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42 terms

Macroeconomics- Exam 1

Review for Exam 1 (excluding #17,18, 32, 33, 35, 36, 42, 43, due to graphs and/or tables)
STUDY
PLAY
Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if:
The marginal benefit to the book is greater than its marginal cost
Comparing marginal costs with marginal benefits is an essential element of:
The economic perspective
Which question is an example of a microeconomic question?
Will the merger of two airlines likely lead to higher airline ticket prices?
Which is the Primary focus of study in macroeconomics?
The national economy
Wages and salaries constitute about what proportion of total income?
71 percent
A durable good is a product that:
Has an expected life of 3 years or more
The statement that "what this nation needs to promote economic growth is a major tax cut" is an example of:
A normative economic statement
Which would be a positive economic statement?
Bankers are now charging higher interest rates on credit cards to cover the increased cost of loaning funds to consumers
The economizing problem for individuals is that:
Economic wants are greater than economic means
The basic economic problem for society is the combined existence of:
Scarce economic resources and unlimited economic wants
A group of firms that produce the same or similar products is:
An industry
Which statement best describes a command economy?
The production and allocation of goods and services is determined primarily through government
Which is a key feature of the market system?
The right to own private property and control resource use
Which condition will encourage competition?
The freedom of sellers and buyers to enter or exit an industry
Of all business enterprises in the United States, corporations constitute approximately:
20 percent and account for 84 percent of all business sales
The personal distribution of income refers to the:
Division of the nation's money income among individual households
Which is an example of a positive externality?
A flood control dam that provide a recreational lake
The development of the Internet and e-mail to replace the regular mail services in many cases would be an example of:
Creative destruction
Which best describes the "invisible hand" concept?
The desires of producers and resource suppliers to further their own self interest will automatically promote the social interest
The influential book written by Adam Smith was:
The Wealth of Nations
The principal-agent problem in corporations arises from:
A conflict of interest between corporate executives who manage the firm and stockholders who own the firm
Which is true of an economy which operates entirely through central planning?
Individual economic performance is reduced by the absence of the profit motive
Economists would classify all the following as land except:
A hydroelectric dam
Which is not considered to be an economic resource?
Money
A nation that devotes more of its resources to capital investment is likely to:
Cause its production possibilities curve to shift outward
The law of demand states that:
Price and quantity demanded are inversely related
A market:
Is an institution that brings together buyers and sellers
If two goods are complements:
A decrease in the price of one will increase the demand for the other
The demand curve for a product might shift as the result of a change in:
Consumer tastes, consumer incomes, the prices of related goods
The term quantity demanded:
Refers to the amount of a product that will be purchased at some specific price
The law of supply indicates that:
Producers will offer more of a product at high prices than they will at low prices
The two general types of economic systems that exist today are:
Market systems and command systems
In economics, the pleasure, happiness, or satisfaction received from a product is called:
Utility
Which is a determinant of supply?
Technology
All of the following are assumed to be constant when the supply curve for a product is drawn, except the:
Price of the product
Suppose that a particular good is characterized by rivalry and excludability. We can conclude that:
It is a private good
Is it reasonable that snow removal on streets is a service often provided by local governments?
Yes, private companies cannot afford to have all the equipment sitting idle through the other three seasons
Which is an example of negative externality?
A neighbor who plays loud music and makes a lot of noise
Which of the following is a government transfer payment?
Unemployment compensation
If government receives tax revenues primarily from middle- and upper- income groups and provides transfer payments primarily to lower-income groups, the result is likely to be:
A more equal distribution of income
Which is not an example of externality?
The rise in the price of gasoline because of the higher crude oil prices
If two goods are close substitutes:
An increase in the price of one will increase the demand for the other