Macroecon Test 1
Scarcity
A situation in which unlimited wants exceed the limited resources available to fulfill those wants
Recovery
the early part of an expansion, immediately after a trough
Macroeconomics is the study of
the economy as a whole, including topics such as inflation, unemployment, and economic growth
Which of the following goods is directly counted in GDP?
A 12 inch subway sandwich purchased by a student
Which of the above statements demonstrates that economic agents respond to incentives? A. consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along waikiki beach B.department stores take steps to increase security since they believe it is more costly to allow shoplifiting than to install expensive security mointoring equipment C. Farmers produce more cotton when its selling price falls
A and B
Supposed Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight kids. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?
GDP will decrease
Which of the following is a microeconomics question?
How will Apple decide on a selling price for the iPad?
Which of the following is a normative economic statement?
The price of milk is too high
Which of the following is a macroeconomics question?
What determines the unemployment rate?
Depression
a deep and long recession
In market economy, who decides what goods and services will be produced?
consumers and producers
Recession
falling in RGDP, from a peak to the next trough RGDP has to be declining for 6 consecutive months or longer
Household production
goods and services people produce for themselves
Microeconomics is the study of
how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices
Which of the following is a positive economic statement?
if the price of gasoline rises, a smaller quantity of it will be bought
Legalizing all forms of illegal activities
increase GDP and reduces the size of underground economy
The study of economics arises due to
scarcity
Peak
the highest point in real GDP at the end of an expansion and right before a contraction
Trough
the lowest point in real GDP at the end of a contraction or recession
positive analysis
the study of "what is?" (descriptive, can be tested with data, doesn't have to be a true fact though)
normative analysis
the study of "what ought to be?" (judgmental, prescriptive, reflects somebody's opinion rather than a fact)
Suppose you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2016?
the value of the service of the real estate agent