Macroeconomics Ch1 Flashcard
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Economics is a social science that studies how individuals, institutions, and society may
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Best use scarce resources to achieve the maximum satisfaction of economic wants
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The key economic concept that serves as the basis for the study of economics is
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Scarcity
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A recurring theme in economics is that people
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Have unlimited economic wants, but limited resources
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As a consequence of the problem of scarcity
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Individuals have to make choices from among alternatives
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Opportunity cost is best defined as
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The value of the best forgone alternative
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Tammie makes $150 a day as a bank clerk. She takes off two days off work without pay to fly to another city to attend the concert of her favorite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Tammie's attending the concert is
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$600
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When a state government chooses to build more roads, the required resources are no longer available for spending on public education. This dilemma illustrates the concept of:
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Opportunity cost
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The observation that people compare the marginal benefits with the marginal costs in making such decisions as how to spend time, which products to buy, whether or not to work, and which goods to produce and sell, is most closely associated with:
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The economic perspective
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Which expression is another way of saying "marginal cost"?
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Additional cost
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Which expression is another way of saying "marginal benefit"?
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Extra benefit
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Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if:
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The marginal benefit of the book is greater than its marginal cost
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The process of developing hypotheses, testing them against facts, and using the results to construct theories is called
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The scientific method
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Developing economic principles or explanations about how individuals behave or institutions act is referred to as
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Economic theory
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Another description for ceteris paribus is
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Other things equal
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Which is an illustration of a macroeconomic question?
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Are increasing wage demands by workers contributing to price inflation?
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Which is an illustration of a microeconomic question?
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Will a new type of television set increase the number of buyers?
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Microeconomics focuses on
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The individual units that make up the economy
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Macroeconomics focuses on:
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The individual units that make up the whole economy
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Which would be a positive economic statement?
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Stock prices rose to a new record last month for the fourth month in a row
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Which would be a normative economic statement?
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This administration needs to raise taxes to pay for childcare programs
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The economizing problem is essentially one of deciding how to make the best use of
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Limited resources to satisfy unlimited economic wants
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The economizing problem for individuals is a consequence of the fact that
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Economic wants are greater than economic means or incomes
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Which one of the following would be a normative economic statement
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The worsening balance of trade must be corrected if this nation is to remain competitive in the world economy
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A U.S. senator states: "The minimum wage should be raised to give people a decent living wage." This quote is an example of:
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A normative economic statement
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The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the:
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Entrepreneur
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Which is not a factor of production?
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Money
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The production possibilities curve represents
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The maximum combinations of products that can be produced with fixed resources and technology
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On a production possibilities curve, the single optimal or best combination of output for any society
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Depends upon the preferences of society
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To improve the rate of growth of labor productivity a number of economists have suggested that there needs to be:
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An increase in investment relative to consumption
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A nation that devotes more of its resources to capital investment is likely to
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Cause its production possibilities curve to shift outward
