PRINCIPLES OF MACROECONOMICS: TEST 1
WITH ALL CORRECT & VERIFIED ANSWERS
(UPDATED TO PASS)
REAL GROSS DOMESTIC PRODUCT Correct answer-Gross domestic product that has been adjusted
to eliminate the impact of changes in the price level. A MACROECONOMIC MEASURE OF THE VALUE
OF OUTPUT ECONOMY ADJUSTED FOR CHANGES. (LIKE INFLATION)
RESEARCH AND DEVELOPMENT Correct answer-generating and experimenting with ideas related
to new products, services, or processes
MARKET SHARE Correct answer-a company's percentage of the total industry sales for a specific
product type
MACROECONOMICS Correct answer-the study of economy-wide phenomena, including inflation,
unemployment, and economic growth. The overall working of a national economy - performance
structure, behavior, and decision making.
STANDARD OF LIVING Correct answer-a measure of quality of life based on the amounts and kinds
of goods and services a person can buy
MICROECONOMICS Correct answer-the branch of economics that studies the economy of
consumers or households or individual firms
CATERIS PARIBUS Correct answer-"all else equal" a device used to analyze the relationship
between two variables while the values of other variables are held unchanged
HUMAN CAPITAL Correct answer-the knowledge and skills that workers acquire through education,
training and experience
OPPORTUNITY COST Correct answer-the cost of the next best use of time and money when
choosing to do one thing or another. It is the sacrifice related to the second best choice available to
someone or group.
SCARCITY Correct answer-limited quantities of resources to meet unlimited wants. Fundamental
economic problem of having humans who have wants and needs in a world of limited resources.
INCENTIVE Correct answer-a positive motivational influence. Incentives aim to provide value for
money and contribute to organizational success.
POLLUTION Correct answer-undesirable state of the natural environment being contaminated with
harmful substances as a consequence of human activities
FISCAL POLICY Correct answer-The federal government efforts to keep the economy stable by
increasing or decreasing taxes or government spending
MARKET FAILURE Correct answer-a situation in which a market left on its own fails to allocate
resources efficiently.
, PRODUCTIVITY Correct answer-the quantity of goods and services produced from each unit of
labor input
AGGREGATE SUPPLY Correct answer-the total amount of goods and services in the economy
available at all possible price levels
ECONOMIC HISTORY Correct answer-the study of economic events and the collection of economic
observations from the past. Analysis in Economic history is undertaken using a combination of
historical methods.
economics- short Correct answer-the study of how people seek to satisfy their needs and wants by
making choices. PEOPLE MAKING RATIONAL DECISIONS.
ECONOMICS- long version Correct answer-a social science that studies the allocation of resources
to the production of goods and services used to satisfy the consumers unlimited wants needs.
POLICY Correct answer-a line of argument rationalizing the course of action of a government. A
principle or rule to guide decisions and achieve rational outcomes.
RECESSION Correct answer-the state of the economy declines
PROGRESSIVE TAX SYSTEM Correct answer-a tax whose average tax rate increases as the taxpayer's
income increases and decreases as the taxpayer's income decreases. THE MORE YOU MAKE THE
MORE YOU PAY!
JOHN KAY Correct answer-Correalation does not imply causation
EFFICIENCY Correct answer-using resources in such a way as to maximize the production of goods
and services. - HOW WELL RESOURCES ARE USED AND ALLOCATED!
EQUITY Correct answer-a condition in which people receive from a relationship in proportion to
what they give to it.
PHILLIPS CURVE Correct answer-A graph showing the relationship between inflation and
unemployment . The theory states that unemployment can be reduced in the short run by increasing
price level (inflation) at a faster rate. Conversely, inflation can be lowered at the cost of possibly
increased unemployment and slower economic growth
BAR CHART Correct answer-a chart with bars whose lengths are proportional to quantities
INFLATION Correct answer-a general and progressive increase in prices
ALLOCATIVE EFFICIENCY Correct answer-A state of the economy in which production is in
accordance with consumer preferences; in particular, every good or service is produced up to the
point where the last unit provides a marginal benefit to society equal to the marginal cost of
producing it
ENTREPRENEUR Correct answer-a person who organizes, manages, and takes on the risks of a
business
WITH ALL CORRECT & VERIFIED ANSWERS
(UPDATED TO PASS)
REAL GROSS DOMESTIC PRODUCT Correct answer-Gross domestic product that has been adjusted
to eliminate the impact of changes in the price level. A MACROECONOMIC MEASURE OF THE VALUE
OF OUTPUT ECONOMY ADJUSTED FOR CHANGES. (LIKE INFLATION)
RESEARCH AND DEVELOPMENT Correct answer-generating and experimenting with ideas related
to new products, services, or processes
MARKET SHARE Correct answer-a company's percentage of the total industry sales for a specific
product type
MACROECONOMICS Correct answer-the study of economy-wide phenomena, including inflation,
unemployment, and economic growth. The overall working of a national economy - performance
structure, behavior, and decision making.
STANDARD OF LIVING Correct answer-a measure of quality of life based on the amounts and kinds
of goods and services a person can buy
MICROECONOMICS Correct answer-the branch of economics that studies the economy of
consumers or households or individual firms
CATERIS PARIBUS Correct answer-"all else equal" a device used to analyze the relationship
between two variables while the values of other variables are held unchanged
HUMAN CAPITAL Correct answer-the knowledge and skills that workers acquire through education,
training and experience
OPPORTUNITY COST Correct answer-the cost of the next best use of time and money when
choosing to do one thing or another. It is the sacrifice related to the second best choice available to
someone or group.
SCARCITY Correct answer-limited quantities of resources to meet unlimited wants. Fundamental
economic problem of having humans who have wants and needs in a world of limited resources.
INCENTIVE Correct answer-a positive motivational influence. Incentives aim to provide value for
money and contribute to organizational success.
POLLUTION Correct answer-undesirable state of the natural environment being contaminated with
harmful substances as a consequence of human activities
FISCAL POLICY Correct answer-The federal government efforts to keep the economy stable by
increasing or decreasing taxes or government spending
MARKET FAILURE Correct answer-a situation in which a market left on its own fails to allocate
resources efficiently.
, PRODUCTIVITY Correct answer-the quantity of goods and services produced from each unit of
labor input
AGGREGATE SUPPLY Correct answer-the total amount of goods and services in the economy
available at all possible price levels
ECONOMIC HISTORY Correct answer-the study of economic events and the collection of economic
observations from the past. Analysis in Economic history is undertaken using a combination of
historical methods.
economics- short Correct answer-the study of how people seek to satisfy their needs and wants by
making choices. PEOPLE MAKING RATIONAL DECISIONS.
ECONOMICS- long version Correct answer-a social science that studies the allocation of resources
to the production of goods and services used to satisfy the consumers unlimited wants needs.
POLICY Correct answer-a line of argument rationalizing the course of action of a government. A
principle or rule to guide decisions and achieve rational outcomes.
RECESSION Correct answer-the state of the economy declines
PROGRESSIVE TAX SYSTEM Correct answer-a tax whose average tax rate increases as the taxpayer's
income increases and decreases as the taxpayer's income decreases. THE MORE YOU MAKE THE
MORE YOU PAY!
JOHN KAY Correct answer-Correalation does not imply causation
EFFICIENCY Correct answer-using resources in such a way as to maximize the production of goods
and services. - HOW WELL RESOURCES ARE USED AND ALLOCATED!
EQUITY Correct answer-a condition in which people receive from a relationship in proportion to
what they give to it.
PHILLIPS CURVE Correct answer-A graph showing the relationship between inflation and
unemployment . The theory states that unemployment can be reduced in the short run by increasing
price level (inflation) at a faster rate. Conversely, inflation can be lowered at the cost of possibly
increased unemployment and slower economic growth
BAR CHART Correct answer-a chart with bars whose lengths are proportional to quantities
INFLATION Correct answer-a general and progressive increase in prices
ALLOCATIVE EFFICIENCY Correct answer-A state of the economy in which production is in
accordance with consumer preferences; in particular, every good or service is produced up to the
point where the last unit provides a marginal benefit to society equal to the marginal cost of
producing it
ENTREPRENEUR Correct answer-a person who organizes, manages, and takes on the risks of a
business
