Macroeconomics - Test 3 Review

In the above graph, which of the following formulas is the correct expression for the slope of the line between points a and b?

(Y2 - Y1) / (X2 - X1)

According to the rationality assumption, people:

Do not intentionally make decisions that would leave them worse off.

Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer? - What products do we produce? - How do we produce the products? - Who consumes the products?

How do we produce the products?

One example of a positive economic statement is

If minimum wage rates rise, then unemployment will rise.

Which of the following is a positive economic statement? - We should tax the wealthy more and use the money to provide services for the poor. - If minimum wage rates rise, then unemployment will rise. - Full employment policies should be pursued. - The government should do something to help the homeless.

If minimum wage rates rise, then unemployment will rise.

Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority? - France - United States - North Korea - Italy

North Korea

Which of the following is NOT an opportunity cost of attending college? - The cost of textbooks - The cost of housing - Money spent on tuition - Wages you could have made instead of attending class and studying

The cost of housing

Formula for the slope of any linear function:

Y = a + bX where b is the slope of the line.

In what type of economy does the government decide how economic resources will be allocated?

a centrally planned economy

There is some amount that each of us would consume regardless of income. This amount is known as ______________ and is represented by the y-intercept which shows the amount we would consume at zero income.

autonomous consumption

The slope

can thought of as rise over run, or that ratio of the change in Y over the change in X. In this graph, the vertical distance, or rise, is the difference between Y2 and Y1. The horizontal distance, or run, is expressed as the difference between X2 and X1.

One of the first steps in deciding whether to complete your education is to:

evaluate the marginal cost and marginal benefit of that decision.

One of the primary goals of most governments with regard to the economy is:

full employment

Physical capital

includes any goods, equipment or tools used in the production process.

A negative relationship is also sometimes referred to as an:

indirect or inverse relationship.

A sustained increase in the overall level of prices is known as:

inflation

Economics

is a social science that studies choices made in the face of scarcity.

Economics:

is concerned with how people respond to incentives

Autonomous consumption

is the amount that you would consume that is independent of income.

If the variables were moving in opposite directions, one increasing while the other is decreasing, it would be known as a:

negative relationship

The stock of computers, factory buildings, and machine tools used to produce goods is known as:

physical capital

Macroeconomics is concerned with all of the following except: - inflation rates - standard of living - unemployment rates - political party affiliation

political party affiliation

As disposable income increases, consumers spend more money. Since both variables are moving in the same direction, it is called a:

positive relationship.

Human capital

refers to education, training or skill sets that a worker might possess.

Financial capital

refers to stocks, bonds, money and other financial assets.

The principle of opportunity cost evolves from the concept of:

scarcity

Positive economic statements are:

statements of fact that imply no value judgment.

In a linear function:

the slope is the same at every point on this line.

The slope of a straight line equals the change in the value on the __________ axis __________ by the change in the value of the other axis measured between any two points on the line.

vertical, divided