MacroEconomics
Economics is the study of:
choices made when scarcity exists.
A simplified representation of a complex system dealing with economics is known as:
an economic model.
Economic decision-making often focuses on how a one unit change will impact the system. This type of analysis is
known as:
marginal analysis.
Ph.D. economists have traditionally been hired by:
universities.
government agencies.
Wall Street firms.
According to the article, ___________ is hiring an economist to help its team of economists use existing data to
"reveal ways to improve the company's service for buyers and sellers."
EBay Inc.
The behaviors that these firms are attempting to model are the subject of:
microeconomics.
The economic way of thinking is best described as
an analytical framework enabling one to reach informed conclusions.
Suppose a government official is trying to decide whether or not to allow more immigration. Which of the following is
not an aspect of the economic way of thinking that would apply in this decision-making process?
Flipping a coin.
To which of the following household-type(s) does the phrase "unlimited wants and limited resources"
I, II, and III.
A low-income household
II. A middle-income household
III. A high-income household
One reason that economists use microeconomics as the basis of macroeconomic analysis is
that all choices are made by individuals and firms.
Which of the following is a true statement about self-interest as used in the study of economics?
Any action can be based on self-interest if the person has some reason for the action.
People may appear to use rules of thumb, as suggested by the assumption of bounded rationality, even though they
may really be behaving in a manner suggested by the rationality assumption if
they face a persistently predictable range of choices for a period of time.
The ceteris paribus assumption means
other things equal
An economic model is developed from a set of assumptions about consumer behavior and predicts that people will
buy less of a good the higher the price of the good. Empirical testing of this model would involve
, the collection of data to evaluate the usefulness of the model.
Consider the following statement based on a positive economic analysis that assumes that all other things remain
constant. Falling gasoline prices will result in additional vacation travel. Which of the following (initially assumed
constant) could occur and thus offset the stated outcome?
An increase in hotel taxes at popular resorts
Economic goods are
goods that are scarce.
Farmer McDonald has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels
of soybeans or 100 bushels of corn or some combination of both. The accompanying figure refers to farmer
McDonald's
production possibilities curve.
Steve can wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. His roommate Mike
can wash, fold, and iron a basket of laundry in three hours and prepare a meal in one hour. The absolute advantage
in laundry is held by
Steve
The comparative advantage in meal preparation is held by
Mike
The division of productive activities among persons and regions so that no one individual or region is totally self-
sufficient is known as
specialization.
Which of the following statements is true?
Everyone can benefit when people specialize where they have a comparative advantage and then trade with each
other.
Specialization and comparative advantage
A. lead to international trade and overall gains for the nations involved.
B. lead to greater output even if you can do everything better than someone else.
C.lead to greater productivity.
The inverse relationship between price and quantity demanded is often referred to as:
the law of demand.
If prices fall for a particular good then consumers will:
buy more units.
demand arrow goes down
Other things remaining equal, the law of demand says that higher prices will lead to a
smaller quantity demanded and lower prices to a larger quantity demanded.
All of the following pairs of goods are substitutes except
We observe that the price of bacon increases and the demand for eggs decreases.
All of the following pairs of goods are complements except
We observe that the price of coffee decreases and the demand for tea decreases.
Assume the cost of aluminum used by soft-drink companies increases. Which of the following correctly describes the
resulting effects in the market for canned soft drinks?
II and III.
Economics is the study of:
choices made when scarcity exists.
A simplified representation of a complex system dealing with economics is known as:
an economic model.
Economic decision-making often focuses on how a one unit change will impact the system. This type of analysis is
known as:
marginal analysis.
Ph.D. economists have traditionally been hired by:
universities.
government agencies.
Wall Street firms.
According to the article, ___________ is hiring an economist to help its team of economists use existing data to
"reveal ways to improve the company's service for buyers and sellers."
EBay Inc.
The behaviors that these firms are attempting to model are the subject of:
microeconomics.
The economic way of thinking is best described as
an analytical framework enabling one to reach informed conclusions.
Suppose a government official is trying to decide whether or not to allow more immigration. Which of the following is
not an aspect of the economic way of thinking that would apply in this decision-making process?
Flipping a coin.
To which of the following household-type(s) does the phrase "unlimited wants and limited resources"
I, II, and III.
A low-income household
II. A middle-income household
III. A high-income household
One reason that economists use microeconomics as the basis of macroeconomic analysis is
that all choices are made by individuals and firms.
Which of the following is a true statement about self-interest as used in the study of economics?
Any action can be based on self-interest if the person has some reason for the action.
People may appear to use rules of thumb, as suggested by the assumption of bounded rationality, even though they
may really be behaving in a manner suggested by the rationality assumption if
they face a persistently predictable range of choices for a period of time.
The ceteris paribus assumption means
other things equal
An economic model is developed from a set of assumptions about consumer behavior and predicts that people will
buy less of a good the higher the price of the good. Empirical testing of this model would involve
, the collection of data to evaluate the usefulness of the model.
Consider the following statement based on a positive economic analysis that assumes that all other things remain
constant. Falling gasoline prices will result in additional vacation travel. Which of the following (initially assumed
constant) could occur and thus offset the stated outcome?
An increase in hotel taxes at popular resorts
Economic goods are
goods that are scarce.
Farmer McDonald has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels
of soybeans or 100 bushels of corn or some combination of both. The accompanying figure refers to farmer
McDonald's
production possibilities curve.
Steve can wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. His roommate Mike
can wash, fold, and iron a basket of laundry in three hours and prepare a meal in one hour. The absolute advantage
in laundry is held by
Steve
The comparative advantage in meal preparation is held by
Mike
The division of productive activities among persons and regions so that no one individual or region is totally self-
sufficient is known as
specialization.
Which of the following statements is true?
Everyone can benefit when people specialize where they have a comparative advantage and then trade with each
other.
Specialization and comparative advantage
A. lead to international trade and overall gains for the nations involved.
B. lead to greater output even if you can do everything better than someone else.
C.lead to greater productivity.
The inverse relationship between price and quantity demanded is often referred to as:
the law of demand.
If prices fall for a particular good then consumers will:
buy more units.
demand arrow goes down
Other things remaining equal, the law of demand says that higher prices will lead to a
smaller quantity demanded and lower prices to a larger quantity demanded.
All of the following pairs of goods are substitutes except
We observe that the price of bacon increases and the demand for eggs decreases.
All of the following pairs of goods are complements except
We observe that the price of coffee decreases and the demand for tea decreases.
Assume the cost of aluminum used by soft-drink companies increases. Which of the following correctly describes the
resulting effects in the market for canned soft drinks?
II and III.
