Theme 1. Introduction to Macroeconomics
Macroeconomics as the part of economics Economics studies individuals and organizations in society engaged in the (A) Production of goods and services (B) Distribution of goods and services (C) Consumption of goods and services (D) All of the above (E) None of the above.
Economics is a social science rather than a natural science because (A) One of its subjects is social security. (B) Its subject is people and how they behave. (C) Its subject is social gatherings. (D) Debates within economics last longer and are much less likely to end in a clear consensus. (E) All of the above.
Economics is most accurately described as the study of (A) Money. (B) How to make choices given limited resources with unlimited desires. (C) Financial institutions. (D) How to eliminate scarcity. (E) How firms maximize profit.
The primary functions of an economic system are to answer the questions (A) What, how, and for whom to produce. (B) When, where, and why to produce. (C) How to maximize profits and minimize time spent making things. (D) How fast, how much, and how often to produce. (E) Where does the money go and how can those in society get some.
The economic problem of what to produce refers to the decision of (A) Which goods and services and how much of each are to be produced. (B) Which goods are good for society. (C) Which goods and services to produce to maximize the rate of economic growth. (D) What combination of resources and production techniques to use. (E) All of the above.
The economic problem of how to produce refers to the decision of (A) Who should be given the authority to produce goods and services (B) How many people in the population are to be employed (C) How much of current production should go toward consumption rather than saving Which of the production techniques is to be used All of the above.
The economic problem of for whom to produce refers to the decision of (A) How to allocate economic resources (B) How many of the wants of various members of society are to be satisfied (C) How much to produce for import or export (D) How much saving should go on in the economy (E) None of the above.
Which of the following is an example of a controlled experiment? (A) Astronomers formulating the "big bang" theory of the origin of the universe by making observations through the Hubble telescope. (B) Economists analyzing the effects of an increase in the money supply by examining output, interest rates, and inflation following a large increase in the money supply. (C) Biologists modifying Darwin's original theory of evolution after examining newly found fossils. (D) Physicians testing the effects of aspirin on the incidence of heart disease by following two groups of men who differ only in their intake of aspirin. (E) All of the above.
Every choice results in a foregone best alternative/ which economists call the (A) Accounting cost. (B) Switching cost. (C) Inferior cost. (D) Average cost. (E) Opportunity cost.
In economics the term opportunity cost refers to (A) The monetary cost of a good or service. (B) The money cost of hiring an economic resource. (C) The value of a good or service forgone. (D) The money cost of providing a good or service. (E) All of the above.
All of the following are reasons why wages and/or prices may be sticky in the short run except: (A) Long-term labor contracts often set wages in advance for up to three years. (B) Many firms leave their product prices unchanged for long periods of time in order to prevent current customers from "shopping around". (C) It is costly for firms to print new price lists and advertise frequently changing prices. (D) Firms are already charging the highest prices people will pay, so there is no reason to change them.
The market in which the assumption of continuous market clearing seems to be least applicable is: (A) The stock market. (B) The market for wheat. (C) The labor market. (D) The market for government bonds. (E) The market for real estate.
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