Macroeconimics HW 1 – Flashcards

Unlock all answers in this set

Unlock answers
question
The word "economy" comes from the Greek word oikonomos, which means
answer
the one who manages a household
question
In considering how to allocate its scarce resources among its various members, a household considers
answer
Each member's abilities, each member's efforts, and each member's desires
question
The overriding reason why households and societies face many decisions is that
answer
all resources are scarce.
question
Economics is the study of
answer
how society manages its scarce resources.
question
In most societies, resources are allocated by
answer
the combined actions of millions of households and firms.
question
The phrase "no such thing as a free lunch" mean
answer
people must face tradeoff
question
Guns and butter are used to represent the classic societal tradeoff between spending on
answer
national defense and consumer goods
question
A typical society strives to get the most it can from its scare resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words the society faces a tradeoff between
answer
efficiency and equality
question
High school athletes who skip college to become professional athletes
answer
understand that the opportunity cost of attending college is very high
question
Consider Paul's decision to go to college. If he goes to college, he will spend $90,000 on tuition, $15,000 on room and board, and $7,000 on books. If he does not go to college, he will earn $22,000 working at a construction job and he will spend $11,000 on room and board. Paul's cost of going to college is
answer
$123,000.
question
rational people are make decisions at the margin by
answer
comparing marginal costs and marginal benefits
question
people are likely to respond to a policy change
answer
if the policy changes either the cost or benefits of theri behavior
question
The principle that "trade can make everyone better off" applies to interactions and trade between
answer
families, states within the US, and nations
question
The basic principle of economics suggests that
answer
Government should become involved in markets when those markets fail to produce efficient or fair outcomes
question
Prices direct economic activity in a market economy by
answer
influencing the actions of buyers and sellers
question
One reason we need government, even in market economy, is that
answer
the invisible hand is not perfect
question
The term used to describe a situation in which markets do not allocate resources efficiently is
answer
market falure
question
The term productivity
answer
refers to the quantity of goods and services produced from each unit of labor input
question
Large or persistent inflation is almost always caused by
answer
excessive growth in quantity of money
question
Suppose the Federal Reserve announces it will be making a change in key interest to increase money supply. This is likely because
answer
The Federal Reserve is worried about unemployment.
Get an explanation on any task
Get unstuck with the help of our AI assistant in seconds
New