Macro Economics Hw.1

Which of the following statements most likely lies within the realm of microeconomics?

An increase in labor costs will increase the additional cost of producing another bus.

In countries like _____________ the command economy predominates.

Cuba and North Korea

_____________ - 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.

Economies of scale

Which of the following is most likely a topic of discussion in macroeconomics?

a decrease in the unemployment rate

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers.

Specialization:

can lead to an increase in overall production.

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

circular flow diagram

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

division of labor

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

The circular flow diagram of economic activity is a model of the:

flow of goods, services, and payments between households and firms.

In the ______________, households receive goods and services and pay firms for them.

goods and services market

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

Which of the following best describes a fiscal policy tool?

government spending

Which of the following best describes a monetary policy tool?

interest rates

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization?

international trade

In the ____________, households work and receive payment from firms.

labor market

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being

low inflation

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.

market-oriented economy

The basic difference between macroeconomics and microeconomics is

microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

If macroeconomics looks at the economy as a whole, it focuses on which of the following?

unemployed people