Leyden Chapter 2 Quiz 4

The Bureau of Economic Analysis calculates a number of different measures of inflation-the GDP Deflator, the Consumer Price Index, the Wholesale Price Index, etc.. Given that, which of the following is an accurate description of the question, "According to the Bureau of Economic Analysis, what has been the average annual level of inflation (as measured by the GDP Deflator) over the past 10 years?": a) A macroeconomic factual question. b) A macroeconomic reasoned judgment question. c) A microeconomic reasoned judgment question. d) A microeconomic factual question.

A macroeconomic factual question.

The Bureau of Economic Analysis calculates a number of different measures of inflation - the GDP Deflator, the Consumer Price Index, the Wholesale Price Index, etc. Given that, which of the following is an accurate description of the question, "What is the best measure of the average annual level of inflation over the past 10 years?": a) A macroeconomic factual question. b) A macroeconomic reasoned judgment question. c) A microeconomic reasoned judgment question. d) A microeconomic factual question.

A macroeconomic reasoned judgment question.

Which of the following is an accurate description of the question, "Did the Federal Reserve accurately predict the financial crisis of 2008?" a) A macroeconomic factual question. b) A macroeconomic reasoned judgment question. c) A microeconomic taste question. d) A microeconomic factual question.

A macroeconomic reasoned judgment question.

Which of the following is an accurate description of the question, "Do free trade agreements lead to faster economic growth?": a) A macroeconomic factual question. b) A macroeconomic reasoned judgment question. c) A microeconomic taste question. d) A microeconomic factual question.

A macroeconomic reasoned judgment question.

Which of the following is an accurate description of the question, "How much of a premium would consumers be willing to pay for a solar-powered car?": a)A macroeconomic factual question. b) A macroeconomic reasoned judgment question. c) A microeconomic reasoned judgment question. d) A microeconomic factual question.

A microeconomic reasoned judgment question.

The question "Is greater income inequality a moral issue?" is an example of: a) A positive macroeconomic question. b) A normative macroeconomic question. c) Both of the above are correct. d) None of the above is correct.

A normative macroeconomic question.

The question "Who has been hurt the worst by the deflation that Japan has experienced in recent years?" is an example of: a) A positive macroeconomic question. b) A normative macroeconomic question. c) Both of the above are correct. d) None of the above is correct.

A normative macroeconomic question.

The question "Slower economic growth increase income inequality?" is an example of: a) A positive macroeconomic question. b) A normative macroeconomic question. c) Both of the above are correct. d) None of the above is correct.

A positive macroeconomic question.

The question "What has been the effect of deflation (that is, a general fall in prices) on the income of the average Japanese worker?" is an example of: a) A positive macroeconomic question. b) A normative macroeconomic question. c) Both of the above are correct. d) None of the above is correct.

A positive macroeconomic question.

The question, "Do businesses primarily fail because of mismanagement?" is an example of a: a) Factual question. b) A taste question. c) A reasoned judgment question. d) A combination of two or more of the above.

A reasoned judgment question.

The question, "Does the minimum wage result in higher unemployment?" is an example of a: a) Factual question. b) A taste question. c) A reasoned judgment question. d) A combination of two or more of the above.

A reasoned judgment question.

The question, "Do you like the handling of a Toyota more than a Subaru?" is an example of a: a) Factual question. b) A taste question. c) A reasoned judgment question. d) A combination of two or more of the above.

A taste question.

Suppose that your favorite aunt has just given you a $100 gift certificate for your birthday that can be used at a local bookstore. Suppose further that you have decided to divide the money between books and coffee in some way and that the price of a book is $20 and the price of a cup of coffee is $2. Given these facts, take a sheet of paper and graphically represent your budget constraint and label that constraint with the letter A. Then choose a point on constraint A that reflects in your estimation the best way to spend your gift certificate and label that point with the letter B. Now, based on your graph (do not turn in the graph), which statement below most accurately describes your graph: a) Constraint A and Point B are the result of answering positive questions. b) Constraint A and Point B are the result of answering normative questions. c) Constraint A is the result of answering a positive question; Point B is the result of answering a normative question. d) Constraint A is the result of answering a normative question; Point B is the result of answering a positive question.

Constraint A is the result of answering a positive question; Point B is the result of answering a normative question.

Which of the following statements is not an example of a positive question? a) Do major league baseball teams generate millions of dollars in additional income for the local economies that they are located in? b) Is the normalizing of international trade between Cuba and the US likely to happen? c) Are minimum wage laws the result of labor unions interested in protecting their position by driving up the cost of hiring non-union labor? d) Does China have the right policy when it comes to foreign trade?

Does China have the right policy when it comes to foreign trade?

The question, "Do most Americans believe that government is too big? " is an example of a: a) Factual question. b) A taste question. c) A reasoned judgment question. d) A combination of two or more of the above.

Factual question.

The question, "Is the price of a share of IBM stock higher today than the price of a share of Xerox stock?" is an example of a: a) Factual question. b) A taste question. c) A reasoned judgment question. d) A combination of two or more of the above.

Factual question.

Which of the following is not a macroeconomics question? a) Was the Federal Reserve right to try to stimulate the economy by reducing interest rates? b) How much will the California drought drive up the price of fresh vegetables? c) Would the nation's growth rate increase if marijuana were legalized in all 50 states? d) How often has the country experienced a recession since World War II?

How much will the California drought drive up the price of fresh vegetables?

Which of the following is a macroeconomic question? a) How much would the unemployment rate fall if the economy grows by 4% this year? b) What is the effect of unemployment on a worker's lifetime earnings? c) Should the Federal government increase the level of regulation of the airline industry? d) What effect does a rise in the stock market have on the age at which one retires?

How much would the unemployment rate fall if the economy grows by 4% this year?

What is the relationship between the question, "Does innovation lead to economic growth?" and the question "Should government encourage innovation"? a) Both questions are positive questions. b) Both questions are normative questions. c) The first question is a positive one; the second question is a normative one. d) The first question is a normative one; the second question a positive one.

The first question is a positive one; the second question is a normative one.

In deciding whether to place economic sanctions on another country because of international political conflicts, what are the macroeconomic issues? a) The only economic issues are microeconomic. b) The macroeconomic issues center on the cost of those sanctions on the other country in terms of economic growth, unemployment, and inflation. c) There are macroeconomic issues for both countries such as the effect on the overall level of economic activity and unemployment. d) There may be a number of economic effects (microeconomic, international trade, labor market, etc.), but none of them are macroeconomic.

There are macroeconomic issues for both countries such as the effect on the overall level of economic activity and unemployment.

Which of the following questions is not an example of a normative question? a) Should you ask what your country can do for you? Or ask what you can do for your country? b) Does government have any business regulating the sale of medicine? c) What do I have to do if I want to increase the return to my investments? d) Do trade restrictions hurt the nations that impose them?

What do I have to do if I want to increase the return to my investments?

Which of the following is a macroeconomic question? a) How should a firm in a perfectly competitive market react to an increase in input prices? b) Would an increase in the minimum wage increase inflation? c) What effect do higher interest rates have on a firm's willingness to invest? d) What happens to the level of exports when the exchange rate changes?

Would an increase in the minimum wage increase inflation?

Which of the following is not a macroeconomics question? a) How much will the nation's economy grow if household consumption rises by 10%? b) What is the effect of higher levels of education on a nation's economic prosperity? c) Would legalization of marijuana nationwide result in a fall in the demand for cigarette? d) Does an increase in business inventories predict a recovery from a recession?

Would legalization of marijuana nationwide result in a fall in the demand for cigarette?

Suppose that you have just acquired a chemical manufacturing company and are trying to figure out what to produce. You talk to the plant manager and discover that the company can produce formaldehyde and sulfuric acid. You also find out that the maximum amount of formaldehyde that the company can produce in a month is 1 million liters if that is all it produces, while the maximum amount of sulfuric acid it can produce in a month (again assuming that is all it produces) is 5 million liters. Given these facts, take a sheet of paper and graphically represent the company's production possibility frontier and label that frontier with the letter A. Now suppose that you invent a new process for manufacturing sulfuric acid that is more efficient so that you can produce more sulfuric acid than before but with the same amount of inputs. Given that innovation, graphically represent the company's new production possibilities frontier on the same graph you just drew and label that new frontier with the letter B. Finally, based on your graph (do not turn in the graph), which statement below most accurately describes your sketch of the frontiers A and B (both their locations and their shapes): a) Your sketch is based entirely on factual thinking. b) Your sketch is based entirely on reasoned judgment thinking. c) Your sketch is based entirely on taste thinking. d) Your sketch is based on both factual thinking and reasoned judgment thinking.

Your sketch is based on both factual thinking and reasoned judgment thinking.