Macro-Economics – Flashcards
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Opportunity Cost
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The cost of what you give up to get
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Economics
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The study of how society manages its scarce resources
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Inflation Rate
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Measures how fast prices are rising
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Unemployment Rate
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Measures the fraction of the labor force that is out of work
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Deflation
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Periods of falling price
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Macro-Economics
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The study of economy wide phenomena, including inflation, unemployment, and economic growth
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Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that...
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people face tradeoffs
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During winter break, Jason considers quitting college to accept a job. Which of the following should he include when calculating the opportunity cost of leaving college to take on a new job?
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the value of the benefits of completing the rest of his college education
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Traci is planning to sell her house, and she is considering making two upgrades to the house before listing it for sale. Replacing the carpeting will cost her $3,000 and replacing the roof will cost her $6,000. Traci expects the new carpeting to increase the value of her house by $2,500 and the new roof to increase the value of her house by $7,500.
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Traci should replace the roof but not replace the carpeting
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Suppose the state of Iowa passes a law that increases the price of cigarettes by $1 per pack. As a result, residents in Iowa start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?
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People respond to incentives
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Trade between the United States and Guatemala
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benefits both the United States and Guatemala.
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The basic principles of economics suggest that
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to protect an industry from foreign competition
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Which of the following is not generally regarded by economists as a legitimate reason for the government to intervene in a market?
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to protect an industry from foreign competition
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The increase in living standards of American workers over the past century is primarily due to
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improvements in productivity.
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Which of the following is the most correct statement about the relationship between inflation and unemployment?
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In the short run, falling inflation is associated with rising unemployment.
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11. Mallory decides to spend three hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working is...
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d. nothing, since she would have received less than $24 of enjoyment from the video.
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For which of the following individuals would the opportunity cost of going to college be highest?
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a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree
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The circular-flow diagram
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an economical model, incorporates two types of decision makers (households and firms), represents the flows of inputs, outputs, and dollars.
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Which two groups of decision makers are included in the simple circular-flow diagram?
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households and firms
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In the markets for goods and services in the circular-flow diagram,
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firms provide households with output.
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In the markets for the factors of production in the circular-flow diagram
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households are sellers and firms are buyers.
