WGU C719 Macroeconomics PA
WGU C719 Macroeconomics PA Complete Review Questions &
Key Concepts With Correct Answers
In the car manufacturing industry, the supply for cars has a positive slope.
What happens if the price of cars increases?
The supply curve will shift right.
The supply curve will shift left.
The supply curve will change slope.
There will be a movement along the supply curve. - ✔✔✔ - There will be a movement along the
supply curve.
In the car manufacturing industry, the supply for cars has a positive slope.
Which two factors can cause the supply curve to shift?
A change in the price of cars
A change in the cost of labor
A change in expectations about the future
A change in consumer tastes - ✔✔✔ - A change in the cost of labor
A change in expectations about the future
Textbooks and class enrollments are complements.
What happens to the demand curve for textbooks if the tuition rate increases?
It will shift to the right.
It will stay the same.
It will shift to the left.
It will first shift to the left, then shift to the right. - ✔✔✔ - It will shift to the left.
1
WGU C719 Macroeconomics PA
©®
,WGU C719 Macroeconomics PA
Below are likely scenarios that affect the demand curve for automobiles. Which scenario is
correct? The unemployment rate increases to 15% in the state of Michigan due to a recession.
As a result, people will have less income and will be spending less. This will decrease the demand
for automobiles, and the demand curve for automobiles will shift to the left. The average price
of automobiles goes up. This will cause a decrease in quantity demanded. As a result, the
demand curve for automobiles will shift to the left. The inflation rate is expected to be 4% next
year. As a result, the automobiles will become relatively more expensive. This will shift the
current demand for automobiles leftward. Public transportation becomes less available. Public
transportation and private commuting are substitutes. This will cause a leftward shift in the
demand for automobiles. - ✔✔✔ - The unemployment rate increases to 15% in the state of
Michigan due to a recession. As a result, people will have less income and will be spending less.
This will decrease the demand for automobiles, and the demand curve for automobiles will shift
to the left.
Classify each option as either increasing or decreasing if the price of tablets is expected to go
down.
Answer options may be used more than once or not at all. Select your answers from the pull-
down list.
Equilibrium price for the current month
Current demand for tablets
Future demand for tablets - ✔✔✔ - Decrease
Decrease
Increase
A drought in Columbia destroyed the rice crops, which caused the supply of rice to decrease.
Which scenario will occur as a result of the decrease in supply? The supply curve for rice will shift
leftward. This will cause an increase in the equilibrium price and a decrease in the equilibrium
quantity. The demand curve for rice will shift rightward. This will cause an increase in the
equilibrium price and a decrease in the equilibrium quantity. The supply curve for rice will shift
rightward. This will cause a decrease in the equilibrium price and a decrease in the equilibrium
quantity. The demand curve for rice will shift leftward. This will cause an increase in the
equilibrium price and an increase in the equilibrium quantity. - ✔✔✔ - The supply curve for rice
2
WGU C719 Macroeconomics PA
©®
,WGU C719 Macroeconomics PA
will shift leftward. This will cause an increase in the equilibrium price and a decrease in the
equilibrium quantity.
Study the two-sector circular-flow diagram.
Classify each statement as either a flow of resources or a flow of dollars.
Answer options may be used more than once or not at all. Select your answers from the pull-
down list.
Households provide productive resources to firms.
Households buy consumer products from firms.
Firms sell products to households.
Households supply labor to firms. - ✔✔✔ - Flow of resources
Flow of dollars
Flow of dollars
Flow of resources
Florence could earn an annual salary of $70,000 as a financial advisor or $60,000 as a bank
manager. Currently, Florence is a teacher and earns an annual salary of $35,000. What is
Florence's opportunity cost for choosing to be a teacher instead of a financial advisor?
$20,000
$35,000
$60,000
$70,000 - ✔✔✔ - $35,000
Florence is a teacher and earns $35,000 a year. Her spouse is a part-time IT specialist who earns
$45,000 a year. Florence and her spouse decide that one of them should quit work and become
a stay-at-home parent.
Based on the principle of comparative advantage, who should be the full-time, stay-at-home
parent?
Florence should stay home, since she has a lower opportunity cost.
3
WGU C719 Macroeconomics PA
©®
, WGU C719 Macroeconomics PA
Her spouse should stay at home, since Florence can potentially earn more.
Her spouse should stay at home, since Florence only makes $35,000.
Neither; they should both continue working. - ✔✔✔ - Florence should stay home, since she has a
lower opportunity cost.
Referring to the three economic questions (what, how, and for whom), in a market system, by
whom are these questions determined?
The culture's tradition
The buyers and sellers
The central authority
The market itself - ✔✔✔ - The buyers and sellers
According to the production possibilities curve model, as you increase the production of one
good, what will happen to the sacrifices of the alternate good?
They will steadily increase.
They will steadily decrease.
They will remain the same.
They will gradually disappear. - ✔✔✔ - They will steadily increase.
A farmer fully utilizes his resources to produce cauliflower and kale. As the farmer produces
more cauliflower, he has fewer resources available to produce kale. Which curve is illustrated in
this scenario?
Production possibilities curve
Aggregate supply curve
Aggregate demand curve
Business cycle - ✔✔✔ - Production possibilities curve
What are the main foci of economics?
Consumption, production, and use of renewable resources
4
WGU C719 Macroeconomics PA
©®
WGU C719 Macroeconomics PA Complete Review Questions &
Key Concepts With Correct Answers
In the car manufacturing industry, the supply for cars has a positive slope.
What happens if the price of cars increases?
The supply curve will shift right.
The supply curve will shift left.
The supply curve will change slope.
There will be a movement along the supply curve. - ✔✔✔ - There will be a movement along the
supply curve.
In the car manufacturing industry, the supply for cars has a positive slope.
Which two factors can cause the supply curve to shift?
A change in the price of cars
A change in the cost of labor
A change in expectations about the future
A change in consumer tastes - ✔✔✔ - A change in the cost of labor
A change in expectations about the future
Textbooks and class enrollments are complements.
What happens to the demand curve for textbooks if the tuition rate increases?
It will shift to the right.
It will stay the same.
It will shift to the left.
It will first shift to the left, then shift to the right. - ✔✔✔ - It will shift to the left.
1
WGU C719 Macroeconomics PA
©®
,WGU C719 Macroeconomics PA
Below are likely scenarios that affect the demand curve for automobiles. Which scenario is
correct? The unemployment rate increases to 15% in the state of Michigan due to a recession.
As a result, people will have less income and will be spending less. This will decrease the demand
for automobiles, and the demand curve for automobiles will shift to the left. The average price
of automobiles goes up. This will cause a decrease in quantity demanded. As a result, the
demand curve for automobiles will shift to the left. The inflation rate is expected to be 4% next
year. As a result, the automobiles will become relatively more expensive. This will shift the
current demand for automobiles leftward. Public transportation becomes less available. Public
transportation and private commuting are substitutes. This will cause a leftward shift in the
demand for automobiles. - ✔✔✔ - The unemployment rate increases to 15% in the state of
Michigan due to a recession. As a result, people will have less income and will be spending less.
This will decrease the demand for automobiles, and the demand curve for automobiles will shift
to the left.
Classify each option as either increasing or decreasing if the price of tablets is expected to go
down.
Answer options may be used more than once or not at all. Select your answers from the pull-
down list.
Equilibrium price for the current month
Current demand for tablets
Future demand for tablets - ✔✔✔ - Decrease
Decrease
Increase
A drought in Columbia destroyed the rice crops, which caused the supply of rice to decrease.
Which scenario will occur as a result of the decrease in supply? The supply curve for rice will shift
leftward. This will cause an increase in the equilibrium price and a decrease in the equilibrium
quantity. The demand curve for rice will shift rightward. This will cause an increase in the
equilibrium price and a decrease in the equilibrium quantity. The supply curve for rice will shift
rightward. This will cause a decrease in the equilibrium price and a decrease in the equilibrium
quantity. The demand curve for rice will shift leftward. This will cause an increase in the
equilibrium price and an increase in the equilibrium quantity. - ✔✔✔ - The supply curve for rice
2
WGU C719 Macroeconomics PA
©®
,WGU C719 Macroeconomics PA
will shift leftward. This will cause an increase in the equilibrium price and a decrease in the
equilibrium quantity.
Study the two-sector circular-flow diagram.
Classify each statement as either a flow of resources or a flow of dollars.
Answer options may be used more than once or not at all. Select your answers from the pull-
down list.
Households provide productive resources to firms.
Households buy consumer products from firms.
Firms sell products to households.
Households supply labor to firms. - ✔✔✔ - Flow of resources
Flow of dollars
Flow of dollars
Flow of resources
Florence could earn an annual salary of $70,000 as a financial advisor or $60,000 as a bank
manager. Currently, Florence is a teacher and earns an annual salary of $35,000. What is
Florence's opportunity cost for choosing to be a teacher instead of a financial advisor?
$20,000
$35,000
$60,000
$70,000 - ✔✔✔ - $35,000
Florence is a teacher and earns $35,000 a year. Her spouse is a part-time IT specialist who earns
$45,000 a year. Florence and her spouse decide that one of them should quit work and become
a stay-at-home parent.
Based on the principle of comparative advantage, who should be the full-time, stay-at-home
parent?
Florence should stay home, since she has a lower opportunity cost.
3
WGU C719 Macroeconomics PA
©®
, WGU C719 Macroeconomics PA
Her spouse should stay at home, since Florence can potentially earn more.
Her spouse should stay at home, since Florence only makes $35,000.
Neither; they should both continue working. - ✔✔✔ - Florence should stay home, since she has a
lower opportunity cost.
Referring to the three economic questions (what, how, and for whom), in a market system, by
whom are these questions determined?
The culture's tradition
The buyers and sellers
The central authority
The market itself - ✔✔✔ - The buyers and sellers
According to the production possibilities curve model, as you increase the production of one
good, what will happen to the sacrifices of the alternate good?
They will steadily increase.
They will steadily decrease.
They will remain the same.
They will gradually disappear. - ✔✔✔ - They will steadily increase.
A farmer fully utilizes his resources to produce cauliflower and kale. As the farmer produces
more cauliflower, he has fewer resources available to produce kale. Which curve is illustrated in
this scenario?
Production possibilities curve
Aggregate supply curve
Aggregate demand curve
Business cycle - ✔✔✔ - Production possibilities curve
What are the main foci of economics?
Consumption, production, and use of renewable resources
4
WGU C719 Macroeconomics PA
©®
