Macroeconomics Test 1 Heriberto Gonzalez Lozano MSU

economics is a social science concerned with...

the best use of scarce resources to achieve the maximum satisfaction of economic wants

a person should consume more of something when its marginal...

benefit exceeds its marginal cost

the process of developing hypothesis, testing them against facts, and using the results to construct theories is called...

the scientific method

which is an illustration of a microeconomic question?

will a new type of television set increase the number of buyers?

a schedule or curve that shows the various combinations of two products a consumer can purchase with a specific amount of money income is...

a budget line

which of the following is real capital?

a pair of stockings

a construction crane

a savings account

a share of IMB stock

a construction crane

a point inside a production possibilities curve best illustrates...

unemployment

a normative statement is one that...

is based on value judgements

the problems of aggregate inflation and unemployment are...

major topics of economics

on a production possibilities curve, the single optimal or best combination of output for any society...

depends upon the preferences of society

which statement best describes a command economy?

the production and allocation of goods and services is determined primarily through government

which statement is correct?

a. freedom of choice and enterprise are essential elements of the market system.

b. producers are "kings" in a market economy because they determine what is produced

c. the market system is efficient at allocation of resources, but not consumer goods to their most valued uses

d. the operation of a market system eventually results in an equal distribution of income

a. freedom of choice and enterprise are essential elements of the market system.

in a competitive economy, prices...

a. influence consumers in their purchases of goods and services

b. influence businesses in their purchases of economic resources

c. influence workers in making occupational choices

d. do all of these

d. do all of these

the competitive market system...

encourages innovation because successful innovators are rewarded with economic profits

which is not one of the five fundamental questions?

a. how will the goods and services be produced?

b. how should the system accommodate change?

c. who is to receive the output of the system?

d. what goods and services should be produced by government?

d. what goods and services should be produced by government?

the idea that firms and resource suppliers in seeking to further their own self-interests in a competitive market economy also simultaneously promotes the public or social interest is a description of...

the invisible hand

which of the following is a limitation of the simple circular flow model?

the determination of product and resource prices is not explained

households and businesses are...

sellers in the resource and product markets respectively

the circular flow model...

illustrates the interdependence of business and consumers

the law of demand is illustrated by a demand curve that is...

downward sloping

what would cause a decrease in the quantity of computers supplied?

a decrease in the demand for computers

when the price of oil declines significantly, the price of gasoline also declines. the latter occurs because of a(n)...

decrease in the supply of gasoline

a schedule which shows the various amounts of a product producers are willing and able to produce at each price in a series of possible prices during a specified period of time is called...

supply

if the quantity supplied of a product is less than the quantity demanded, then...

there is a shortage of a product

if the market price is above the equilibrium price...

a surplus will occur and producers will produce less and lower

a competitive market will...

achieve an equilibrium price

a product market is in equilibrium...

where the demand and supply curves intersect

a headline reads, "storms destroy half of the lettuce crop." this situation would lead to a(n)...

increase in the price of lettuce and decrease in quantity purchased

government-set prices floors and price ceilings...

interfere with the rationing function of price in a free market