4. Overview of US macroeconomy

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

A market

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

A. If minimum wage rates rise, then unemployment will rise.

Output

Amount of goods and services produced in system given constraints. Constraints include the quality of machinery technology, available workers, and the demand.

Increased demand for laptop computers will drive up their price. A. An increase in consumer income. B. An improvement in computer manufacturing technology. C. A decrease in the supply of laptop computers.

B.An improvement in computer manufacturing technology.

For every 10 exam points Myrna must earn in order to pass her economics course and meet her graduation​ requirements, she will study one additional hour for her economics test next week.

Based on the rationality assumption.

​Celeste, who uses earnings from her regularly scheduled hours of​ part-time work to pay for her room and board at​ college, will decide to buy a newly released DVD this week only if she is able to work two additional hours.

Based on the rationality assumption.

____________________________ deals with the fact that individual choices can be affected by psychological limitations.

Behavioral economics

Which of the following would be a topic of study in microeconomics​? A. Federal government spending. B. Unemployment. C. The amount of steel purchased by General Motors. D. Inflation.

C. The amount of steel purchased by General Motors

Falling gasoline prices will result in additional vacation travel. A. The airlines engage in a price war that leads to lower airfares. B. Consumer incomes increase. C. The economy enters a recession with increased unemployment.

C. The economy enters a recession with increased unemployment.

A reduction of income tax rates will result in more people working. A. Lower interest rates lead to a boom in housing construction. B. Congress passes a huge appropriations bill leading to increased government spending. C. The foreign exchange value of the dollar increases causing domestic exports to decline.

C. The foreign exchange value of the dollar increases causing domestic exports to decline.

The three fundamental economic questions that a nation addresses in order to allocate​ society's scarce resources include all of the following ​except: A. For whom will the items be​ produced? B. How will the items be​ produced? C. Why will the items be​ produced? D. What and how much will be​ produced?

C. Why will the items be​ produced?

Which one of the following is a positive​ statement? A.The Fed should not have cut the interest rate so frequently. B.All these interest rate cuts should have helped the economy. C.A tax cut should be better for stimulating the economy than a cut in the interest rate. D.The Fed has cut the key interest rate several times this year.

D. The Fed has cut the key interest rate several times this year.

According to the rationality assumption, people:

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

Surplus

Exports exceed imports

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?

How do we produce the products?

Deficit

Imports exceed exports

What is the concept of bounded ​rationality?

Individuals make​ short-run choices that are not consistent with their​ long-term goals.

Microeconomics issue or a macroeconomics issue? The national​ government's budget deficit.

Macroeconomics

Microeconomics issue or a macroeconomics issue? The national unemployment rate.

Macroeconomics

Microeconomics issue or a macroeconomics issue? The rate of growth of the money supply.

Macroeconomics

What covers the study of topics such as inflation and unemployment?

Macroeconomics

Microeconomics issue or a macroeconomics issue? A​ family's choice of having a baby.

Microeconomics

Microeconomics issue or a macroeconomics issue? A​ student's allocation of study time across two subjects.

Microeconomics

Microeconomics issue or a macroeconomics issue? The decision of a worker to work overtime or not.

Microeconomics

__________ is the study of how households and businesses make choices, how they interact in markets, and how government influences their choices.

Microeconomics

Which of the following are not essential components of an economic model?

Normative statements

Which of these is NOT an essential component of an economic model?

Normative statements

A coin toss will best predict​ Leonardo's decision about whether to purchase an expensive business suit or an inexpensive casual outfit to wear next week when he interviews for a​ high-paying job he is seeking.

Not based on the rationality assumption.

Which of these is a macroeconomic study?

The study of how fast prices in general are rising.

Output per capita

Total Output divided by total population

Labor productivity

Total output divided by number of employed workers

Macroeconomics focuses on which of the following topics?

Unemployment, inflation, growth, and trade

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

a centrally planned economy

If the president of Columbia commented that "we should do something to reduce inflation in Columbia," this would be an example of:

a normative statement

In economic terms, a(n) _________________ is the total amount of some good or service.

aggregate

The hypothesis that people cannot always make completely rational decisions by examining every possible choice but instead use of rules of thumb to guide them is known as;

bounded rationality.

Economic models

can be used to explain or predict economic phenomena.

Economic models often simplify the real world by holding all things equal and changing one variable to determine the impact of the change. The "all things equal" assumption is also known as:

ceteris paribus

A centrally planned economy is also referred to as a;

command and control economy.

Macroeconomics can be used to understand all of the topics listed below, except: how a consumer decides between the purchase of two different cars how the national economy works what causes economic booms and recessions national unemployment trends

how a consumer decides between the purchase of two different cars

Economics is best defined as the study of

how people allocate limited resources to satisfy unlimited wants.

The rationality assumption implies that

individuals will not intentionally make decisions that leave them worse off.

Economics:

is concerned with how people respond to incentives

The assumption of bounded rationality suggests that people might use rules of thumb to guide their decision making because

people can not examine every possible choice available to them.

One basic underlying principle in economics is that;

people respond to incentives.

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

political party affiliation

Economics is the study of choice under conditions of:

scarcity

Economists assume that an individual acts as if motivated by

self-interest.

Normative statement

statement which describes how the world should be

positive statement

statement which describes the world as it is (WILL BE/ will happen)

standard of living

the degree of wealth and material comfort available to a person or community.

Productivity

the rate of production; measured using output per unit of input