Macroeconomics: Ch. 1-4

With trade

A country's consumption possibilities frontier can be outside its production possibilities frontier

Without trade

A country's production possibilities frontier is also its consumption possibilities frontier

On the production possibilities frontier shown, the economy CANNOT produce at which point or points?

A,C (outside the curved line)

When economists attempt to simplify the real world and make it easier to understand they make

Assumptions

On the production possibilities frontier shown, the economy can produce at which point or points?

B,D,E (all within the curved line)

Trade is based on

Comparative advantage

Absolute advantage is found by

Comparing the productivity of one nation to that of another

On the production possibilities frontier shown, which point or points are inefficient?

D (not located on curved line)

On the production possibilities frontier shown, which point represents the maximum possible production of tubas?

E (farthest possible place on curved line)

When a production possibilities frontier shifts outward, it is showing the concept of

Economic growth

Macroeconomics is the study of

Economy-wide phenomena

CAFE Standards, as explained in "Can Better Regulation Boost Growth?" provide regulatory certainty to the U.S. automobile industry and encourage car companies to invest in

Energy efficiency technologies

A circular-flow diagram is a model that

Explains how the economy is organized

The best way to boost the economy during a recession, as pointed out in "Unemployment Rate," is to

Extend unemployment benefits

One definition of equity would be

Fairness

In general, as noted in "Unemployment Rate," the unemployment rate begins to rise prior to the start of a recession

False

Another word used for household is

Family, Consumer, Customer

Imports are

Goods produced abroad and sold domestically

The unemployment rate, as put forth in "Unemployment Rate," is important as a gauge of joblessness, which makes it also a gauge of the economy's

Growth rate

For two people who are planning to trade, it is impossible to

Have a comparative advantage in both goods

In a market economy, the government should

Help when we experience market failure, and interfere when we have externality

Economists study all of the following EXCEPT

How societies change over time

Economists understand that people respond to

Incentives

In a circular-flow diagram

Income payments flow from firms to households, and sales revenue flows from households to firms

Emerging markets, as reported in "What Threat Do the Monetary Policies of Developed Nations Pose to Emerging Economies?" have attracted investor attention in the wake of the 2008 financial crisis as a result of all of the following factors except

Increasingly stable governance

When countries specialize according to their comparative advantage,

It is possible to increase world output of all goods

A relatively weaker currency is a key tool for emerging economies, as maintained in "What Threat Do the Monetary Policies of Developed Nations Pose to Emerging Economies?" because it

Makes their exports more appealing to developed nations

Good economic models

Omit many details to allow us to see what is truly important

On a production possibilities frontier, production is efficient if the production point is

On the frontier

The U.S. Bureau of Labor Statistics, as explained in "Unemployment Rate," releases new unemployment figures

Once a month

The word economy comes from the Greek word for

One who manages a household

What you give up to obtain an item is called your

Opportunity cost

Comparative advantage is based on

Opportunity costs

In a market, surplus refers to a situation in which

Quantity supplied is greater than quantity demanded

According to "Can Better Regulation Boost Growth?" there is a risk that regulations can impose significant costs or alter behavior in unintended ways, particularly if

Regulators lack strong technical knowledge

Both households and societies face many decisions because

Resources are scarce

The law of demand says that when price

Rises, quantity demanded falls

Economics deals primarily with the concept of

Scarcity

The country that has a comparative advantage in a product

Should export that product

Efficiency means that

Society is getting the most it can from its scarce resources

According to the graph shown, if price in this market is currently $14, there would be a

Surplus and price would tend to fall

In the circular-flow diagram shown, which arrow shows the flow of the factors of production?

The arrow that starts at households, then to markets for factors of production, and finally at firms

In the circular-flow diagram shown, which arrow shows the flow of spending by households?

The arrow that starts at households, then to markets for goods and services, and ends at firms

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

The nation is not using all available resources or has inefficiencies

The market demand is

The sum of all individual demands

For most students, the largest single cost of a college education is

The wages given up to attend school

Which of the following is NOT correct?

Trade is based on absolute advantage

A monopoly is a market

With one seller

According to the graph show above, in this market, equilibrium price and quantity would be

at the very center of the crossing lines

According to the graph shown, if price in this market is currently $8, quantity supplied would be

the amount between S and D