MANKIW PRINCIPLES OF
MACROECONOMICS | QUESTIONS
ANDANSWERS | VERIFIED
QUESTIONS AND ANSWERS |
GRADED A+ | LATEST 2026
1. Scarcity-ANSWER Resources are limited
2. Economics-ANSWER Study of how society manages scarce resources
3. Efficiency-ANSWER Society obtaining the maximum benefits from scarce
resources
4. Equality-ANSWER The distribution of the benefits obtained from society's
scarce resources
5. Opportunity Cost-ANSWER The cost of what is given up to obtain
something
6. Rational People-ANSWER People who systematically and purposefully do
the best they can to achieve their objectives
7. Marginal Change-ANSWER Small incremental adjustments
,8. Incentive-ANSWER Something that induces a person to act
9. Property Rights-ANSWER Ability of an individual to own and exercise
control over scarce resources
10.Market Failure-ANSWER A situation in which a market left on its own fails
to allocate resources efficiently
11.Externality-ANSWER The impact of one person's actions on the well-being
of a bystander
12.Market Power-ANSWER The ability of a single economic actor (or small
group of actors) to have unduly influence on market prices
13.Productivity-ANSWER Quantity of goods and services produced from each
unit of labor input; Correlated with high standards of living
14.Inflation-ANSWER An increase in the overall price level in the economy;
Inversely related with unemployment in the short run
15.Cause of inflation-ANSWER Growth in the quantity of money
16.Business cycle-ANSWER Fluctuations in economic activity, such as
employment and production
, 17.Circular Flow Diagram-ANSWER Visual model of the economy that shows
how dollars flow through markets among households and firms
18.Factors of Production-ANSWER Labor land, capital, natural resources, and
other inputs used to make goods and services
19.Production Possibilities Frontier-ANSWER A graph that shows the
combinations of output that the economy can possibly produce. The slope of
the PPF measures opportunity cost. Any point on the PPF curve (rather than
inside) is efficient.
20.Microeconomics-ANSWER The study of how households and firms make
decisions and how they interact in specific markets
21.Macroeconomics-ANSWER The study of economy-wide phenomena,
including inflation, unemployment, and economic growth
22.Positive Statement-ANSWER A descriptive statement
23.Normative Statement-ANSWER A prescriptive statement
24.Absolute Advantage-ANSWER The ability to produce a good using fewer
inputs than another producer
25.Comparative Advantage-ANSWER The ability to produce a good at a lower
opportunity cost than another producer
MACROECONOMICS | QUESTIONS
ANDANSWERS | VERIFIED
QUESTIONS AND ANSWERS |
GRADED A+ | LATEST 2026
1. Scarcity-ANSWER Resources are limited
2. Economics-ANSWER Study of how society manages scarce resources
3. Efficiency-ANSWER Society obtaining the maximum benefits from scarce
resources
4. Equality-ANSWER The distribution of the benefits obtained from society's
scarce resources
5. Opportunity Cost-ANSWER The cost of what is given up to obtain
something
6. Rational People-ANSWER People who systematically and purposefully do
the best they can to achieve their objectives
7. Marginal Change-ANSWER Small incremental adjustments
,8. Incentive-ANSWER Something that induces a person to act
9. Property Rights-ANSWER Ability of an individual to own and exercise
control over scarce resources
10.Market Failure-ANSWER A situation in which a market left on its own fails
to allocate resources efficiently
11.Externality-ANSWER The impact of one person's actions on the well-being
of a bystander
12.Market Power-ANSWER The ability of a single economic actor (or small
group of actors) to have unduly influence on market prices
13.Productivity-ANSWER Quantity of goods and services produced from each
unit of labor input; Correlated with high standards of living
14.Inflation-ANSWER An increase in the overall price level in the economy;
Inversely related with unemployment in the short run
15.Cause of inflation-ANSWER Growth in the quantity of money
16.Business cycle-ANSWER Fluctuations in economic activity, such as
employment and production
, 17.Circular Flow Diagram-ANSWER Visual model of the economy that shows
how dollars flow through markets among households and firms
18.Factors of Production-ANSWER Labor land, capital, natural resources, and
other inputs used to make goods and services
19.Production Possibilities Frontier-ANSWER A graph that shows the
combinations of output that the economy can possibly produce. The slope of
the PPF measures opportunity cost. Any point on the PPF curve (rather than
inside) is efficient.
20.Microeconomics-ANSWER The study of how households and firms make
decisions and how they interact in specific markets
21.Macroeconomics-ANSWER The study of economy-wide phenomena,
including inflation, unemployment, and economic growth
22.Positive Statement-ANSWER A descriptive statement
23.Normative Statement-ANSWER A prescriptive statement
24.Absolute Advantage-ANSWER The ability to produce a good using fewer
inputs than another producer
25.Comparative Advantage-ANSWER The ability to produce a good at a lower
opportunity cost than another producer
