Macroeconomics Review #1 – Flashcards
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The study of economics is primarily concerned with:
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Choices that are made in seeking the best use of resources.
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According to economists, economic self-interest:
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Is a reality that underlies economic behavior.
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Macroeconomics approaches the study of economics from the viewpoint of:
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The entire economy
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A normative statement is one that:
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Is based upon value judgments.
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Which of the following would not be classified as an economic resource by economists?
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Money in a business checking account
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When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because:
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Resources are limited.
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Assume that a change in government policy results in greater production of both consumer goods and investment goods. We can conclude that:
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The economy was not employing all of its resources before the policy change.
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Refer to the above production possibilities curve. At the onset of the Second World War the United States had large amounts of idle human and property resources. Its economic adjustment from peacetime to wartime can best be described by the movement from point:
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Point A to Point B
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9. Refer to the above table. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:
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1/3 of a unit of capital goods.
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Refer to the above table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:
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Achieve economic growth.
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Refer to the above diagram. The combination of computers and bicycles shown by point F:
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Is attainable, but implies that the economy is not using all its resources.
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Refer to the above diagram. An improvement in technology will:
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Shift the production possibilities curve from PP1 to PP2.
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Refer to the above diagram. This economy will experience unemployment if it produces at point:
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D
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Which of the following is a fundamental characteristic of the market system?
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Property Rights
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In a market economy a significant change in consumers' desire for product X will:
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Do all of these.
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Firms are motivated to minimize production costs because:
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Competitive pressures in the market will drive out higher-cost producers.
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Households and businesses are:
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Sellers in the resource and product markets respectively.
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The demand curve shows the relationship between:
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Price and quantity demanded.
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Which of the following would not shift the demand curve for beef?
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A reduction in the price of cattle feed
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In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:
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A change in buyer tastes.
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If X is a normal good, a rise in money income will shift the:
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Demand curve for X to the right.
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An increase in product price will cause:
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Quantity demanded to decrease.
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The law of supply indicates that, other things equal:
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Producers will offer more of a product at high prices than they will at low prices.
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Assume product A is an input in the production of product B. In turn product B is a complement to product C. We can expect a decrease in the price of A to:
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Increase the supply of B and increase the demand for C
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Refer to the above diagram. The equilibrium price and quantity in this market will be:
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$2
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Refer to the above diagram. A surplus of 160 units would be encountered if the price was:
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$1.60
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At the current price there is a shortage of a product. We would expect price to:
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$.50.
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Refer to the above. An increase in the price of a product that is a complement to X will:
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decrease D, decrease P, and decrease Q.
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Which of the above diagrams illustrate(s) the effect of a decline in the price of irrigation equipment on the market for corn?
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A only
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Refer to the above diagram. A government-set price floor is best illustrated by:
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Price A
