McConnell Macroeconomics 20th edition Chapter 1 Multiple Choice – Flashcards

What statement would be complete a short definition of economics? Economics Studies a) how business produce goods and services b) the equitable distribution of society's income and wealth c) the printing and circulation of money throughout the economy d) how individuals, institutions, and society make optimal choices under conditions of scarcity.

The idea in economics that " there is no such thing as a free lunch" means that a) the marginal benefit of such a lunch is greater than its marginal cost b) business cannot increase their market share by offering free lunches c) scare resources have alternative uses d) consumers are irrational when they ask for a free lunch

The opportunity cost of a new public stadium is the a) money cost of hiring guards and staff of the new stadium b) cost of constructing the new stadium in a future year c) change in the real estate tax rate to pay off the new stadium d) other goods and services that must be sacrificed to construct the new stadium.

From the economic perspective, when a business decides to employ more workers, the business decision maker has most likely concluded that the marginal a) cost of employing more workers have decreased b) benefits of employing more workers have increased c) benefits of employing more workers are greater than the marginal costs d) costs of employing more workers are not opportunity costs for the business because more workers are needed to increase production

The combination of economic theories or principles into a simplified representation of reality is referred to as an economic a) fact b) model c) assumption d) hypothesis

Which would be studied in microeconomics? a) the output of the entire U.S. economy b) the general level of prices in the U.S. economy c) the output and price of wheat in the United States d) the total number of workers employed in the United States

When we look at the whole economy or its major aggregates, our analysis would be at the level of a) microeconomics b) macroeconomics c) positive economics d) normative economics

Which is a normative economic statement? a) The consumer price index rose 1.2 percent last month b) The unemployment rate of 6.8 percent is too high c) The average rate of interest on loans is 4.6 percent d) The economy grew at an annual rate of 3.6 percent

Sandra states that " there is a high correlation between consumption and income." Arthur replies that the correlation occurs because " people consume too much of their income and don't save enough." a) Both Sandra's and Arthur's statements are positive. b) Both Sandra's and Arthur's statements are normative. c) Sandra's statement is positive and Arthur's statement is normative. d) Sandra's statement is normative and Arthur's statement is positive.

Tools, machinery, or equipment used to produce other goods would be examples of a) public goods b) capital goods c) social goods d) consumer goods

An entrepreneur innovates by a) making basic policy decisions in a business firm b) following government regulations to make a product c) coming up with a business idea d) commercializing a new product for a market

When a production possibilities scheduled is written ( or a production possibilities curve is drawn) in this chapter, four assumptions are made. Which is one of those assumptions a) The state of technology changes b) More than two products are produced c) The economy has full employment of available resources d) The quantities of all resources available to the economy are variable, not fixed.

The under allocation of outsources by society to the production of a product means that the a) marginal benefit is greater than the marginal cost b) marginal benefit is less than the marginal cost c) opportunity cost of production is rising d) consumption of the product is falling