macro test

A typical American family sends about _____% of its budget on services. ​

66%

Graphs are useful because of the way they

All of the above are correct.

Which of the following is an example of opportunity cost not measured by money cost?

All of the above are correct.

If price rises, what happens to quantity supplied for a product?

It increases.

Are markets always in equilibrium?

No, but if there is no interference, they tend to move toward equilibrium

Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college. How would an economist look at the matter?

There is still an opportunity cost, even if it is justified by higher future earnings.

If a decision maker uses marginal analysis, then the relevant costs are the

additional costs of a particular activity or product.

The central question in economics is how to

make the best use of scarce resources.

Gross Domestic Product in 2013 was almost five times larger than it was in 1960 but it is important to note that

the population grew substantially over the same time period.

In January, 2,500 quarts of ice cream are sold in Boston at $2 a quart. In February, 3,000 quarts are sold at $2.50 a quart. This change in quantity sold and price may have been caused by

the release of a medical study showing that ice cream consumption improves mental health.

The opportunity cost of increased production of some good can be measured with

the slope of the production possibilities curve.

During a war, a government will often draft people, most of whom are presently employed, into the army. An economist, computing the real cost of the war, would be sure to include which of the following items?

the value of the civilian goods no longer produced by the new soldiers

Rational production decisions require an understanding of

trade offs, opportunity costs, scarcity of resources.

Along with changes in the level of economic activity, measured by GDP, what other economic variable tends to rise and fall as a consequence?

unemployment

An article in a recent economics periodical asks the question: "Is low inflation worth it?" By "it," the article probably means

unemployment

The demand curve for a good connects points describing how much consumers

would have been willing and able to buy at different prices during a particular period.

The largest share of the typical American family budget goes to:

​housing

The average hourly wage (excluding benefits) in the United States is currently

$20.00

During fiscal year 2012, the most recent mentioned in the text, the federal government spent approximately

$3.7 trillion

Refer to Table 4-1. What is the equilibrium price in the example above?

$7

A ticket to an Eric Clapton concert costs $45. If you have a ticket, you can "scalp" it (sell it illegally) for $75. To a ticket holder, the opportunity cost of actually attending the concert is

$75

From the data given in Table 3-2, the opportunity cost of increased cotton in moving from A to B is

1 unit of corn

What is the approximate number of Americans who have jobs?

144 million

After a strike against the Financial News in London began, the number of copies of the competing Broad Street Journal sold in England increased dramatically, yet there was no increase in price. Which supply and demand graph in Figure 4-19 represents the situation for the Broad Street Journal before the strike started?

2

At present, faculty in the Economics Department teach introductory and upper-level courses. Which graph in Figure 3-5 represents the change in the production possibilities of the Economics Department after a policy of using graduate students in addition to faculty to teach introductory sections was implemented?

3

The typical American family spends about ____ percent of its budget on goods, and the remainder on services.

34

If the suppliers of a good will sell any amount at $30 but there are no sales, then the market can best be represented by which graph in Figure 4-5?

4

Which of the following is the correct way to describe equilibrium in a market?

At equilibrium, quantity demanded equals quantity supplied.

A decrease in demand will have what effect on equilibrium price and quantity?

Both price and quantity will decrease.

The price for labor is the wage rate. What happens to the supply of labor if wages increase?

It does not change.

How does the United States compare to other advanced, industrialized economies on the issue of openness?

It is one of the less open of them

Annual incomes of James, Jack, and Stanley are $30,000, $50,000, and $80,000 and their tax rates are 10%, 20%, and 30% respectively. Which tax structure is this an example of?

Progressive tax

Which of the following is the most closed economy?.

The United States

Which of the following is the best definition of openness?

The average of imports and exports expressed as a share of GDP.

In Figure 3-3, a shift from A to B seems most consistent with which of the following?

There is a massive immigration of labor.

Standby passengers on airlines who pay low rates for seats benefit from the low price. How are the airlines affected?

They benefit as long as the additional revenue from the passengers exceeds the marginal cost

Is it possible to express an economic model in words without diagrams?

Yes, some of the simplest models are verbal statements.

It is possible to represent three dimensions on a two-dimensional graph by using

a contour map.

A theory can best be defined as

a deliberate simplification of factual relationships that attempts to explain how those relationships work.

The mechanism of supply and demand is

a fundamental tool in both microeconomics and macroeconomics

The price of gasoline has risen and the quantity sold has fallen. This was likely caused by

a rise in the price of crude oil

Equilibrium in a market is

a situation in which there are no inherent forces that produce change.

If the supply curve for housing has the normal positive slope, rent controls will likely

aggravate the housing shortage.

Throughout history, governments have used price controls to

all of the above

An important assumption that is made when constructing a supply schedule is

all other determinants of supply are held constant

In Egypt, in 1970, the Aswan Dam was completed. By preventing the annual flood of the Nile (thereby providing millions of acres of arable land) and by providing electricity, the dam was expected to raise the living standard of the Egyptian people-and it has. However, it has also led to a rise in the water table which causes Egypt's limestone structures, including the pyramids, to absorb more salt water and to suffer serious erosion from crystallized salts. Combined with air pollution and traffic vibration, this erosion is turning the pyramids to dust. Economists analyze this type of problem with the concept of

an externality

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased. As a result, we can expect

an increase in output with no predictable change in price.

In the short run, efforts to reduce the unemployment rate are likely to cause

an increase in the inflation rate.

Which of the following would be most likely to cause an outward shift of the demand curve for electricity?

an increase in the price of heating oil

Economists make assumptions because

analysis without assumptions would be impossibly complex.

Economists and others use economic theory

as a partial basis for public policy recommendations.

A rational decision is one that

assigns available resources in the manner most preferred by decision makers.

During one winter quarter at Frozen U., snow falls every Friday night. Students assume that, on their campus, Fridays cause snow. This hypothesis

assumes that correlation implies causation.

Jack buys a computer from Sam, knowing fully well that the technology used in it is obsolete. In this case, the trade is

beneficial to both parties.

Ticket "scalping" is an example of

black market

During the American Revolution, Washington's army nearly starved to death after price controls were enacted to "help" buy food for the army at affordable prices. The Continental Congress later passed a law which

called for the repeal of other price control measures.

In terms of the competing claims of equality and efficiency, in the United States we have

chosen greater wage inequality for lower unemployment.

What factors are held constant along a given demand curve for a good?

consumer incomes and the prices of other goods

Normally an increase in the supply of a good will cause

consumers to use more of that good and less of others.

What is the basic task that economists expect the market to carry out?

deal with the fundamental problem of scarcity

Employment discrimination is a source of

economic inefficiency.

At an equilibrium price for gasoline,

everyone with the desire and the income to buy gasoline at that price can do so.

A theory is an abstraction used often by economists to

explain why things work the way they do.

According to Baumol and Blinder, recognition of the usefulness of markets

extends to some socialist countries, for example, China.

A transfer payment is a sum of money

given by government without a good or service in exchange.

Which of the following is not an example of a type of factor of production?

government

The dramatic increase in the standard of living since the Industrial Revolution

has not meant unlimited abundance for societies or persons.

According to the law of comparative advantage, a doctor who is also a talented auto mechanic should

hire a professional mechanic to repair her car.

Opportunity costs exist for

households, businesses, and governments

The payments to owners of capital include

interest and profits.

If production involves constant opportunity cost, the production possibilities curve

is a straight line.

Voluntary exchange

is always beneficial to both parties.

A common misperception about consumer demand is that

it is a fixed amount

A common misconception about supply is that

it is a fixed amount.

Which factor of production accounts for the highest percentage of the income that the production process generates in the US?

labor

In contrast to the United States, the European Union has chosen

less wage inequality for higher unemployment.

Because there is a trade-off between inflation and unemployment in the short run

lower inflation will generally be associated with higher unemployment.

The most basic investigative tool of economics is the

mechanism of supply and demand.

Inefficiency in an economy can be caused by

misallocating resources, under employing resources, discrimination

The law of comparative advantages explains why

nations trade with each other, regardless of their relative levels of economic development

People generally purchase less of a commodity as its price increases. This implies that the relationship between quantity purchased and the price of the commodity must have a

negative slope

From 2007 to 2008, the Federal Reserve System reduced interest rates, the price that borrowers pay. As a result, economists expected that the supply of money would

not change

When a firm or economy is operating efficiently, it is operating

on its production possibilities frontier.

Price controls are usually enacted in response to

popular opinion.

"The hotter it gets, the more water people drink." This statement implies that the relationship between temperature and water consumption must have a

positive slope.

If an economy is producing inefficiently, it is

possible to increase production of all goods simultaneously.

Which of the following does not determine the position and shape of a society's PPF?

price level

An individual's demand schedule

provides information about what quantity a consumer is willing and able to buy at each price.

Specialization in production

raises productivity, requires money,stimulates exchange.

Government ownership of property and resources in the United States is

relatively rare; the United States is mostly privatized.

Economics is a social science in the sense that it

rigorously examines human behavior.

Sugarcane can be used for producing both sugar and ethanol. New regulations in certain countries now allow a higher level of ethanol in gasoline. An economist would expect sugarcane prices to ____, and quantity sold to ____.

rise; rise.

As a general rule, an increase in the capital available to a society

shifts the production possibilities frontier outward, away from the origin.

An increase in the number of nursing homes and community health centers and the expansion of home care has led to an increase in the demand for nurses. At the same time, improving opportunities for women in business have reduced the supply of nurses. Hospitals, the major employers of nurses, have resisted wage increases. The resulting situation could be described as

shortage of nurses

The shape of the production possibilities frontier in Figure 3-1 implies that

some resources are better suited for producing wheat than for producing barley.

If the price of a good is below the equilibrium price

suppliers will find inventories being depleted. They will increase production and raise prices

If the price of a good is below the equilibrium price,

suppliers will find inventories being depleted. They will increase production and raise prices

Which of the following is the most open economy?

the Netherlands

Economists define efficiency as

the absence of waste.

Opportunity cost is best defined as the value of

the next best alternative that the decision forces one to give up.