Econ 202 Barnes Ch 2 Aplia Hw Answers – Flashcards
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An economic model is a mechanical machine that replicates the functioning of the economy. a fully detailed, realistic description of the economy. a simplified representation of some aspect of the economy. a computer program that predicts the future of the economy.
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a simplified representation of some aspect of the economy.
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The circular-flow diagram illustrates that, in markets for the factors of production, households are sellers, and firms are buyers. households are buyers, and firms are sellers. households and firms are both buyers. households and firms are both sellers.
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households are sellers, and firms are buyers. The circular-flow diagram simplifies the economy by including only two types of decision makers: firms and households. Firms produce goods and services using inputs, such as labor, land, and capital. These inputs are called the factors of production. Households own the factors of production and consume all the goods and services that the firms produce. Therefore, in the markets for the factors of production, households are sellers, and firms are buyers.
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A point inside the production possibilities frontier is efficient, but not feasible. feasible, but not efficient. both efficient and feasible. neither efficient nor feasible.
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feasible, but not efficient.
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An economy produces hot dogs and hamburgers. If a discovery of the remarkable health benefits of hot dogs were to change consumers' preferences, it would expand the production possibilities frontier. contract the production possibilities frontier. move the economy along the production possibilities frontier. move the economy inside the production possibilities frontier.
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move the economy along the production possibilities frontier.
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All of the following topics fall within the study of microeconomics EXCEPT the impact of cigarette taxes on the smoking behavior of teenagers. the role of Microsoft's market power in the pricing of software. the effectiveness of antipoverty programs in reducing homelessness. the influence of the government budget deficit on economic growth.
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the influence of the government budget deficit on economic growth. Microeconomics is the study of how households and firms make decisions and how they interact in specific markets. Macroeconomics is the study of economy-wide phenomena. Therefore, the influence of the government budget deficit on economic growth is a macroeconomic topic, while the others are all microeconomic topics.
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Which of the following is a positive, rather than a normative, statement? Law X will reduce national income. Law X is a good piece of legislation. Congress ought to pass law X. The President should veto law X.
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Law X will reduce national income. Positive statements are descriptive; they make a claim about how the world is. However, normative statements are prescriptive; they make a claim about how the world ought to be. Therefore, in this case, the only positive statement is law X will reduce national income because it states what will happen if something is done rather than what should be done.
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Classify the following topics as relating to microeconomics or macroeconomics. 1) A family's decision about how much income to save 2) The effect of government regulations on auto emissions 3) The impact of higher national saving on economic growth 4) A firm's decision about how many workers to hire 5) The relationship between the inflation rate and changes in the quantity of money
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1)Micro 2)Micro 3)Macro 4)Micro 5)Macro Microeconomics is the study of how households and firms make decisions and how they interact in specific markets. Macroeconomics is the study of economy-wide phenomena. Therefore, the impact of higher national saving on economic growth and the relationship between the inflation rate and changes in the quantity of money are examples of macroeconomic topics, while the others are all microeconomic topics.
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Classify each of the following statements as positive or normative. 1) Society faces a short-run tradeoff between inflation and unemployment. 2) A reduction in the rate of money growth will reduce the rate of inflation. 3) The Federal Reserve should reduce the rate of money growth. 4) Society ought to require welfare recipients to look for jobs. 5) Lower tax rates encourage more work and more saving.
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1) Positive 2) Positive 3) Normative 4) Normative 5) Positive
