Intro. to Macro.: Chapter 1 – Flashcards
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In a command economy ---- either makes most economic decisions itself or at least strongly influences how the decisions are made
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Government
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In a ---- , most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers
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Market-oriented economy
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In the first chapter of The Wealth of Nations, Smith introduces the idea of the ----, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers
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Division of labor
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In the ---- , households work and receive payment from firms
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Labor market
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In the ---- , households receive goods and services and pay firms for them
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Goods and services market
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When nations desire a healthy macroeconomy, thy typically focus on three goals, one of these being: A. Balanced budget B. Prudent monetary policy C. Low inflation D. Assuring competition between firms
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C. Low inflation
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The basic difference between macroeconomics and microeconomics is:
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Microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy
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Which of the following is most likely a topic of discussion in macroeconomics? A. An increase in the price of a hamburger B. A decrease in the production of DVD players by a consumer electronics company C. An increase in the wage rate paid to automobile workers D. A decrease in unemployment rate
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D. A decrease in unemployment rate
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Macroeconomics primarily examines:
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Broad issues such as national output, employment, and inflation
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Specialization ----
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Can lead to an increase in overall production
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In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of ----
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Buyers and sellers
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The circular flow diagram of economic activity is a model of the ----
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Flow of goods, services, and payments between households and firms
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What best characterizes the circular flow of income?
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Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses
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Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected ---- doesn't change
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Economy
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---- , a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines
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Economies of scale
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Economic models like the ---- are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories
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Circular flow diagram
