Macro Chapters 1 and 2 notes
Question 1 1 out of 1 points
Which of the following scenario would result in a negative slope denoted by a minus (-)
sign?
Selected
Answer:
when variable on the horizontal axis increases, the variable on the vertical
axis also decreases
Answers:
when variable on the horizontal axis increases, the variable on the vertical
axis also increases.
when variable on the horizontal axis decreases, the variable on the vertical
axis also decreases
when variable on the horizontal axis increases, the variable on the vertical
axis also decreases
none of the above
• Question 2 0 out of 1 points
Your income can vary from one month to the other. We can measure it
Selected Answer:
Answers:
• Question 3 1 out of 1 points
Which of the following is a macroeconomic question?
Selected Answer:
All of the above are macroeconomic questions.
Answers:
Should a country adopt policies to encourage personal savings?
Why do some countries grow faster than others?
Why do prices tend to increase over time?
All of the above are macroeconomic questions.
• Question 4 1 out of 1 points
Normative economics:
Selected Answer:
answers the question “What ought to be?”
Answers:
is the focus of most modern economic reasoning.
answers the question “What ought to be?”
predicts the consequences of alternative actions.
All of the above are correct.
• Question 5 1 out of 1 points
There is a positive relationship between two variable, if the two variables
Selected Answer:
move in the same direction.
Answers:
are positive.
move in opposite directions.
move in the same direction.
are negative.
• Question 6 0 out of 1 points
Which of the following is not a factor of production?
Selected Answer:
human capital
Answers:
money
human capital
physical capital
labor
• Question 7 1 out of 1 points
Economists make assumptions
Selected Answer:
to make things simpler
Answers:
to make things simpler
to show off their knowledge
to reach a definite conclusion
all of the above
• Question 8 1 out of 1 points
Which of the following is not an example of a question answered by positive
economics?
Selected Answer:
Should the government increase the minimum wage?
Answers:
How will an increase in the price of gasoline affect taxi drivers?
What fraction of an income-tax cut will be spent on consumer goods?
How will an increase in interest rates affect investment in factories?
Should the government increase the minimum wage?
• Question 9 1 out of 1 points
Ceteris paribus is the Latin expression meaning:
Selected Answer:
other variables are held fixed.
Answers:
other variables are held fixed.
let buyer beware.
think at the margin.
for every action there is an equal and opposite reaction.
• Question 10 0 out of 1 points
Refer to figure 1.1. Slope of the relationship or the wage rate shown in figure 1.1 is
Selected Answer:
$15 per hour.
Answers:
$5.15 per hour.
$10 per hour.
$13.33 per hour.
$15 per hour.
• Question 1 1 out of 1 points
Joe runs a business and needs to decide how many hours to stay open. Figure 2.2
illustrates his marginal benefit of staying open for each additional hour. Suppose that
Joe’s marginal cost of staying open per hour is $24(for all possible hours). How many
hours should Joe stay open?
Selected Answer:
6 hours
Answers:
3 hours
4 hours
5 hours
6 hours
• Question 2 0 out of 1 points
On the production possibilities curve in Figure 2.1 as agricultural production increases
by 200 tons per year from 200 tons to 400 tons and then to 600 tons, the opportunity cost
in terms of tons of manufacturing goods:
Selected Answer:
falls.
Answers:
rises.
falls.
is constant.
becomes negative.
• Question 3 0 out of 1 points
In figure 2.3, point A:
Selected Answer:
cannot be produced.
Answers:
implies unemployment of some resources.
is the optimum.
cannot be produced.
all of the above.
• Question 4 0 out of 1 points
A group of people has formed a house cleaning and yard maintenance business. The
number of houses or yards that they can clean or maintain in any given day is depicted in
Table 2.1. The opportunity cost of cleaning the first house in a day is:
Selected Answer:
20 yards.
Answers:
0 yards.
1 yard.
2 yards.
20 yards.
• Question 5 Needs Grading
List five principles of Economics (after you are done, check with the book).
Selected Answer:
Opportunity Cost
Marginal Principle
Voluntary Exchange
Diminishing Returns
Real-Normative Principle
Correct Answer:
[None]
• Question 6 1 out of 1 points
The principle that what matters to people is the real value or purchasing power of money is the
Selected Answer:
real-nominal principle.
Answers:
marginal principle.
principle of diminishing returns.
voluntary exchange principle.
real-nominal principle.
• Question 7 1 out of 1 points
According to the principle of diminishing returns, if the number of workers is increased
beyond the point of diminishing returns, then the additional worker
Selected Answer:
increases total output by less than the amount of previous workers.
Answers:
increases total output by the same amount as previous workers.
increases total output by more than the amount of previous workers.
increases total output by less than the amount of previous workers.
decreases total output.
• Question 8 1 out of 1 points
The extra benefit resulting from a small increase in an activity is called the
Selected Answer:
marginal benefit.
Answers:
opportunity cost.
marginal benefit.
marginal cost.
diminishing returns of the activity.
• Question 9 0 out of 1 points
Suppose that your tuition to attend college is $10,000 per year and you spend $4,000 per
year on room and board (Note that room and board expenditure stays same irrespective
of whether you go to college). If you were working full time, you could earn $20,000 per
year. What is your opportunity cost of attending college for one year?
Selected Answer:
$34,000
Answers:
$14,000
$24,000
$30,000
$34,000
• Question 10 1 out of 1 points
Refer to Table 2.3. The principle of diminishing returns sets in with the addition of the
________ worker.
Selected Answer:
2nd
Answers:
1st
2nd
3rd
4th
Solutions to End-of-Chapter Exercises
Chapter 1
SECTION 1.1: WHAT IS ECONOMICS?
1.1 what, how, who
1.2 natural resources, labor, physical capital, human capital, entrepreneurship
1.3 statement “a.” is TRUE
1.4 a. normative
b. positive
c. normative