Question

1. Which of the following would be considered more closely related to macroeconomics?

A) a firm deciding how many workers to hire.

B) a household deciding how much to spend on groceries.

C) a government economist forecasting the unemployment rate.

D) a business trying to decide how much outuput to produce.

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2. Which of the following is an example of using the scientific method with a natural experiment?

A) Measuring how long it takes a marble to fall from a ten story building.

B) Comparing plant growth with and without a soil additive.

C) Tracking the price of oil when a war in the Middle East interrupts the flow of crude oil.

D) Observing the reaction when two chemicals are mixed together.

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3. For an economist, the idea of making assumptions is regarded generally as a

A) bad idea, since doing so leads to the omission of important ideas and variables from economic models.

B) bad idea, since doing so invariably leads to data-collection problems.

C) good idea, since doing so helps to simplify the complex world and make it easier to understand.

D) good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.

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4. The goal of an economist who formulates new theories is to:

A) provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works.

B) provoke stimulating debate in scientific journals.

C) contribute to an understanding of how the world works.

D) demonstrate that economists, like other scientists, can formulate testable theories.

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5. “Prices rise when the quantity of money rises rapidly” is an example of a

A) negative economic statement.

B) positive economic statement.

C) normative economic statement.

D) statement that contradicts one of the basic principles of economics.

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6. A circular-flow diagram is a model that:

A) helps to explain how participants in the economy interact with one another.

B) helps to explain how the economy is organized.

C) incorporates all aspects of the real economy.

D) Both (a) and (b) are correct.

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7. The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

A) Households

B) Firms

C) Government

D) Markets for Factors of Production

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8. In the simple circular-flow diagram,

A) households own the factors of production.

B) households buy all the goods and services that firms produce.

C) land, labor, and capital flow from households to firms.

D) All of the above are correct.

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9. Production is efficient if the economy is producing at a point

A) on the production possibilities frontier.

B) outside the production possibilities frontier.

C) on or inside the production possibilities frontier.

D) inside the production possibilities frontier.

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10. When constructing a production possibilities frontier, which of the following assumptions is not made?

A) The economy produces only two goods or two types of goods.

B) Firms produce goods using factors of production.

C) The technology available to firms is given.

D) The quantities of the factors of production that are available are increasing over the relevant time period.

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11. Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

A) the nation is producing beyond its capacity, so inflation will occur.

B) the nation is not using all available resources or is using inferior technology or both.

C) the nation is producing an efficient combination of goods.

D) there will be a large opportunity cost if the nation tries to increase production of any good.

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12. Opportunity cost is:

A) about half of the monetary cost of a product.

B) the dollar payment for a product.

C) the benefit derived from a product.

D) the value of the best alternative forgone in making any choice.

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13. Which of the following trade-offs does the production possibilities frontier illustrate?

A) if an economy wants to increase efficiency in production, then it must sacrifice equality in consumption

B) once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other

C) for an economy to consume more of one good, it must stop consuming the other good entirely

D) for an economy to produce and consume goods, it must sacrifice environmental quality

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14. On a bowed production possibilities frontier, as you move down along the curve

A) more of one good must be given up to receive one unit of the other good.

B) the available production technology does not change.

C) the opportunity cost increases.

D) All of the above are correct.

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15. Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year, it is producing 1050 units of food and 52 machines. Which of the following events could not explain the increase in output?

A) a reduction in unemployment

B) an increase in available labor

C) an improvement in technology

D) Any of these events could explain the increase in output.

Answer 1

(1) (C)

Macroeconomics deals with economy-wide variables like GDP, interest rate and unemployment.

(2) (C)

(3) (C)

Assumptions help understand complex models by simplifying them.

(4) (A)

(5) (B)

Since this statement can be validated using data, this is a positive statement.

(6) (D)

(7) (C)

The simple model comprises only households and firms.

NOTE: As per Chegg Answering Policy, 1st 7 questions are answered.