Economics
If the labor force is 50 million and 48 million are employed then the unemployment rate is:
4%
Which of the following does not constitute an act of "investment" as economists use the term?
A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share.
Monetary policy includes changing the level of household taxes.
False
Which of the following statements is not correct?
If poverty was eliminated there would be no reason to study economics.
What is the primary difference between income and wealth?
Income is a flow variable; wealth is a stock variable.
An increase in the wage rate of steel workers will reduce the supply of steel.
True
Contractionary fiscal policy includes raising taxes.
True
Which of the following is an assumption used by Classical economists?
Wages adjust both upward and downward.
An institution through which buyers and sellers interact and engage in exchange is
a market
The government should extend the duration of unemployment benefits to those workers who lost their jobs due to outsourcing. This statement is best described as
a normative statement.
Better insurance benefits increase the incentive of some individuals to work. This statement is best described as
a positive statement
Which of the following is a topic studied in Macroeconomics?
aggregate behavior of households and industries
According to the theory of comparative advantage, specialization and free trade will benefit
all trading parties, even when some are absolutely more efficient producers than others.
Inflation and unemployment
are a focus of macroeconomics.
Someone has a comparative advantage in producing a good if she can produce that good
at a lower opportunity cost.
Unemployment means that
at the going wage rate, there are people who want to work but cannot find work.
The concept of opportunity cost
can be applied to the analysis of any decision-making process.
The diagram that shows the income received and payments made by each sector of the economy is the
circular flow diagram.
If an economy begins to use its resources more efficiently, it will move
closer to its production possibilities frontier (ppf).
According to the Classical model, unemployment
could not persist because wages would fall to eliminate the excess supply of labor.
There is a possibility that a national sales tax will be implemented. Many economists argue that items such as food and clothing should be exempt from such a tax because low-income people spend a greater percentage of their income on these goods than do high-income individuals.
equity.
Because resources are scarce, the opportunity cost of investment in capital is
forgone present consumption.
In the circular flow of economic activity, there are two kinds of markets in which firms and households interact. In the product market:
goods or services are exchanged.
If the demand for sardines increases as income decreases, sardines are a(n)
inferior good.
Which of the following is not a resource as the term is used by economists?
money
Suppose you are deciding whether to spend your tax rebate check on a new iPod or a new digital camera. You are dealing with the concept of
opportunity costs.
Whenever the Democrats gain control of Congress, spending on social programs increases; whenever Republicans gain control of Congress, spending on defense increases. Hence, we know what the next party in control will do.
post hoc, ergo propter hoc fallacy.
The basic coordinating mechanism in a free-market system is
price
An efficient market is a market in which
profit opportunities are eliminated almost instantaneously.
The reason that opportunity costs arise is that
resources are scarce.
The concept of opportunity cost is based on the principle of
scarcity.
The marginal rate of transformation is the
slope of the production possibility frontier.
Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are
sticky prices.
uppose the demand for books goes down when the price of video games goes down. We can say that these two goods are
substitutes.
In a laissez-faire economy ________ what gets produced, how it is produced, and who gets it.
the behavior of buyers and sellers determines
Which of the following is the best definition of economics?
the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided
The term business cycle refers to the
short-term ups and downs in the level of economic activity.