Macroeconomics Quiz 2-Chang

Classify the statement below as positive or normative. Society faces a short-run trade-off between inflation and unemployment a. Positive b. Normative

A

Questions 12-15 involve graph

A

Classify the statement below as positive or normative. The Federal Reserve should reduce the rate of money growth. a. Positive b. Normative

B

Economic models a. are not useful because they omit many real-world details. b. are usually composed of diagrams and equations. c. are useful because they do not omit any real-world details. d. are usually plastic representations of the economy.

B

Unemployment would cause an economy to a. produce inside its production possibilities frontier. b. produce on its production possibilities frontier. c. produce outside its production possibilities frontier. d. experience an inward shift of its production possibilities frontier.

A

A production possibilities frontier can shift outward if a. government increases the amount of money in the economy. b. there is a technological improvement. c. resources are shifted from the production of one good to the production of the other good. d. the economy abandons inefficient production methods in favor of efficient production methods.

B

Microeconomics is the study of a. how money affects the economy. b. how individual households and firms make decisions. c. how government affects the economy. d. how the economy as a whole works.

B

Shoes: 800, 600, 400, 200, 0 Socks: 0, 400, 700, 900, 1000 What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600? a. 400 socks b. 300 socks c. 200 socks d. 100 socks

B

An economy's production of two goods is efficient if a. all members of society consume equal portions of the goods. b. the goods are produced using only some of society's available resources. c. it is impossible to produce more of one good without producing less of the other. d. the opportunity cost of producing more of one good is zero.

C

Macroeconomics is the study of a. individual decision makers. b. international trade. c. economy-wide phenomena. d. markets for large products.

C

The production possibilities frontier is a graph that shows the various combinations of output that an economy a. should produce. b. wants to produce. c. can produce. d. demands.

C

A model can be accurately described as a a. theoretical abstraction with very little value. b. device that is useful only to the people who created it. c. realistic and carefully constructed theory. d. simplification of reality.

D

For economists, statements about the world are of two types: a. assumptions and theories. b. true statements and false statements. c. specific statements and general statements. d. positive statements and normative statements.

D

On a bowed production possibilities frontier, as you move down along the curve a. more of one good must be given up to receive one unit of the other good. b. the available production technology does not change. c. the opportunity cost increases. d. All of the above are correct.

D

Shoes: 800, 600, 400, 200, 0 Socks: 0, 400, 700, 900, 1000 Which of the following statements is correct? a. The opportunity cost of an additional 200 shoes is constant at 200 socks. b. The opportunity cost of an additional 200 shoes is constant at 300 socks. c. Footville's production possibilities frontier is a straight, downward-sloping line. d. The opportunity cost of an additional 200 shoes increases as more shoes are produced.

D

Tennis Rackets: 100, 200, 300 Tennis Balls: 8000, 6500, ??? What is ??? if the PPF is bowed outward? a. 6000. b. 5500. c. 5000. d. 4500.

D

The production possibilities frontier is used to illustrate some basic economic ideas, including a. scarcity. b. opportunity cost. c. economic growth. d. All of the above are correct.

D