Macroeconomics Chapter 1

Select all that apply Which of the following are issues most explored in microeconomics? (Check all that apply.) -The expenditures of a government entity -Unemployment and inflation rates -Measuring the price of specific goods -The level of public debt -Measuring total revenues of a firm

The expenditures of a government entity Measuring the price of specific goods Measuring total revenues of a firm

A production possibilities curve with an increasing slope is the result of which of the following? -The economizing problem -The law of increasing opportunity costs -The other-things-equal assumption -The scarcity of resources

The law of increasing opportunity costs

Which best defines utility? -The satisfaction or pleasure obtained from consuming a good or service -The satisfaction or pleasure obtained from producing a good or service -The utilization of economic resources by producers when engaging in production -The utilization of economic resources by consumers when engaging in consumption

The satisfaction or pleasure obtained from consuming a good or service

Which statement best describes combinations of goods that are beyond the production possibilities curve? -They are unattainable. -They are inefficiently produced. -They are attainable. -They are efficiently produced.

They are unattainable.

Select all that apply Which statements best describe the combinations of goods that lie on the production possibilities curve? -They utilize all of an economy's available resources. -They represent an underallocation of resources. -They are unattainable. -They are attainable.

They utilize all of an economy's available resources. They are attainable.

True or false: A decrease in income will shift the budget line to the left.

True

True or false: A trade-off occurs when some quantity of production of a good is given up in order to produce another good.

True

Consumers must forgo certain goods and services based on a limited budget because ______. -a consumer's limited budget is constrained by the resources used to produce goods or services -a consumer spends his or her limited budget purchasing a combination of goods and services that maximize his or her satisfaction -a consumer's limited budget is constrained by the availability of goods or services -a consumer's limited budget is constrained by the demand for goods or services

a consumer spends his or her limited budget purchasing a combination of goods and services that maximize his or her satisfaction

Suppose you are given a $100 gift card and you choose to spend it on a number of goods. You will select a combination of goods that is best for you and that maximizes your satisfaction. Your choices will involve which of the following? -An evaluation of the unlimited resources used in the production of each good considered -A decision between attainable and unattainable combinations of the goods under consideration -A comparison of marginal benefits and marginal costs for each good considered -The available supply of each good considered

A comparison of marginal benefits and marginal costs for each good considered

Which of the following describes a budget line? -A curve showing various combinations of two products a consumer can purchase with a specific amount of income. -A schedule showing various combinations of three or more products a consumer can purchase at different prices. -A curve showing various combinations of two products an economy can produce with a specific amount of resources. -A curve showing various combinations of three or more products a consumer can purchase at different prices.

A curve showing various combinations of two products a consumer can purchase with a specific amount of income.

A point that lies inside the production possibilities curve reflects which of the following? -Too many resources being allocated to the production of one good -An efficient use of resources -Unattainable combinations of output -A failure to achieve full employment

A failure to achieve full employment

What does every point on a budget line graph represent? -All combinations of goods that can be purchased with a given income -The maximum utility achievable at a given income -The minimum income required to purchase two or more goods at the same time -All combinations of goods that unattainable with a given income

All combinations of goods that can be purchased with a given income

What does every point on a budget line graph represent? -The maximum utility achievable at a given income -All combinations of goods that unattainable with a given income -All combinations of goods that can be purchased with a given income -The minimum income required to purchase two or more goods at the same time

All combinations of goods that can be purchased with a given income

Select all that apply Which of the following resources would be considered to be land by an economist? -Arable land -Forests -Factories -Oil and mineral deposits -Water

Arable land Forests Oil and mineral deposits Water

Select all that apply Which of the following are ways of expressing the meaning of ceteris paribus? (Check all that apply.) -Assuming additional factors, other than those under consideration, are given equal consideration -Assuming factors other than those being considered in a particular analysis do not change -Assuming other things remain constant -Assuming additional factors, other than those under consideration, play a significant role in analysis

Assuming factors other than those being considered in a particular analysis do not change Assuming other things remain constant

Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction? -Because of our limited incomes conflicting with our limited wants for goods and services -Because some goods and services are less expensive than their substitutes so we should choose those cheaper items -Because of our unlimited incomes conflicting with our insatiable wants for goods and services -Because of our limited incomes conflicting with our insatiable wants for goods and services

Because of our limited incomes conflicting with our insatiable wants for goods and services

Select all that apply Which of the following are the focus of positive economics? (Check all that apply.) -How economies ought to function -Idealized situations -Cause-and-effect relationships -Facts

Cause-and-effect relationships Facts

If economists examine the relationship between the price of a good and sales of that good while ignoring other related factors, or assuming those other factors are equal, they are using which of the following? -The scientific method -Marginal costs -Ceteris paribus -Scarcity theory

Ceteris paribus

If economists examine the relationship between the price of a good and sales of that good while ignoring other related factors, or assuming those other factors are equal, they are using which of the following? -The scientific method -Scarcity theory -Marginal costs -Ceteris paribus

Ceteris paribus

Which of the following combinations are unattainable given a consumer's budget line? -Combinations that fall beyond the budget line -Combinations that fall on the budget line -A combination that intersects either of the axes -Combinations that fall inside the budget line

Combinations that fall beyond the budget line

Select all that apply Which of the following combinations are attainable given a consumer's budget line? -Combinations that fall on the budget line -Combinations that fall beyond the budget line -Combinations that fall inside the budget line -Combinations falling only on the Y axis

Combinations that fall on the budget line Combinations that fall inside the budget line

Select all that apply In which of the following ways do capital goods differ from consumer goods? -Consumer goods satisfy wants indirectly. -Capital goods increase the demand for consumer goods. -Consumer goods satisfy wants directly. -Capital goods satisfy consumer wants indirectly by facilitating the production of consumer goods.

Consumer goods satisfy wants directly. Capital goods satisfy consumer wants indirectly by facilitating the production of consumer goods.

______ goods satisfy wants directly, whereas ______ goods do so indirectly. -Future; present -Consumer; capital -Present; future -Capital; consumer -Demand; supply

Consumer; capital

Taken together, the four general categories of economic resources (land, labor, capital, and entrepreneurial ability) are referred to as which of the following? -Other-things-equal assumption -Economizing problem -Opportunity cost -Factors of production

Factors of production

Taken together, the four general categories of economic resources (land, labor, capital, and entrepreneurial ability) are referred to as which of the following? -Other-things-equal assumption -Opportunity cost -Economizing problem -Factors of production

Factors of production

Select all that apply Which of the following are the focus of positive economics? (Check all that apply.) -How economies ought to function -Idealized situations -Facts -Cause-and-effect relationships

Facts Cause-and-effect relationships

True or false: Economists use the terms "capital" and "money" interchangeably.

False

True or false: Everyone except for the super wealthy has a finite, or limited, amount of income.

False

True or false: Positive economics encourages value judgments.

False

True or false: To economists, rational self-interest is the same as selfishness.

False

Which of the following is a result of having scarce economic resources for the production of goods and services? -The production of unlimited goods and services -Deflation -Fewer options that require choices -Poverty and unequal distribution of wealth

Fewer options that require choices

______ comes in the form of wages, interest, rent, profit, and even from government programs. -Taxes -Spending -Income -Transfers

Income

Select all that apply Which of the following is true of positive economics? -It avoids value judgments. -It focuses on value judgments. -It deals with what the economy should be like. -It tries to establish scientific statements about economic behavior. -It focuses on facts and cause-and-effect relationships.

It avoids value judgments. It tries to establish scientific statements about economic behavior. It focuses on facts and cause-and-effect relationships.

Select all that apply Which of the following is true of positive economics? -It focuses on facts and cause-and-effect relationships. -It focuses on value judgments. -It avoids value judgments. -It tries to establish scientific statements about economic behavior. -It deals with what the economy should be like.

It focuses on facts and cause-and-effect relationships. It avoids value judgments. It tries to establish scientific statements about economic behavior.

Which of the following can be stated as potentially true about any economy? -Increased supplies of the factors of production will only affect its current location on its production possibilities curve. -Its current choice of position on its production possibilities curve helps determine the curve's future location. -Its future location on its production possibilities curve has no bearing on its current decisions. -Increased supplies of the factors of production will cause its future location on the curve to expand inward.

Its current choice of position on its production possibilities curve helps determine the curve's future location.

What do economists call the physical actions and mental activities that people contribute to the production of goods and services? -Entrepreneurial ability -Investment -Labor -Capital

Labor

Select all that apply What do combinations of output that fall inside the production possibilities curve represent? -Less total output than points on the curve -Goods that are attainable -Goods that are unattainable -Optimum output in an economy

Less total output than points on the curve Goods that are attainable

Which discipline studies the economy as a whole or its basic subdivisions or aggregates? -Microeconomics -Normative economics -Macroeconomics -Positive economics

Macroeconomics

___ is the discipline that examines the performance and behavior of an economy as a whole.

Macroeconomics

Which discipline studies the decision-making process of customers, workers, households, and business firms on an individual basis rather than as aggregates? -Positive economics -Macroeconomics -Microeconomics -Negative economics

Microeconomics

______ economics considers the desirability of certain aspects of the economy and underlies expressions of support for particular economic policies. -Microeconomics -Positive -Macroeconomics -Normative

Normative

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources? -Budget line -Budget constraint -Opportunity cost -Production possibilities curve -Demand and supply curve model

Production possibilities curve

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources? -Budget line -Production possibilities curve -Demand and supply curve model -Budget constraint -Opportunity cost

Production possibilities curve

What is the cause of a society's increasing opportunity costs with respect to the production of goods? -Resources that are perfectly flexible -A society's unlimited wants -Resources that are not fully interchangeable -Budget line constraints

Resources that are not fully interchangeable

______ economic resources means limited goods and services.. -Tangible -Insatiable -Physical -Scarce

Scarce

In macroeconomics, an aggregate is a collection of which of the following? -Specific economic units treated as if they were one unit -General economic units treated as many units -General economic units treated as if they were one unit -Specific economic units treated as if they were many units

Specific economic units treated as if they were one unit

Select all that apply Economic growth is the result of which of the following? -Technological advances -Increases in the supply of resources -Decreases in the demand for capital goods -Improvements in resource quality

Technological advances Increases in the supply of resources Improvements in resource quality

When people get satisfaction from charitable giving, they are ______. -acting selfishly -acting out of rational self-interest -decreasing their utility -decreasing their opportunity costs

acting out of rational self-interest

When economists consider the output of all U.S. businesses as a single entity, they are treating them as a(n) ______. -normative unit -microcomponent -average -aggregate

aggregate

Points ______ the production possibilities curve represent a maximum output of two products as long as the economy is fully employed. -along -below -beyond -inside

along

Choosing one good or service over another based on a comparison of marginal benefits and marginal costs always involves ______. -an opportunity cost -an unlimited economic resource -a "free lunch" -a degree of selfishness

an opportunity cost

Positive economics ______ value judgments, tries to establish ______ statements about economic behavior, and deals with ______ economic events. -encourages; scientific; actual -avoids; scientific; actual -encourages; scientific; potential -avoids; normative; actual -encourages; normative; potential

avoids; scientific; actual

Normative economics is ______. -based on value judgments -applicable only to macroeconomics -based on facts -based on the use of the scientific method

based on value judgments

A consumer's ____ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

budget

Factories, storage, transportation, and machinery are all examples of ______ goods. -entrepreneurial ability -land -capital -labor

capital

For economists, ______ goods include all manufactured aids used in producing consumer goods and services. -capital -entrepreneurial -consumer -labor

capital

Select all that apply Which of the following are general categories economists use to classify economic resources? -money -capital -land -entrepreneurial ability -labor

capital land entrepreneurial ability labor

The straight-line budget constraint indicates ______ opportunity cost. -constant -average -decreasing -increasing

constant

The straight-line budget constraint indicates ______ opportunity cost. -decreasing -increasing -constant -average

constant

Consumers must make choices about what to buy and what to forgo to fulfill wants because ______. -consumers' incomes are unlimited -consumers act out of rational self-interest -consumers' wants are limited -consumers' incomes are limited

consumers' incomes are limited

Normative, value-based policy questions or statements give rise to ______. -controversy or disagreement among economists -agreement and collaboration among economists -efficient markets -inefficient markets

controversy or disagreement among economists

All natural resources, human resources, and manufactured goods that go into the production of goods and services are considered as society's scarce ____ resources.

economic

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n) ______. -economic principle -economic hypothesis -normative economic statement -real-world outcome

economic principle

The ____ problem refers to the need to make choices because economic wants exceed economic means.

economizing

Economic principles are generalizations that are ______. -expressed only as mathematical equations -expressed as the tendencies of average consumers, workers or firms -based solely on the assumption that all factors other than price remain constant -based only on normative judgments

expressed as the tendencies of average consumers, workers or firms

What is the simplified term economists use to refer to "factors of production"? -inputs -investment -outputs -capital goods

inputs

Points lying ______ the production possibilities curve are attainable but reflect less total output than can be produced. -along -on -inside -beyond

inside

The work-related activities of a teacher and doctor fall under the resource category of ___

labor

From an economic standpoint, ______ includes all natural resources used in the production process. -labor -capital -supply -land

land

From an economic standpoint, ______ includes all natural resources used in the production process. -supply -labor -land -capital

land

As a result of our ______ incomes and ______ wants, it is in our self-interest to economize or pick and choose goods and services that maximize our satisfaction. -limited; insatiable -scarce; satiable -limited; finite -unlimited; insatiable

limited; insatiable

Economic principles are generalized statements that ______ consumer behavior. -emphasize atypical -focus on negative -look at typical -marginalize

look at typical

Economic principles are generalized statements that ______ consumer behavior. -focus on negative -look at typical -marginalize -emphasize atypical

look at typical

Economists do not include money as an economic resource because ______. -currency and coins are easily lost or destroyed -money produces nothing -the value of money is constantly fluctuating -of its difficulty in valuation due to many world currencies

money produces nothing

Improvements in the methods of production allows for the creation of ______. -fewer goods with more resources -more goods with available resources -fewer goods with fewer resources -the same amount of goods utilizing more resources

more goods with available resources

The disagreement among economists typically revolves around ______. -normative economics -positive economics -microeconomics -macroeconomics

normative economics

A production possibilities curve (PPC) illustrates the attainable combination ______. -of two goods that can be produced given a limited amount of income -of two goods that can be produced given an unlimited amount of resources -of many goods that can be produced given an unlimited amount of resources -of two goods that can be produced given a specific set of resources

of two goods that can be produced given a specific set of resources

Trade-offs arising from limited resources give rise to ______. -opportunity costs -rational self-interest -unlimited wants -scarce resources

opportunity costs

Points lying ______ the production possibilities curve represent greater, but unachievable levels of output with current inputs, than that at any point on the curve. -along -at the axis of -outside -midpoint of -inside

outside

The assumption behind purposeful behavior is that ______. -buyers and sellers are removed from the sensitivities that can affect their decisions -individuals make random or chaotic economic decisions -people act in such a way as to rationally pursue their own interests -people and institutions are perfect decision makers

people act in such a way as to rationally pursue their own interests

Unemployment in the economy is graphically represented by ______ the production possibilities curve. -a change to a new point on -points inside -a movement outside -a rightward shift of

points inside

A ______ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment. -production function -budget table -production possibilities table -consumption function

production possibilities table

When individuals and institutions make decisions with some desired outcome in mind, they are engaging in ______ behavior. -economically efficient -purposeful -chaotic -random

purposeful

When individuals and institutions make decisions with some desired outcome in mind, they are engaging in ______ behavior. -purposeful -chaotic -random -economically efficient

purposeful

In developing economic theories, principles, or models, economists ______. -remove clutter and simplify -include all possible factors -ignore possible variables -consider every possible outcome

remove clutter and simplify

Arable land, water, machinery, and professional athletes are all considered economic ____ used in the production of goods and services.

resources

When an economy produces a good such that the marginal benefit equals the marginal cost, this indicates that ______. -society's well-being would increase by decreasing the output of the good -society would be better off by increasing the output of the good -resources are being allocated efficiently -the unemployment rate is at its minimum

resources are being allocated efficiently

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______. -insatiable wants -unlimited economic resources -scarce economic resources -economic growth

scarce economic resources

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______. -scarce economic resources -economic growth -insatiable wants -unlimited economic resources

scarce economic resources

An increase in income will ______. -shift the budget line to the right -cause a movement down the budget line -shift the budget line to the left -cause a movement up the budget line

shift the budget line to the right

The ratio of the price of two goods on a graphed budget line is measured by its ___.

slope

In a world of scarcity, ______. -consumers or producers will always behave in a manner in which marginal benefits (MB) are less than average costs (MC) -the decision to obtain the marginal benefit (MB) of a specific option always includes the marginal cost (MC) of forgoing something else -the decision to obtain the marginal benefit associated with some specific option includes the total cost of forgoing something else -consumers or producers will always behave in a manner in which marginal benefits (MB) are less than marginal costs (MC)

the decision to obtain the marginal benefit (MB) of a specific option always includes the marginal cost (MC) of forgoing something else

Your next-door neighbors want to go on a European vacation but cannot afford it, so they decide to visit a local amusement park instead. This is an example of ______. -ceteris paribus -a hypothesis -the economizing problem -the utility problem

the economizing problem

Your next-door neighbors want to go on a European vacation but cannot afford it, so they decide to visit a local amusement park instead. This is an example of ______. -ceteris paribus -the economizing problem -a hypothesis -the utility problem

the economizing problem

The outward bowing shape of the production possibilities curve is due to ______. -the law of increasing opportunity costs -the diminishing marginal benefits -the law of decreasing opportunity costs -the law of diminishing marginal utility

the law of increasing opportunity costs

The optimal allocation of resources occurs when ______. -the production of the two goods is equal -the marginal cost of producing the good is equal to zero -the marginal benefit of the good is greater than the marginal cost -the marginal benefit of the good equals the marginal cost

the marginal benefit of the good equals the marginal cost

People desire goods and services that provide maximum utility. In fact, our desires or wants are ______. -limited -unlimited -supply-driven -reasonable

unlimited

The pleasure, satisfaction, or happiness obtained from consuming a good or service is known as ___

utility

For better or worse, people have ______. -few unsatisfied wants -virtually unlimited wants -extremely limited desires -virtually unlimited income

virtually unlimited wants

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service ______. -by examining only marginal costs -by examining only marginal benefits -when the marginal benefit is greater than the marginal cost -when opportunity costs are greater than marginal benefits

when the marginal benefit is greater than the marginal cost