Macroeconomics Chapter 1 quiz

Adam Smith used the idea of the invisible hand to refer to the ability of market economies to:

harness the power of individual self-interest for the good of society as a whole.

In his book The Wealth of Nations, Adam Smith used the example of pin-making to illustrate the advantages of:

specialization.

If market failures exist, the market can become efficient when:

the government intervenes to improve society's welfare.

Economists would most likely agree with which one of the following statements?

People usually exploit opportunities to make themselves better off.

Economists would most likely disagree with which of the following statements?

Resources and inputs used in production are unlimited.

The purpose of an economic system is to:

allocate scarce resources.

Economists generally agree that people are most likely to change their behavior when they:

are given incentives to do so.

Exchanges taking place in a market system:

are voluntary.

The condition of scarcity means that:

choices must be made in the allocation of productive resources.

An economy is __________ if it has exploited all opportunities to benefit someone without making anyone else worse off.

efficient

An economic system is in __________ when no individual would be better off by making a different choice.

equilibrium

Macroeconomics is the branch of economics studying:

fluctuations in the overall level of business activity.

. The focal point of economic inquiry is:

individual choice.

The focal point of economic inquiry is:

individual choice.

An equilibrium outcome is one in which:

no one has as incentive to change his or her decisions or behavior.

After finishing high school, LeBron James decided to enter the NBA rather that going to college to begin his studies to become a doctor. This choice between the two careers can best be described by:

opportunity cost.

Which one of the following statements is not true of a market economy?

pursuit of individual self-interest leads to bad results for society as a whole.

Most individuals choose careers in which they specialize in producing only one type of good or service, yet as consumers they have access to a wide variety of goods and services. What principle allows for this?

trade

An opportunity cost arises:

whenever any choice is made.

Economic theory asserts that people will behave in ways that:

will enhance their own overall well-being.