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Macro Final Exam With Questions And Correct Answers Latest Version
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Macro Final Exam With Questions And Correct Answers Latest Version
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Macro Final Exam With Questions AndCorrect Answers Latest Version
Economics Answer: the study of how humans make decisions in the face of scarcity
Scarcity Answer: means that human wants for goods, services and resources exceed what is
available. Resources, such as labor, tools, land, and raw materials are necessary to produce the goods
and services we want but they exist in limited supply.
Microeconomics Answer: focuses on the actions of individual agents within the economy, like
households, workers, and businesses
Macroeconomics Answer: looks at the economy as a whole. It focuses on broad issues such as
growth of production, the number of unemployed people, the inflationary increase in prices,
government deficits, and levels of exports and imports
Economic Model Answer: - a theoretical construct representing economic processes by a set of
variables and a set of logical and/or quantitative relationships between them.
- a simplified, often mathematical, framework designed to illustrate complex processes
Circular Flow Diagram Answer: shows how households and firms interact in the goods and services
market, and in the labor market. The direction of the arrows shows that in the goods and services
market, households receive goods and services and pay firms for them. In the labor market, households
provide labor and receive payment from firms through wages, salaries, and benefits.
Division of labor Answer: means that the way a good or service is produced is divided into a number
of tasks that are performed by different workers, instead of all the tasks being done by the same person.
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,Specialization Answer: in a particular small job allows workers to focus on the parts of the
production process where they have an advantage.
Exports Answer: international trade is a good or service produced in one country that is bought by
someone in another country
Imports Answer: defined as purchases of good or services by a domestic economy from a foreign
economy
GDP Answer: measures what share of a country's total economic production is sold in other
countries
The size of total production in an economy is measured by
Command vs Market Economy Answer: - A command economy is one in which a central authority
decides on supply and demand issues. Market economies are decentralized
- Market economies are based on private enterprise: the means of production (resources and
businesses) are owned and operated by private individuals or groups of private individuals. Businesses
supply goods and services based on demand. (In a command economy, by contrast, resources and
businesses are owned by the government.)
Microeconomics vs. Macroeconomics Answer: The microeconomic perspective focuses on parts of
the economy: individuals, firms, and industries. The macroeconomic perspective looks at the economy
as a whole, focusing on goals like growth in the standard of living, unemployment, and inflation.
Budget Constraint Answer: represents all the combinations of goods and services that a consumer
may purchase given current prices within his or her given income
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, Invisible Hand Answer: suggests the remarkable possibility that broader social good can emerge
from selfish individual actions.
Opportunity Cost Answer: - to indicate what must be given up to obtain something that is desired
- the cost of one item is the lost opportunity to do or consume something else
Marginal Analysis Answer: which means comparing the benefits and costs of choosing a little more
or a little less of a good.
law of diminishing marginal utility Answer: which means that as a person receives more of a good,
the additional (or marginal) utility from each additional unit of the good declines
law of Diminishing Returns Answer: which holds that as additional increments of resources are
added to a certain purpose, the marginal benefit from those additional increments will decline
Normative Statement Answer: which describe how the world should be
Positive Statement Answer: which describe the world as it is
Production possibilities frontier Answer: defines the set of choices society faces for the
combinations of goods and services it can produce given the resources available.
comparative advantage Answer: the ability of an individual or group to carry out a particular
economic activity (such as making a specific product) more efficiently than another activity.
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