Macroeconomics Test 1

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nikkid080
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Macroeconomics Test 1
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2015-09-21 11:39:07
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Macroeconomics
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Macroeconomics Test 1 - Ch 1-3
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  1. The condition in which human wants are forever greater than the available supply of time, goods, and resources.
    Scarcity
  2. The basic categories of input used to produce goods and services. Resources are also called factors of production. 
    Resources
  3. Economists divide resources into three categories:
    • Land
    • Labor
    • Capital
  4. Any natural resource provided by nature that is used to produce a good or service.
    Land
  5. The mental and physical capacity of workers to produce goods and services.
    Labor
  6. The creative ability of individuals to seek profits by taking risks and combining resources to produce innovative products.
    Entrepreneurship
  7. A human-made good used to produce other goods and services.
    Capital
  8. The study of how society chooses to allocate its scarce resources to production of goods and services to satisfy unlimited wants.
    Economics
  9. The branch of economics that studies decision marking for the economy as a whole.
    Macroeconomics
  10. The branch of economics that studies decision making by a single individual, household, firm, industry, or level of government.
    Microeconomics
  11. A simplified description of reality used to understand and predict the relationship between variables.
    Model
  12. A Latin phrase that means while certain variables change, "all other things remain unchanged".
    Ceteris paribus
  13. An analysis limited to statements that are verifiable.
    Positive economics
  14. An analysis based on value judgement.
    Normative economics
  15. Which of the following illustrates the concept of scarcity?
    A) More clean air is wanted than is available in large polluted metropolitan areas such as Mexico City
    B) There is usually more than one use of your "free" time in the evening.
    C) There are many competing uses for the annual budget of your city, country, or state.
    D) All of the above are correct
    D) All of the above are correct
  16. Which of the following are factors of production?
    A) The outputs generated by the production process transforming land, labor, and capital into goods and services. 
    B) Resources restricted to the land, such as natural resources that are unimproved by human economic activity. 
    C) Land (natural resources), labor (human capital, entrepreneurship), and capital ( constructed inputs such as factories).
    D) Just labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services.
    C) Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories).
  17. Which of the following is not an example of a capital input?
    A) A person's skill and abilities, which can be employed to produce valuable goods and services.
    B) Factories and offices where goods and services are produced.
    C) Tools and equipment.
    D) Computers used by a company to record inventory, sales, and payroll.
    A) A person's skill and abilities, which can be employed to produce valuable goods and services.
  18. Which of the following is the best definition of economics?
    A) Economics is the study of how to manage corporations to generate the greatest return on shareholder investment.
    B) Economics is the study of how to manage city and country government to generate the greatest good to its citizens.
    C) Economics is the study of how society chooses to allocate its scarce resources. 
    D) Economics is the study of how to track revenues and costs in a business.
    C) Economics is the study of how society chooses to allocate its scarce resources. 
  19. Which of the following best illustrates the application of the model-building process to economics?
    A) On a Sunday morning talk show, two economists with differing political agendas argue about the best way to solve the Social Security problem.
    B) A labor economist notices that unemployment tends to be higher among teenagers than more experienced workers, develops a model, and gathers data to test the hypotheses in the model.
    C) A Ph.D. student in economics makes up data on the lumber market and develops a model for his dissertation that seems to be consistent with the data. 
    D) Economists come to believe that some economic models are true simply because prominent leading economists say they are true.
    B) A labor economist notices that unemployment tends to be higher among teenagers than more experienced workers, develops a model, and gathers data to test the hypotheses in the model.
  20. Which of the following represents causality rather than association?
    A) In years that fashion dictates wider lapels on men's jackets, the stock market grows by at least 5 percent.
    B) Interest rates are higher in years ending with a 1 or a 6.
    C) Unemployment falls when the AFC champion wins the Super Bowl.
    D) Quantity demanded goes up when price falls because lower prices increase consumer purchasing power and because some consumers of substitute goods switch.
    D) Quantity demanded goes up when price falls because lower prices increase consumer purchasing power and because some consumers of substitute goods switch. 
  21. Which of the following describes the ceteris paribus assumption?
    A) If we increase the price of a good, reduce consumer income, and lower the price of substitutes and if quantity demanded is observed to fall, we know that the price increase caused the decline in quantity demanded. 
    B) If the federal government increased government spending and the Federal Reserve Bank lowers interest rates, we know that the increase in government spending caused unemployment to fall.
    C) If a company reduces its labor costs, negotiates lower materials costs from its vendors, and advertises, we know that the reduced labor cost are why the company's profits are higher.
    D) If we decrease the price of a good and observe that there is an increase in the quantity demanded, holding all other factors that influence this relationship constant.
    D) If we decrease the price of a good and observe that there is an increase in the quantity demanded, holding all other factors that influence this relationship constant. 
  22. The condition of scarcity.
    A) cannot be eliminated.
    B) prevails in poor economies. 
    C) prevails in rich economies.
    D) all of the above are correct
    D) all of the above are correct
  23. Which of the following best describes an entrepreneur? 
    A) A person who works as an office clerk at a major corporation
    B) A person who combines the factors of production to produce innovative products.
    C) A special type of capital
    D) Wealthy individuals who provide savings that stimulates the economy.
    B) A person who combines the factors of production to produce innovative products.
  24. Which of the following is true about renewable natural resources?
    A) They are a type of land resource (for example, oil, coal, and natural gas) that has fixed stock.
    B) They are a type of capital resource (for example, irrigation networks and waste-water treatment plants) that utilize water.
    C) They are a type of capital resource (for example, air filtration systems in buildings) that renew and refresh polluted air from the outside.
    D) They are a type of land resource (for example, forests, rangelands, and marine fisheries)  that naturally regenerate and thus can tolerate a sustained harvest but can be depleted from excessive harvest.
    D) They are a type of land resource (for example, forests, rangelands, and marine fisheries)  that naturally regenerate and thus can tolerate a sustained harvest but can be depleted from excessive harvest. 
  25. Because of scarcity,
    A) it is impossible to satisfy every desire and choices must be made.
    B) the available supply of time, goods, and resources is greater than human wants.
    C) every desire is fulfilled.
    D) there are no limits on the economy's ability to satisfy unlimited wants.
    A) it is impossible to satisfy every desire and choices must be made.
  26. Which of the following represents positive economics?
    A) Policy A is fair.
    B) Outcome B is the best objective to achieve.
    C) If policy A if followed, then outcome B results.
    D) All of the above are positive economic analyses.
    C) If policy A if followed, then outcome B results.
  27. Which of the following is the last step in the model-building process?
    A) Collect data and test the model.
    B) Develop a model based on simplified assumptions. 
    C) Identify the problem.
    D) Formulate an assumption.
    A) Collect data and test the model.
  28. Which of the following is not a type of economic analysis?
    A) Positive
    B) Resources
    C) Normative
    D) None of the above
    B) Resources
  29. Which word indicates that an economist is using positive economics?
    A) Good
    B) Bad
    C) If-then
    D) Should
    C) If-then
  30. Which of the following would eliminate scarcity as an economic problem?
    A) Moderation of people's competitive instincts.
    B) Discovery of new, sufficiently large energy reserves.
    C) Resumption of steady productivity growth.
    D) None of the above is correct.
    D) None of the above is correct.
  31. Which resource is not an example of capital?
    A) Equipment
    B) Machinery
    C) Physical plants
    D) Stocks and bonds
    D) Stocks and bonds
  32. Which of the following is the second step in the model-building process?
    A) Collect data and test the model.
    B) Develop a model based on simplified assumptions.
    C) Identify the problem
    D) Include all possible variables that affect the model.
    B) Develop a model based on simplified assumptions.
  33. Which of the following is a type of economic analysis?
    A) Positive
    B) Resource
    C) Association
    D) None of the above
    A) Positive
  34. Which of the following careers could result from majoring in economics?
    A) Management
    B) Banking
    C) Government
    D) All of the Above
    D) All of the Above
  35. A positive association between two variable. When one variable increases, the other variable increases, and when one variable decreases, the other variable decreases.
    Direct relationship
  36. A negative association between two variables. When one variable increases, the other variable decreases, and when one variable decreases the other variable increases.
    Inverse relationship
  37. The ratio of the change in the variable on the vertical axis (the rise or fall) to the change in the variable on the horizontal axis (the run).
    Slope
  38. A zero association between two variables. When one variable changes, the other variable remains unchanged.
    Independent relationship

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