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Principles of Macroeconomics Exam Questions With Correct Answers

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  • Macroeconomics
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  • Macroeconomics

Principles of Macroeconomics Exam Questions With Correct Answers Economics - answerstudy of how people and societies choose to allocate scarce resources Key economic ideas - answer1. Tradeoffs 2. Opportunity costs 3. Rational decisions 4. Incentives 5. Margin Explicit cost - answerrequires ...

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  • September 17, 2024
  • 5
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • Macroeconomics
  • Macroeconomics
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Principles of Macroeconomics Exam
Questions With Correct Answers


Economics - answer✔study of how people and societies choose to allocate scarce resources

Key economic ideas - answer✔1. Tradeoffs
2. Opportunity costs
3. Rational decisions
4. Incentives
5. Margin

Explicit cost - answer✔requires an outlay of cash

Implicit cost - answer✔does not require an outlay of cash

Total opportunity cost equations - answer✔TOC = Explicit costs + Implicit Costs

Marginal benefit equation - answer✔MB = change in TB / change in activity

Marginal cost equation - answer✔MC = change in TC / change in activity

Optimum is obtained when... - answer✔MC = MB

Every society much decide... - answer✔1. WHAT to produce
2. HOW to produce
3. FOR WHOM to produce
4. Now vs. Future

Economic system is... - answer✔a system in which all 4 question are answered.

Centrally-planned economies. - answer✔The government decides on the 4 questions.

Market economies. - answer✔The individuals and businesses and the interaction between the
two decide on the 4 questions.

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Mixed economies. - answer✔The government and the individuals/businesses decide on the 4
questions.

Productive efficiency. - answer✔Goods and services produced at lowest possible cost.

Allocative efficiency. - answer✔Production is consistent with consumers' preferences.

Market failures. - answer✔When market ceases to allocate resources efficiently.

Instances the government can improve market outcomes. - answer✔1. Gov't enforces property
rights (police, courts, etc.)
2. Subsidize and tax.
3. Equity (gov't steps in to make the outcomes fair).

Economic model. - answer✔Theory based on assumptions from which solutions to economic
problems ca be deduced. Highly simplified version of reality.

Key features of models. - answer✔1. Assumptions and Simplifications
2. Testable
3. Variables

Exogenous variables. - answer✔Determined outside the model (ex. income). Shifting the curve.

Endogenous variables. - answer✔Determined within the model (ex. price and quantity).
Moving along the curve.

Positive analysis. - answer✔Study of what is.
Can be tested against real world behavior.

Normative analysis. - answer✔Study of what ought to be.
Cannot be tested.

PPF. - answer✔Simple model showing maximum combinations of 2 goods/services that society
can produce given its limited resources and technology at a given point in time.

Assumptions under PPF. - answer✔1. 2 goods/services
2. Limited resources
3. Limited technology
4. One point in time.

Most common PPF graph shape. - answer✔

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