Hon Econ Chapter 1 Quiz Questions

Which of the following best describes a monetary policy tool?

interest rates

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization?

international trade

One basic difference between macroeconomics and microeconomics is:

microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

One basic difference between macroeconomics and microeconomics is that:

microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

In the circular flow diagram model:

(a) households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses (b) businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy labor from households.

Which of the following statements most likely lies within the realm of microeconomics?

A rapid acceleration of the supply of money may create inflation.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy?

Cuba

Which of the following is most likely a topic of discussion in macroeconomics?

a decrease in the unemployment rate

Which of the following best characterizes the circular flow of income?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

Which of the following statements most likely lies within the realm of macroeconomics?

Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

Which is the best term for the principle that for many goods, as the level of production increases, the average cost of producing each individual unit declines?

Economies of scale

Macroeconomics primarily examines:

broad issues such as national output, employment and inflation.

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers.

Specialization:

can lead to an increase in overall production.

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

division of labor

Which of the following is generally accepted as a valid possible criticism of the production of useful goods and services?

environmental pollution

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

Which of the following best denotes the reason for the existence of substantial black markets?

government laws and rules

Which of the following best describes a fiscal policy tool?

government spending

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire more workers today?

that firm's future revenue