Macroeconomics

The market system answer to the fundamental question "how will the goods and services be produced?" Is essentially

"Using the least-cost production techniques"

The opportunity cost of producing the second unit of apple is:

2 oranges

If consumer desire for product X increases, all of the following will occur except:

A reduction in the quantity of resources employed by industry X

Which of the following result in an outward shift of the production possibilities curve?

An increase in the total amount of resources available

Which of the following best illustrates the circular flow model in action

Bobby goes to work and build cars, and uses the income she receives to buy food at the grocery store

A market system is also known as

Capitalism

How is the economic perspective reflected in lines for fast food?

Customers select the shortest line because they believe it will reduce their time cost of obtaining food.

Cuba is a command economy that suffered a decline in economic growth because of a cut in support from the former Soviet Union when it collapsed. As a consequence, Cuba:

Experienced an inward shift of its production possibilities curve

Which of the following is a distinguishing feature of the command system

Government ownership of resources

"Consumer sovereignty" refers to the:

Idea that the decision of producers must ultimately conform to consumer demands

You should decide to go to a movie:

If the marginal benefit of the movie exceeds its marginal cost

If an economy is operating on its production possibilities curve for consumer goods and capital goods, this mean that:

It is possible to produce more capital goods

Joe sold gold coins for $2500 that he bought a year ago for $2500. He says "at least I didn't lose any money on my financial investment." His economist Friend points out that in fact he did lose money, because he could have received a 1% return on $2500 if he had bought a bank certificate of deposit instead of coins. The economists analysis in this case incorporates the idea of:

Opportunity cost

In terms of the circular flow diagram, businesses obtain revenue through the _____ market and make expenditures in the _____ market.

Output; input

Economics growth may be represented by a (an):

Outward shift of the production possibilities curve

The two basic markets showed by the simple circular flow model are:

Resource market and product market

According to the concept of the "invisible hand", if Susie opens and operates a profitable childcare center, then:

She has served society's interest by providing a desire a good or service

Other things equal, an increase in a consumer's money income:

Shifts her budget line rightward because she can now purchase more of both products

Macroeconomic approaches the study of economics from the viewpoint of:

The aggregate economy

production possibilities curve shows:

The maximum amounts of two goods that can be produced given available resources and technology

If the production possibilities curve is a straight line:

The opportunity cost if producing one more unit of goods is constant

The presence of market failures implies that:

There is active role for government, even in a market system

Joe says that "an increase in the federal personal income tax lowers households' disposable income." Tim argues that "taxes on cigarettes should be increased because smoking causes health issues." We can conclude that:

Tim's statement is normative, but joes statement is positive

Which of the following most closely relates to the idea of opportunity cost?

Trade-offs

Which of the following is not one of the five fundamental questions?

What prices will be charged for goods and services?

Economic systems differ according to which two main characteristics?

Who owns the factors of production, and the methods used to coordinate economic activity.

The study of economics is primarily concerned with:

choices that are made in seeking the best use of resources

command system is also known as:

communism and socialism

private property

encourages owners to maintain or improve their property so as to preserve or enhance value.

Broadly defined, competition involves:

independently acting buyers and sellers and freedom to enter or leave markets.

An economic system:

is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.

Microeconomics:

is concerned with individual economic units and specific markets.

The invisible hand refers to the

notion that, under competition, decisions motivated by self-interest promote the social interest.