Principles of Macroeconomics Exam
Questions With Correct Answers
An economist notices that sunspot activity is high just prior to recessions and concludes that
sunspots cause recessions. The economist has - answer✔confused association with and
causation.
Which of the following is a statement of normative economics? - answer✔The minimum wage
is good because it raises wages for the working poor.
Scarcity exists - answer✔in all countries in the world.
Which of the following would eliminate scarcity as an economic problem? - answer✔None of
these because scarcity cannot be eliminated.
Microeconomics approaches the study of economics from the viewpoint of -
answer✔individuals or specific markets.
Computer programs, or software, are an example of - answer✔capital.
A review of the performance of the U.S. economy during the 1990's is primarily the concern of -
answer✔macroeconomics.
Which of the following is not a resource? - answer✔money
Which of the following is a statement of positive economics? - answer✔The income tax system
collects a lower percentage of the incomes of the poor.
Economics is the study of - answer✔people making choices because of the problem of scarcity.
On a production possibilities curve, the opportunity cost of good X, in terms of good Y, is
represented by the: - answer✔movement along the curve.
This economy cannot currently produce 70 washers and 70 dryers because - answer✔it does not
have the resources and technology to produce that level of output.
In the following exhibit, the production possibilities curve demonstrates: - answer✔the law of
increasing opportunity costs.
The opportunity cost of an action is: - answer✔the value of the best opportunity that must be
sacrificed in order to take the action.
In the following exhibit, inefficient resource use is shown by which of the following points? -
answer✔P
Production is efficient if the economy is producing at a point - answer✔on the production
possibilities curve.
In the following exhibit, if the economy moves from point L to point M, the opportunity cost of
producing 10 more capital goods is: - answer✔15 less consumer goods.
When a production possibilities frontier is bowed outward, the opportunity cost of producing an
additional unit of a good - answer✔increases as more of the good is produced.
In the following exhibit, which of the following could have caused the production possibilities
curve of an economy to shift from the one labeled A to the one labeled B? - answer✔An
advance in technology
Which of the following will cause a movement along the supply curve? - answer✔A change in
the market price of a good, other things held constant.
An increase in the wages paid to fishermen will have what effect on the fish market equilibrium?
- answer✔Price will increase, and quantity will decrease.
The price of a good will fall when: - answer✔there is a surplus of the good.
Which of the following would shift the demand curve for autos to the right? - answer✔A fall in
the price of auto insurance.
Which of the following could cause the supply of carrots to decrease? - answer✔Fertilizer costs
increase.
If the demand for a good decreased, what would be the effect on the equilibrium price and
quantity? - answer✔Price would decrease, and quantity would decrease.
If a government-imposed price floor legally sets the price of milk above market equilibrium,
which of the following will most likely happen? - answer✔There will be a surplus of milk.
An increase in demand and a decrease in supply cause which of the following? -
answer✔Equilibrium price rises.
If a price ceiling is imposed, then: - answer✔a shortage of product will result.
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