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Unit 1 Macro Review Flashcards | StudBud
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Unit 1 Macro Review
Unit 1 Macro Review
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1
Which of the following best explains why many United States economists support free international trade?
Govt can protect United States industries while encouraging free trade
The gains to some exceed the losses to others
Workers are not affected; only businesses suffer
It is more important to reduce inflation than to reduce unemployment.
2
Fred can make 10 blankets or 5 vases. Sara can make 30 blankets or 10 vases. What's true?
Fred has both absolute advantages
Sara has both comparative advantages
Fred has both comparative advantages
Sara has both absolute advantages
3
In a mixed market economy, which of the following is LEAST likely to be provided by the government?
necessities like food and housing
a legal system
public infrastructure
national defense
4
In a command economy, who primarily decides what goods and services will be produced?
Central planners or government officials
Private entrepreneurs based on profitability
Market forces of supply and demand
Individual consumers based on their preferences
5
If demand increases and supply increases, what can you be sure of?
price will decrease
quantity will increase
price will increase
quantity will decrease
6
If the price of cookies has decreased because of an decrease in the price of flour, in market for milk
supply will increase
price will increase and quantity will decrease
demand will decrease
price and qauntity will increase
7
At a price above equilibrium, there will be...
a market shortage and upward pressure on price
a market surplus and downward pressure on price
a market shortage and downward pressure on price
a market surplus and upward pressure on price
8
If at $10, Qd=100 and Qs=50, what must be true?
Eq. quantity must be > 100
there is surplus
the quantity sold will be 100
Eq. price must be > $10
9
Alpha can make 50 cars or 50 trucks; Beta can make 20 cars or 40 trucks. Mutually beneficial terms of trade?
1 car = 1 truck
no exchange rate could be since Alpha has both Abs. Advs
1 car = 0.5 truck
1 car = 1.5 truck
10
If an increase in min. wage leads to increase income which increases demand for goods and services, this could
increase supply of workers
decrease supply of workers
decrease demand for workers
increase demand for workers
11
The "local knowledge problem" most clearly demonstrates which of the following?
why command economies struggle to allocative goods efficiently
why market economies are better at providing a social safety net
why command economies are better at providing a social safety net
why market economies struggle to allocative goods efficiently
12
Which is an example of price floor?
rent control
farm subsidies
minimum wage
antitrust legislation
13
Income has fallen and cost of building materials have increased. In market for houses..
price will be indeterminate and quantity will decrease
price will decrease and quantity will be indeterminate
price will increase and quantity will decrease
price will be decrease and quantity will decrease
14
The gov't has announced it will start taxing imports of Good X next month. How will this impact demand for Good X?
it will decrease because of the future price increase
it will increase because of the future price increase
it will increase because of the current price increase
it will not change
15
Deadweight loss is the result of...
Qd = Qs
people who want the good not getting it
the good going to rich people and not poor people
mutually beneficial exchanges not being taken advantage of
16
Movement along a production possibilities curve shows which of the following?
the trade-offs society faces
the combination of inputs required for a given output
the total amount of available resources
the relationship between the price of an input and the quantity demanded
17
If a country has both absolute advantages, it should...
not engage in trade
specialize in the good it has a comparative advantage in
produce both goods
produce neither good
18
If a market starts in equilibrium and then demand increases...
there will be a temporary shortage, leading price to increase
there will be a temporary surplus, leading price to decrease
there will be a temporary shortage, leading price to decrease
there will be a temporary surplus, leading price to increase
19
What could cause movement from A to B?
a decrease in supply
an increase in supply
an increase in consumers' income
a decrease in consumers' income
20
Which of the following would be most likely to occur if the United States placed high tariffs on imported goods?
The United States standard of living would increase.
Workers in the United States would have more jobs in the long run.
United States exports would increase.
The United States economy would become less efficient.
21
If Qs > Qd, the market...
is experiencing a surplus
does not have scarcity
is in equilibrium
is experiencing a shortage
22
If it takes Bob 4 hours to make table or 1 hour to make chair, what is opp. cost of of making a table?
4 tables
4 chairs
1 chair
1/4 of a chair
23
Which of the following will definitely cause price to increase and quantity to increase?
increase in demand and no change in supply
decrease in demand and decrease in supply
increase in demand and increase in supply
no change in demand and increase in supply
24
Rent control is an example of...
a subsidy
a tax credit
a price floor
a price ceiling
25
If the price of a good increases...
Demand will increase
Demand will decrease
Qd will decrease
Qd will increase
26
Which of the following is a key characteristic of a market economy?
Centralized control of resource allocation
Decisions based on customs and traditions
Private property rights allowing individuals to own and control resources
An emphasis on equality over efficiency
27
U.S. takes 1 hr to make cars, 2 hrs to make trucks. Canada takes 3 hrs to make cars, and 9 hrs to trucks. U.S. should
export both cars and import trucks
export both cars and trucks
import both trucks and cars
export trucks and import cars
28
A bowed-out production possibilities curve illustrates:
Increasing opportunity costs as more of one good is produced
Constant opportunity costs between two goods
Decreasing opportunity costs as more of one good is produced
The inability to produce more of one good without producing less of another
29
Price has decreased, quantity has increased. What could have caused this?
increase in demand
decrease in supply
increase in supply
decrease in demand
30
Mutually beneficial terms of trade?
1 computer = 5 steel
2 Steel = 1 Computer
1 Steel = 1 Computer
2 computers = 1 Steel
31
Economics is
best
defined as the study of...
money
finance
equity
scarcity
32
Good A and Good B are substitutes, if price of Good B increases...
Demand of good A will decrease
Demand of good A will increase
Supply of Good A will increase
Demand of Good B will decrease
33
Economic growth refers to an increase in which of the following?
Nominal gross domestic product
Government spending
Potential real gross domestic product
Consumption spending
34
If terms of trade are 1 computer for 5 phones, and Country A is importing phones...
Country A has a comparative advantage in phones
Country A must give up more than 5 phones to make a computer
Country A must give up less than 5 phones to make a computer
Country A won't benefit from trade
35
A good becomes less popular AND a new machine is invented that can produce the good more efficiently.
P will decrease; Q will decrease
P will increase; Q will be indeterminate
P will decrease; Q will be indeterminate
P will decrease; Q will increase
36
Scarcity exists because:
Resources are not renewable
People are irrational in their choices
Resources are limited while wants are unlimited
Governments fail to allocate resources efficiently
37
Income has gone up AND a good has been subsidized. If good is normal, we can expect
P is indeterminate; Q will increase
P is indeterminate; Q is indeterminate
P will increase; Q will increase
P will increase; Q is indeterminate
38
Through specialization and trade, countries can...
produce beyond their PPC
consume within their PPC
consume beyond their PPC
produce within their PPC
39
If consumers' income increases, the effect on the market for Top Ramen will be
price to increase
quantity to increase
price to decrease; quantity to decrease
price to increase; quantity to decrease
40
If Sally can make 10 scarfs or 30 mittens and Paul can make 25 scars or 50 mittens, mutually beneficial terms of trade..
1 mitten for 4 scarfs
1 scarf for 4 mittens
1 scarf for 2.5 mittens
2 scarfs for 1 mitten
41
Alpha can make 50 cars or 50 trucks; Beta can make 20 cars or 40 trucks. What are their opp costs of making 1 car?
Alpha: 1 truck; Beta: 1 truck
Alpha: 1 truck; Beta: 1/2 truck
Alpha: 2 truck; Beta: 1 truck
Alpha: 1 truck; Beta: 2 trucks
42
Which of the following changes could cause both the price and quantity of a good to increase?
a decrease in demand
a decrease in supply
an increase in demand
an increase in supply
43
If wages of workers who make widgets goes up, in market for widgets
price will increase; quantity will decrease
price will decrease; quantity will increase
price will increase; quantity will increase
price will decrease; quantity will decrease
44
Which of the following is NOT one of the problems that could be caused by a price ceiling?
the good will be more expensive than at equilibrium
there can be pressure towards black market activity
there can be downward pressure on the quality of the good
they can cause long lines that can cost people their time
45
If price of cheese increases AND price of burgers increases, effect on market for pizza will be:
decrease in P; indeterminate effect on Q
indeterminate effect on P; increase on Q
indeterminate effect on P; decrease on Q
increase in P; indeterminate effect on Q
46
The opportunity cost of attending college includes all of the following EXCEPT
the cost of food and housing
The time spent studying rather than enjoying leisure activities.
The wages you could have earned working full-time instead
The tuition and fees paid for classes
47
A price ceiling below equilibrium...
will cause a market surplus
will increase demand
will cause a market shortage
have no effect
48
Putting a price ceiling above the equilibrium price will
have no effect
create a market shortage
create a market surplus
increase demand
49
Allocative efficiency means...
MB is at its max
CS = PS
total surplus is at its max
everyone who wants the good receives the good
50
If there is a binding price ceiling, as producers become more flexible over time, economists expect
the size of a shortage to decrease
the size of a surplus to increase
the size of a surplus to decrease
the size of a shortage to increase
