Macroeconomics Test One

24 Questions | Total Attempts: 190

Settings
Please wait...
Macroeconomics Quizzes & Trivia

The multiple choice questions, each worth 2 points For each question, circle the best answer.


Questions and Answers
  • 1. 
    • A. 

      Keeping private businesses from losing money.

    • B. 

      Keeping economics professors from starving to death.

    • C. 

      Choices that are made in seeking to use scarce resources efficiently.

    • D. 

      Determining the most equitable (fair) distribution of the government's money.

  • 2. 
    • A. 

      Is an example of irrational behavior.

    • B. 

      Implies that reading should be taught through phonics rather than the whole language method.

    • C. 

      Contradicts the economic perspective.

    • D. 

      Implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

  • 3. 
    • A. 

      Allow one to reason about the relationship between price and quantity of X without the intrusion of a change in the price of Z.

    • B. 

      Allow one to focus upon micro variables by ignoring macro variables.

    • C. 

      Allow one to focus upon macro variables by ignoring micro variables.

    • D. 

      Allow one to reason about the relationship between revenues and expenses of a business.

  • 4. 
    Which of the following is a microeconomic statement?
    • A. 

      The real U.S. output increased by 2.5 percent last year.

    • B. 

      Unemployment was 6.8 percent of the U.S. labor force last year.

    • C. 

      The price of personal computers declined last year.

    • D. 

      The general price level (inflation) increased by 4 percent last year.

  • 5. 
    The problems of aggregate (at the national level) inflation and unemployment are:
    • A. 

      Major topics of macroeconomics.

    • B. 

      Not relevant to the U.S. economy

    • C. 

      Major topics of microeconomics.

    • D. 

      Peculiar to socialistic economies.

  • 6. 
    "If you leave a football game at the end of the third quarter, you will avoid traffic and get home more quickly. Therefore, everyone should leave the game early." This illustrates the:
    • A. 

      "sore loser syndrome" (loser doesn't want to see the end of the game when his team is losing.)

    • B. 

      Adverse selection problem.

    • C. 

      Fallacy of division.

    • D. 

      Fallacy of composition.

  • 7. 
    If we say that two variables are inversely related, this means that:
    • A. 

      The two graph as an upsloping line.

    • B. 

      An increase in one variable is associated with a decrease in the other.

    • C. 

      An increase in one variable is associated with an increase in the other.

    • D. 

      The resulting relationship can be portrayed by a straight line parallel to the horizontal axis.

  • 8. 
    The fundamental problem of economics is:
    • A. 

      To establish a democratic political framework for the smooth operation of the government.

    • B. 

      The establishment of prices that reflect the relative scarcities of products and resources.

    • C. 

      Dealing with the scarcity of productive resources relative to an unlimited number of economic wants.

    • D. 

      What do I do to get out of poverty?

  • 9. 
    Which of the following is real capital (as we define it in economics)?
    • A. 

      A pair of stockings

    • B. 

      A construction crane

    • C. 

      A savings account

    • D. 

      A share of IBM stock

  • 10. 
    Economics can best be defined as the study of:
    • A. 

      How to profitably invest one's income in stocks and bonds.

    • B. 

      How to use scarce productive resources efficiently.

    • C. 

      How government policies affect businesses and labor.

    • D. 

      Managing business enterprises for profit.

  • 11. 
    A production possibilities curve shows:
    • A. 

      That resources are unlimited.

    • B. 

      That people prefer one of the goods more than the other.

    • C. 

      The maximum amounts of two goods that can be produced assuming the full and efficient use of available resources.

    • D. 

      Combinations of labor only necessary to produce specific levels of output.

  • 12. 
    Opportunity cost is best defined as:
    • A. 

      The monetary price of any productive resource.

    • B. 

      The amount of labor that must be used to produce one unit of any product.

    • C. 

      The ratio of the prices of imported goods to the prices of exported goods.

    • D. 

      The amount of one product that must be given up to produce one more unit of another product.

  • 13. 
    "Allocative efficiency" refers to:
    • A. 

      The use of the least-cost method of production.

    • B. 

      The production of the product-mix most wanted by society.

    • C. 

      The full employment of all available resources.

    • D. 

      Production at some point inside of the production possibilities curve.

  • 14. 
    A demand curve:
    • A. 

      Shows the relationship between price and quantity supplied.

    • B. 

      Indicates the quantity demanded at each price in a series of prices.

    • C. 

      Graphs as an upsloping line.

    • D. 

      Shows the relationship between income and spending.

  • 15. 
    If two goods are complements (like pepperoni pizza and coke):
    • A. 

      They are consumed independently.

    • B. 

      An increase in the price of one will increase the demand for the other.

    • C. 

      A decrease in the price of one will increase the demand for the other.

    • D. 

      They are necessarily inferior goods.

  • 16. 
    • A. 

      A and B are substitute goods.

    • B. 

      A is a normal good and B is an inferior good.

    • C. 

      A is an inferior good and B is a normal good.

    • D. 

      A and B are complementary goods.

  • 17. 
    An increase in consumer incomes (like when one wins the big Fantasy Five prize) will:
    • A. 

      Increase the demand for an inferior good.

    • B. 

      Increase the demand for an inferior good.

    • C. 

      Increase the demand for a normal good.

    • D. 

      Decrease the supply of a normal good.

  • 18. 
    The law of supply:
    • A. 

      Reflects the amounts that producers will want to offer at each price in a series of prices.

    • B. 

      Is reflected in a downsloping supply curve.

    • C. 

      Was enacted by Congress to force businesses to produce goods that society wants.

    • D. 

      Reflects the income and substitution effects of a price change.

  • 19. 
    At the equilibrium price:
    • A. 

      Quantity supplied may exceed quantity demanded or vice versa.

    • B. 

      There are no pressures on price to either rise or fall.

    • C. 

      There are forces that cause price to rise.

    • D. 

      There are forces that cause price to fall.

  • 20. 
    One can say with certainty that equilibrium quantity of enchiladas bought and sold will increase when:
    • A. 

      Supply and demand both decrease.

    • B. 

      Supply increases and demand decreases.

    • C. 

      The price of the salsa to go with them will go up.

    • D. 

      Supply and demand both increase

  • 21. 
    "The 'dollar votes' of consumers ultimately determine the composition of output and the allocation of resources in a market economy." This statement best describes the concept of:
    • A. 

      Political demand.

    • B. 

      Consumer sovereignty.

    • C. 

      "supply creates its own demand."

    • D. 

      Market failure.

  • 22. 
    • A. 

      Fact that the U.S. tax system redistributes income from rich to poor.

    • B. 

      Notion that, under competition, buying and selling decisions motivated by self-interest promote the social interest.

    • C. 

      Tendency of monopolistic sellers to raise prices above competitive levels.

    • D. 

      Hands of shoplifters caught "red-handed" by video cameras at stores such as Wal-Mart.

  • 23. 
    The personal distribution of income in the United States is such that the richest fifth receives about _____ percent of total personal income.
    • A. 

      5

    • B. 

      30

    • C. 

      50

    • D. 

      95

  • 24. 
    • A. 

      The number of sellers in a market.

    • B. 

      The number of buyers in a market.

    • C. 

      The extent to which the demand curve shifts as the result of a price decline.

    • D. 

      The sensitivity of consumers to price changes.