Macroeconomics: Chapters 1,2&3

  1. What statement would best complete a short definition of economics?
    how individuals, institutions, and society make optimal choices under conditions of scarcity.
  2. The idea in economics that "there is no such thing as a free lunch" means that
    scarce resources have alternative uses or opportunity costs.
  3. The opportunity cost of building a new stadium is the
    other goods and services that must be sacrificed to construct a new stadium
  4. From the economic perspective, when business decides to employ more workers, the business decision maker has most likely concluded that the marginal
    benefits of employing more workers are greater than the marginal costs
  5. The combination of economic theories or principles into a simplified representation of reality is referred to as an economic
  6. Which would be studied in macroeconomics?
    the output and price of wheat in the United States
  7. When we look at the whole economy or its major aggregates, our analysis would be at the level of 
  8. Which is a normative economic statement?
    the unemployment rate of 6.8 percent is to high
  9. Tools, machinery, or equipment used to produce other goods would be an example of 
    capital goods
  10. An entrepreneur innovates by
    commercializing a new product for a market
  11. When production possibilities curve is written in this chapter, four assumptions are made. Which is one of those assumptions?
    The economy has full employment of available resources
  12. What is the economic rationale for the law of increasing opportunity costs
    Economic resources are not completely adaptable to alternative uses
  13. The private ownership of property resources an use of markets and prices to direct and coordinate economic activity are characteristics of
    a market economy
  14. Which is one of the main characteristics of the market system?
    the right to own private property
  15. The maximization of profit tends to be the driving force in the economic decision making of
  16. Which situation would most likely shift the production possibilities curve for a nation in an outward direction?
    increases in technological direction
  17. How do consumers typically express self-interest?
  18. By seeking the lowest prices for a product
  19. Which is a characteristic of competition as economists see it?
    the widespread diffusion of economic power
  20. The decide how to use it scarce resources to satisfy economic wants, a market economy primarily relies on
  21. The market system is a method of
    communicating and coordinating economic decisions
  22. When workers specialize in various tasks to produce a commodity, the situation is referred to as
    division of labor
  23. In what way does human specialization contribute to an economy's output?
    It fosters learning by doing
  24. Which is a prerequisite of specialization?
    having a convenient means of exchanging goods
  25. In the market system, the role of government is best described as
  26. Which would necessarily result, sooner or later, from a decrease in consumer demand for a product?
    A decrease in the profits of firms in the industry
  27. The demand for resources is
    derived from the demand for the products made with the resources
  28. Which is the primary factor determining the share of the total output of the economy received by a household?
    the prices at which a household sells its resources
  29. If an increase in the demand for a product and a rise in its price cause an increase in the quantity supplied, price is successfully performing its
    guiding function
  30. The advent of personal computers and word processing software that eliminated the market for electric typewriters would be an example of
    creative destruction
  31. The chief economic virtue of the competitive market system is that it
    promotes the efficient use of resources
  32. In the circular flow diagram, businesses
    sell products and buy resources
  33. A schedule that shows the various amounts of product consumers are willing and able to purchase at each price in a series of possible prices during a specified time period is called
  34. the reason for the law of demand can be best explained in terms of
    diminishing marginal utility
  35. Assume that the price of video game players falls. What will most likely happen to the equilibrium price and quantity of video games, assuming this market is competitive?
    price will increase; quantity will increase
  36. What change will decrease the demand for a product?
    a decrease in the number of buyers
  37. The income of a consumer decreases and the consumer's demand for a particular good increases. It can be concluded that the good is
  38. The law of supply states that, other things being constant, as price increases
    quantity supplied increases
  39. If the quantity supplied of a product is greater than the quantity demanded for a product, then
    there is a surplus of the product
  40. If the price of a product is below equilibrium price, the result will be
    a shortage of the good
  41. A decrease in supply and demand will
    affect price in an indeterminate way and decrease the quantity exchanged
  42. An increase in demand and a decrease in supply will
    increase price and the effect upon quantity exchange will be indeterminate
  43. A maximum price set by the government that is designed to help consumers is a
    price ceiling
Card Set
Macroeconomics: Chapters 1,2&3
Macroeconomics: Chapters 1,2&3