Macroeconomics Test 1 (McGraw-Hill Chs
1,2,3,&6) Questions and Answers
Question 1
Specialization
Correct Answer
the use of the resources of an individual, a firm, a region, or a nation to concentrate
production on one or a small number of goods and services
Question 2
Loaded Terminology
Correct Answer
The use of words to make a reader think a certain way; often biased
Question 3
Self Interest
Correct Answer
that which each firm, property owner, worker, and consumer believes is best for
itself and seeks to obtain
Question 4
Invisible Hand
Correct Answer
the tendency of firms and resource suppliers that seek to further their own self-
interests in competitive markets to also promote the interests of society; created by
Adam Smith
Page 1 of 10
, Question 5
Five Fundamental Questions
Correct Answer
What goods and services will be produced?
How will the goods and services be produced?
Who will get the goods and services?
How will the system accommodate change?
How will the system promote progress?
Question 6
Changes in supply
Correct Answer
moves up (increase) and down (decrease) up the price axis
Question 7
Marginal Analysis
Correct Answer
The comparison of marginal ("extra" or "additional") benefits and marginal costs,
usually for decision making
Question 8
Dollar Votes
Correct Answer
the "votes" that consumers and entrepreneurs cast for the production of consumer
and capital goods, respectively, when they purchase those goods in product ant and
resource markets
Question 9
Three types of businesses
Correct Answer
sole proprietorship (singe person, bears all financial responsibility), partnership (two
people), corporation (multiple founders bear no financial responsibility)
Page 2 of 10
1,2,3,&6) Questions and Answers
Question 1
Specialization
Correct Answer
the use of the resources of an individual, a firm, a region, or a nation to concentrate
production on one or a small number of goods and services
Question 2
Loaded Terminology
Correct Answer
The use of words to make a reader think a certain way; often biased
Question 3
Self Interest
Correct Answer
that which each firm, property owner, worker, and consumer believes is best for
itself and seeks to obtain
Question 4
Invisible Hand
Correct Answer
the tendency of firms and resource suppliers that seek to further their own self-
interests in competitive markets to also promote the interests of society; created by
Adam Smith
Page 1 of 10
, Question 5
Five Fundamental Questions
Correct Answer
What goods and services will be produced?
How will the goods and services be produced?
Who will get the goods and services?
How will the system accommodate change?
How will the system promote progress?
Question 6
Changes in supply
Correct Answer
moves up (increase) and down (decrease) up the price axis
Question 7
Marginal Analysis
Correct Answer
The comparison of marginal ("extra" or "additional") benefits and marginal costs,
usually for decision making
Question 8
Dollar Votes
Correct Answer
the "votes" that consumers and entrepreneurs cast for the production of consumer
and capital goods, respectively, when they purchase those goods in product ant and
resource markets
Question 9
Three types of businesses
Correct Answer
sole proprietorship (singe person, bears all financial responsibility), partnership (two
people), corporation (multiple founders bear no financial responsibility)
Page 2 of 10
