Macro test 1
___ 12) A consumer in Germany purchases a car made in the United States for $40,000. The net effect of this purchase on United States GDP is A) $40,000. B) $0. C) -$40,000. D) dependent on where the parts of the car were made.
A) $40,000.
Consider the following situation for questions 7 and 8. Laptops and desktops are substitutes in production. Suppose that the price of desktops increases. What will happen to the supply of laptops? A) The supply of laptops will decrease (shift left). B) The quantity supplied for laptops will decrease. C) The supply of laptops will increase (shift right). D) The quantity supplied for laptops will increase.
A) The supply of laptops will decrease (shift left).
In economics, the optimal decision is to continue an activity until A) marginal benefit is equal to marginal cost. B) marginal cost is greater than marginal benefit. C) marginal benefit is zero. D) total benefit is maximized and total cost is minimized.
A) marginal benefit is equal to marginal cost.
___14) What are the four major categories of expenditure? A) Wages, interest, rent, and profit. B) Consumption, investment, government purchases, and net exports. C) Labor, capital, natural resources, and entrepreneurship. D) Final goods, intermediate goods, production, and income.
B) Consumption, investment, government purchases, and net exports.
The concept of opportunity cost is best illustrated by A) a demand schedule. B) a production possibilities frontier. C) a supply schedule. D) the income effect.
B) a production possibilities frontier.
___ 11) For any price of a good in which the quantity supplied is greater than the quantity demanded, there will be __________. A) a shortage of the good. B) a surplus of the good. C) not enough information to determine if there is a shortage or surplus of the good. D) neither a shortage nor surplus of the good (i.e., the market is in equilibrium).
B) a surplus of the good.
What is the difference between a positive statement and a normative statement? A) A scientific model can be created to see if a normative statement is true or not. B) Positive statements are good and normative statements are bad. C) Positive statements are always true while normative statements are false. D) Positive statements are testable while normative statements are based on someone's opinion.
D) Positive statements are testable while normative statements are based on someone's opinion.
Consider the following situation for questions 7 and 8. Laptops and desktops are substitutes in production. Suppose that the price of desktops increases. ___ 8) What will happen to the supply of desktops? A) The supply of desktops will decrease (shift left). B) The quantity supplied for desktops will decrease. C) The supply of desktops will increase (shift right). D) The quantity supplied for desktops will increase.
D) The quantity supplied for desktops will increase.
In a two good, two country economy, each country can simultaneously benefit from trade when A) one has a comparative advantage in producing both goods. B) each has a comparative advantage in producing one of the goods. C) each has an absolute advantage in producing one of the goods. D) one has an absolute advantage in producing both goods.
B) each has a comparative advantage in producing one of the goods.
Dr. X decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services. What would Dr. X need to do to try to achieve allocative efficiency? A) invest in companies that produce up to the point where the marginal cost of the last unit produced is zero B) invest in companies that produce goods and services based on consumer preferences C) invest in companies that fairly distribute their products and services D)invest in companies that produce goods and services at the lowest possible cost
B) invest in companies that produce goods and services based on consumer preferences
Which of the following is true of centrally planned economies? A. The government makes some economic decisions while households and firms make other economic decisions B. A centrally planned economy will always achieve both allocative efficient and productive efficient. C. A centrally planned economy has most likely not been successful in producing low cost, high quality goods and services D. A centrally planned economy is based mostly on consumer preferences.
C) A centrally planned economy has most likely not been successful in producing low-cost, high-quality goods and services.What is the difference between a positive statement and a normative statement?
___ 9) Which of the following is not a characteristic of a perfectly competitive market? A) All firms produce identical products. B) Firms can freely enter and exit the market. C) Barriers to entry into the market must be high. D) There are a large number of both buyers and sellers.
C) Barriers to entry into the market must be high.
___ 15) GDP is an imperfect measure of total production because it fails to measure what types ofproduction? A) Business investment and foreign production. B) Foreign production and the government sector. C) Household production and the underground economy. D) Household production and foreign production
C) Household production and the underground economy.
___ 10) The law of demand is the __________ relationship between price and quantity demanded, while the law of supply is the __________ relationship between price and quantity supplied. A) positive; positive B) positive; negative C) negative; positive D) negative; negative
C) negative; positive
___ 13) The GDP deflator is a measure of A) the growth rate of nominal GDP divided by the growth rate of real GDP. B) the growth rate of real GDP. C) the price level. D) the reduction in real GDP due to household production and the underground economy.
C) the price level.