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32 terms

MacEcon Final Review

Which of the following would an economist classify as capital?
a lawyer's personal computer
the expression "there is no such thing as a free lunch" means that
even if it has a price of zero, a good or service has a cost
In macroeconomics, we analyze
the overall performance of the economy as a whole
The assumption of rational self-interest means that the economic decision makers
make reasonable decisions based on their expectations of results
Your friend notices that U.S. auto production and U.S. Population growth have moved together over several decades. he reasons that one way to slow population growth if for the government to order the auto makers to cut back on production. You gently point out to him that he
has mistakenly inferrred causation from observed correlation
Sunk costs
should not be considered when making economic decisions
The law of comparitive advantage states that the person who should produce a good is the person who
has the lowest opportunity cost of producing that good
What would the income effect of a price change be greatest on
the highest priced item
Which of the following is the best example of substitutes
hiking botts and athletic shoes
two goods are considered substitutes only if an
increase in the price of one leads to an increaese in demand for the other
An increase in the demand for peanut butter could be cause by an
decrease in the price of bread
Assume that corn and soybeands are alternatives which could be grown by most farmers. A rise in the price of corn will
decrease the supply of soybeans
Which of the following is correst when a price floor is set above the equilibrium price
quantity supplied is equal to quantity demanded at the set price
In terms of the numbers of firms in the U.S. economy, the most common type of firm is the
sole proprietership
When the soical cost of production is greater than the private cost, we have a
negative externality
Which of the following accounts for he largest source of revenue for the federal government?
personal income tax (out of sales tax, federal property tax, corporate income tax, and borrowing)
A recession is a period during which
employment, production and income decreaes
As the U.S. price level DECREASES, the aggregate quantity of US output demanded
increases because US products become more expensive relative to foreign products
The Keynesian approach to government economic policy
highlighted the role of aggregate demand
The Keynesian approach to fiscal policy calls for
tax cuts during a recession
In the 1960's, government policy makers thought they could
use taxation and government spending to fine-tune the economy
The resource most commonly used to measure productivity is
A decrease in the capital-labor ratio means
lower labor productivity because the labor is working with relatively less capital
If per capita GDP growth exceeds labor productivity growth
employment must be growing faster than the population
In order for a society to have a rising standard of living, output per worker must grow
faster than the population growth rate
The SLOWDOWN of labor productivity in the US
has also been experienced by other developed nations in Europe
Which of the following best describes an intermediate good
It helps to produce another good
Which of the following is not considered a component of government purchases in calculating GDP
unemployment compensation payments
Use the following data to calculate GDP: Consumption = 2,000; gross investment = 600, government purchases = 500; net exports = -40, transfer payments = 340
GDP = $3060
Which of the following is an injection into the circular flow
exports (out of consumption, taxes, savigns, and government borrowing)
A problem measuring GDP is that
the value of service output often fails to reflect improvements in the speed or quality of service
You could determine the value of the GDP price index if you knew
current GDP at current and base-year prices