Macroeconomics Ch 1 Questions And Answers – Flashcards

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question
The main incentive for business activity is:
answer
Profit
question
Adam Smith coined the term "invisible hand" to mean:
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a metaphorical hand that leads individuals to promote social interest by pursuing self-interest.
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Which of the following choices best illustrates the concept of Adam Smith's "invisible hand"?
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A Vietnamese farmer grows rice; an exporter ships it to the United States, and a grocer in New York sells it to a customer.
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The opportunity cost of a choice is:
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the value of the next best opportunity foregone.
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In the 2 hours between classes a student can do one of three things, ranking them from most to least desirable as: (1) chat with friends, (2) study economics, or (3) eat lunch. This student's opportunity cost of chatting with friends is:
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the value of studying economics.
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Susan quits her administrative job, which pays $40,000 a year, to finish her four-year college degree. Her annual college expenses are $8,000 for tuition, $900 for books, and $2,500 for food. The opportunity cost of attending college for the year is:
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$48,900.
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What is thinking on the margin?
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Making choices by comparing the additional benefits and additional costs from doing a little bit more of some activity.
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A grocery store is running a "buy-one-get-another-at-one-half-off" promotion on a dozen doughnuts. So the first dozen is $6 and the second would be $3. A person would buy the second dozen if their marginal benefit from the second dozen doughnuts is:
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greater than $3
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One benefit of trade is that it:
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allows for increased specialization and mass-production techniques that lower per unit costs of production.
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The better Martha Stewart is at running her business:
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the higher her opportunity cost of ironing her own shirts.
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The historical rise in living standards of American workers is primarily a result of:
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the rise in American productivity.
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What are the institutions that help foster the appropriate incentives for economic growth?
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a dependable legal system, property rights, and competitive and open markets
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Institutions that support economic growth are the ones that:
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provide incentives for entrepreneurs to take risks and innovate.
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Booms and busts refer to the:
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fluctuations in economic activity over time.
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Which of the following explains why economic booms and busts cannot be avoided?
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The economy is always being struck by unavoidable shocks.
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The Zimbabwean government printed money as fast as it could for years. As a result:
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Zimbabwe experienced inflation at a rate of billions of percent per month.
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A policymaker wants to reduce inflation. In order to make an intelligent decision about how to do so, the policymaker:
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needs to know the causes of inflation, for example, the government's printing of too much money.
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The decisions made by the Federal Reserve Bank sometimes result in negative effects on the economy because:
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too much money or too little money might induce inflation or unemployment due to bad timing of decisions.
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If the central bank creates too much money, _____ is the result. If the central bank doesn't create enough money, an economic _____ is the result.
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inflation; slowdown
question
The average starting salary of economics majors is just behind that of:
answer
chemical and nuclear engineering majors.
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