service is much lolwer today

One observes that the initial equilibrium quantity, Pe falls to Pe1, and the initial equilibrium quantity, Qe falls to Qe1. Which of the following best fits the observed data?

Demand constant and decrease in supply

The impact of government policies on the building of new roads and highways would be studied in the field of: A.microeconomics. B.macroeconomics. C.government economics. D.marginal economics.

b. Macro