Macroeconomics

If Marco and Carlos specialize according to comparative advantage and exchange with each other, Marco can gain up to $_______ and Carlos can gain up to $_______. A. 500; 300 C. 2000; 900 B. 1000; 1500 D. 500; 600 E. 100; 500

A. 500; 300

If Russia and Brazil specialize on the basis of comparative advantage: A. Brazil will produce steel and Russia will produce grain. B. Brazil will produce both steel and grain. C. Russia will produce both steel and grain and Brazil will produce neither. D. Russia will produce steel and Brazil will produce grain.

A. Brazil will produce steel and Russia will produce grain

In building models, the economic way of thinking A. starts by making simplifying assumptions. B. includes all available information. C. must use mathematical equations. D. attempts to exactly duplicate the real world.

A. Starts by making simplifying assumptions.

The economic way of thinking considers the scientific method as... A. used by economists and other social scientists to formulate and test hypotheses. B. also known as the economic perspective. C. applicable to human behavior in markets but not in governments. D. not applicable to economics because economics deals with human beings.

A. Used by economists and other social scientists to formulate and test hypothesis.

Which of the following is a labor resource? A. a computer programmer B. a computer C. silicon (sand) used to make computer chips D. software used by a firm

A. a computer programer

If Marco and Carlos specialize according to comparative advantage then Marco will only _______ and Carlos will only ______. A. design websites; build decks B. design websites; design websites C. build decks; build decks D. build decks; design websites

A. design websites; build decks

Macroeconomics approaches the study of economics from the viewpoint of A. entire economys. B. governmental units. C. the operation of specific product and resource markets. D. individual firms.

A. entire economys.

Lorenzo: 1J = 3C Ivana: 1J = 4C For Ivana, the opportunity cost of making C: A. is 1/4 a Jam. B. is 4 Jam. C. should be zero under child labor laws D. becomes lower depending on how many C's he has made that day.

A. is a 1/4 a jam

Comparative advantage is a situation in which _______. A. some people are more competitive than other people B. some people can produce a specific good at lower opportunity cost than other people can C. some people can produce more of a specific product than other people can D. there is a basis for specialization and exchange E. both (B) and (D)

A. some people are more competitive than other people

In the economic way of thinking, the phrase ceteris paribus represents a __________ that means _____. A. purposeful behavior; all other things equal B. simplifying assumption; all other things equal C. purposeful behavior; people seek utility D. simplifying assumption; people seek utility

B. Simplifying assumption; all other things equal

In the economic way of thinking, the term "incentives" refers to A. costs and benefits of government intervention B. benefits and costs associated with any choice made by an individual C. employers paying workers a bonus at the end of the year D. unlimited wants but limited resources

B. benefits and costs associated with any choice made by an individual.

The main function of the entrepreneur is to A. make routine pricing decisions. B. combine inputs of production into valuable output. C. purchase capital. D. create market demand

B. combine inputs of production into valuable output

In order for mutually beneficial trade to occur between two otherwise isolated nations: A. each nation must have an absolute advantage in at least one good. B. each nation must have a comparative advantage in at least one good. C. each nation must face constant costs in the production of the good it exports. D. one nation must have an absolute and a comparative advantage in most goods.

B. each nation must have a comparative advantage in at least one good

When analyzing entire societies, the economic way of thinking assigns A. greater weight to domestic workers' well being than to foreign workers' B. equal weight to individuals' well being C. equal weight to people's opportunity costs D. greater weight to the well being of children than to adults

B. equal weight to individuals' well being

The four factors of production are A. land, labor, capital, and money. B. land, labor, capital, and entrepreneurial ability. C. labor, capital, technology, and entrepreneurial ability. D. labor, capital, entrepreneurial ability, and money.

B. land; labor, capital, and entrepreneurial ability

Specialization in production is economically beneficial primarily because it: A. allows everyone to have a job which they like. B. permits the production of a larger output for any particular amounts of resources. C. facilitates trade by bartering. D. guarantees full employment. E. none of the above

B. permits the production of a larger output for any particular amounts of resources

Which of the following will not produce an outward shift of the production possibilities curve? A. upgrading the quality of a nation's human resources B. reducing unemployment C. increasing the quantity of a society's labor force D. improving a society's technological knowledge

B. reducing unemployment

Which one of the following expressions best states the idea of opportunity cost? A. "A penny saved is a penny earned." B. "He who hesitates is lost." C. "There is no such thing as a free lunch." D. "All that glitters is not gold."

C. "There is no such thing as lunch."

France's opportunity costs of producing bread is _________ and the U.S.'s opportunity costs of producing wine is _________ . a. 1/2; 1/4. b. 100; 120. c. 1/2; 1/6. d. 1/6; 1/2.

C. 1/2; 1/6

Marco earns $50 per hour and Carlos earns $30 per hour at their respective jobs. Marco can design a new website in 20 hours and can build a new deck in 40 hours. Carlos can design a new website in 40 hours and can build a new deck in 50 hours. Marco's opportunity cost of building one deck is $_____ and Carlos's opportunity cost of designing one website is $_____. A. 2000; 1000 C. 2000; 1200 B. 1000; 1000 D. 1000;120 E. 1000; 1500

C. 2000; 1200

Assume that before specialization and trade, Russia produced combination C and Brazil produced combination B. If these two nations now specialize completely based on comparative advantage, the total increased production from specialization will be: A. 8 tons of steel. B. 1 ton of grain and 2 tons of steel. C. 8 tons of grain. D. 2 tons of grain and 4 tons of steel.

C. 8 tons of grain

The country with the absolute advantage in making bread is _________ and the country with the comparative advantage in producing wine is __________ . A. U.S.; U.S. B. U.S.; France C. France; U.S. D. France; France

C. France; U.S

The country with the comparative advantage in making bread is ________ and the country with the absolute advantage in producing wine is ___________ . A. U.S.; U.S. B. U.S.; France C. France; U.S. D. France; France

C. France; U.S

If Ivana and Lorenzo specialize based on comparative advantage then: A. Lorenzo will make both C and J. B. Ivana will make all the C and all the J. C. Ivana will make C and Lorenzo will make J. D. Lorenzo will make C and Ivana will make J

C. Ivana will make C and lorenzo will make J

In the economic way of thinking, the term "all other things equal" means that A. economists are only interested in understanding two aspects of the world at a time. B. many contingencies are going to affect the variable under consideration. C. a complex problem has been simplified to its most important parts D. all possible contingencies are being accounted for

C. a complex problem has been simplified to its

Specialization in production: A. allows society to avoid the coincidence-of-wants problem. B. allows society to avoid immigration. C. allows the same availability of productive resources to generate greater production. D. allows society to have fewer capital goods. E. both (B) and (C).

C. allows the same availability to productive resources to generate greater production

Economic models... A. are useless because they are not based on laboratory experimentation. B. that are true for individuals are typically not true for the economy as a whole. C. are generalizations based on hypotheses tested and supported with observed facts. D. are simplifications of the real world and therefore of no application to real situations.

C. are generalizations based on hypotheses tested and supported with observed facts.

The production possibilities curve illustrates the basic principle that A. the production of more of any one good will in time require smaller and smaller sacrifices of other goods. B. an economy will automatically obtain full employment of its resources. C. if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. D. an economy's capacity to produce increases in proportion to its population size.

C. if all the resources

The production possibilities curve A. shows all of those levels of production that are consistent with a stable price level. B. indicates that any combination of goods lying outside the curve is economically inefficient. C. is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced. D. shows all of those combinations of two goods that are most preferred by society.

C. is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced

The United States and other developed economies are wealthy. In terms of basic economic principles, how is wealth created in society? A. people follow mutually beneficial rules enacted by smart congressional legislation 5 B. people work for large corporations that specialize in producing mutually beneficial quantities of goods and services C. people specialize according to comparative advantage and engage in mutually beneficial exchange D. people vote for governments that subsidize domestic producers to create jobs E. both (C) and (D)

C. people specialize according to comparative advantage and engage in mutually beneficial exchange

The economic way of thinking starts with analysis of A. irrational individuals who behave randomly B. presidents and prime ministers C. rational individuals who seek more utility D. rational individuals who seek more opportunity cost

C. rational individuals who seek more utility

If Ivana and Lorenzo completely specialize according to their comparative advantage A. They can become better off by trading with each other. B. The most Ivana will pay for each Jam is 4 Cheese. C. The most Ivana will pay for each Jam is 1 Cheese. D. Both (A) and (B) E. Both (A) and (C)

D Both (A) and (B)

In assuming that friction does not exist when calculating the Earth's gravitational pull, physicists are making a ________. A. maximizing assumption B. obvious mistake C. minor error of omission D. simplifying assumption

D. Simplifying assumption

If you're stranded on an island with another person, dividing labor enhances your productivity by: A. allowing you both take advantage of your different abilities and skills. B. avoiding the loss of time needed to shift from one task to another. C. allowing you both to hone your skills at certain tasks. D. all of the above. E. none of the above.

D. all of the above

Based on the listed production possibilities, production in . A. both Russia and Brazil are subject to the law of increasing opportunity costs. B. Brazil is subject to decreasing costs, but production in Russia occurs under increasing opportunity costs. C. Russia is subject to increasing costs, but production in Brazil occurs under constant opportunity costs. D. both Russia and Brazil is subject to constant opportunity costs.

D. both Russia and brazil is subject to constant opportunity costs

In Russia the opportunity cost of 1 ton of grain: A. is 3 tons of steel. B. diminishes with the level of grain production. C. is 5 tons of steel. D. is 1/5 of a ton of steel.

D. is 1/5 of a ton of steel

When using the economic way of thinking, the phrase "people make incremental choices" refers to the concept known as A. opportunity cost B. purposeful behavior C. unlimited wants D. marginal analysis

D. marginal analysis

In his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith wrote about the increased output people get by the division of labor. In what setting was Adam Smith's account? A. dairy farm C. classroom B. pencil mill D. pin factory E. none of the above

D. pin factory

Which of the following is a capital resource? A. a computer programmer B. a corporate bond issued by a computer manufacturer C. silicon (sand) used to make computer chips D. software used by a firm

D. software used by a film

Any point inside the production possibilities curve indicates A. the presence of technological change. B. that resources are imperfectly substitutable among alternative uses. C. the presence of inflationary pressures. D. that more output could be produced with the available resources. E. none of the above.

D. that more output could be produced with the available resources