Question 1

Which of the following is an historically accurate description of real per capita growth rates?&#10;A) For the 1820-1913 period, the UK economy experienced negative growth&#10;B) Between 1820 and 1913, Bangladesh grew as rapidly as Japan&#10;C) In 1820 the US had a higher income per head than China, Japan and the UK&#10;D) By 2010 China had overtaken Japan in terms of Income per head&#10;E) Between 1913 and 2002, Japan grew faster than either the US or the UK

Accepted Answer

Japan experienced rapid economic growth, especially after World War II, leading to higher growth rates compared to the US and the UK between 1913 and 2002.

Question 2

Macroeconomics differs from microeconomics in that&#10;A) microeconomics examines strictly short run questions; macroeconomics examines only long run questions&#10;B) microeconomics examines the domestic economy only; macroeconomics examines the world&#10;C) microeconomics examines production; macroeconomics examines distribution&#10;D) microeconomics examines individual behavior; macroeconomics examines aggregate outcomes&#10;E) microeconomics examines positive issues; macroeconomics examines normative questions

Accepted Answer

Microeconomics focuses on individual economic units such as consumers, firms, and industries, while macroeconomics examines the overall functioning of the economy, including factors such as inflation, economic growth, and employment at the aggregate level. Therefore, microeconomics is concerned with individual behavior, while macroeconomics looks at aggregate outcomes.

Question 3

Which of the following is not a macroeconomic event?&#10;A) a fluctuation in interest rates&#10;B) a change in the exchange rate&#10;C) the bankruptcy of a competitive firm&#10;D) a drop in stock market prices&#10;E) a shift in monetary policy

Accepted Answer

The bankruptcy of a competitive firm is a microeconomic event as it affects the individual firm and its stakeholders, while macroeconomic events relate to the performance of the economy as a whole. A, B, D, and E all relate to macroeconomic events as they pertain to factors that impact the broader economy, such as interest rates, exchange rates, stock market prices, and monetary policy.

Question 4

Which of the following is probably the least relevant to a country's growth rate?&#10;A) infrastructure such as roads or computer networks&#10;B) the education of the workforce&#10;C) new technological inventions&#10;D) legal restrictions on capital mobility and investment&#10;E) short-term interest rates

Accepted Answer

Short-term interest rates may have some impact on economic activity, but they are generally considered to be a less significant factor in determining long-term growth rates compared to factors such as infrastructure, education, technology, and investment policies.

Question 5

Modern market economies allocate resources primarily through&#10;A) carefully planned staffing policies&#10;B) coordination among government agencies&#10;C) price signals&#10;D) long-term contracts&#10;E) internet-based bartering

Accepted Answer

Market economies allocate resources primarily through price signals, which are determined by the interaction of supply and demand in the marketplace. Prices serve as signals to producers and consumers about what goods and services are in demand, and they also provide incentives for firms to produce goods and services efficiently. While staffing policies, government coordination, long-term contracts, and internet-based bartering may all play a role in allocating resources in modern economies, they are not the primary drivers of resource allocation in market economies.

Question 6

Macroeconomics and microeconomics are complementary in that&#10;A) macroeconomics explores the context within which microeconomic decisions are made&#10;B) microeconomics takes a broader look at the issues upon which macroeconomics is more narrowly focused&#10;C) microeconomics seeks to understand the economy as it is, while macroeconomics seeks to determine how the economy ought to be designed&#10;D) microeconomics examines market-based economies, whereas macroeconomics examines command economies&#10;E) macroeconomics studies private behavior, while microeconomics studies public behavior

Accepted Answer

Macroeconomics and microeconomics are complementary because they both analyze different aspects of the same economy. Microeconomics explains how individuals and firms make decisions and interact with each other in markets, while macroeconomics explores the broader context of the economy, such as inflation, unemployment, and economic growth, which affects these micro-level decisions. Therefore, macroeconomics explores the context within which microeconomic decisions are made.

Question 7

The fundamental problem of economics is&#10;A) that resources are too scarce to satisfy all wants simultaneously&#10;B) how to balance the federal budget&#10;C) deciding how large government should be&#10;D) how to keep the unemployment rate below 4%&#10;E) that firms have no way to know what consumers want to buy

Accepted Answer

The concept of scarcity is the foundation of economics. It means that resources are limited, but wants and needs are infinite. Therefore, society must make choices about how to allocate resources to maximize their satisfaction. This leads to the central economic problem of how to efficiently allocate scarce resources to meet unlimited wants and needs.

Question 8

Which of the following is not a macroeconomic question?&#10;A) How do lower interest rates lead to economic recovery?&#10;B) Why did Japan perform so poorly in the 1990s?&#10;C) Why have stock prices fallen?&#10;D) What is the predicted market value for an initial public offering of stock?&#10;E) What is the outlook for economic growth in the US?

Accepted Answer

The predicted market value for an initial public offering of stock is a microeconomic question as it pertains to a specific company and its financial situation. The other options are macroeconomic questions as they deal with broader economic issues and trends.

Question 9

From 1965 to 1990,US economic output,adjusted for inflation,quadrupled while the population doubled. This means that output per person&#10;A) rose by a factor of 8&#10;B) fell by 50%&#10;C) doubled&#10;D) remained constant&#10;E) increased 200%

Accepted Answer

If the economic output quadrupled and the population doubled, output per person doubled. This is because the output increased at twice the rate of the population increase.

Question 10

Which of the following is not a direct concern of macroeconomists?&#10;A) interest rates&#10;B) the growth rate of output&#10;C) aggregate investment in machines and infrastructure&#10;D) pricing decisions by an individual firm&#10;E) monetary policy

Accepted Answer

Pricing decisions by an individual firm are more in the realm of microeconomics, which is concerned with the behavior of individual consumers, firms, and markets, while macroeconomics is concerned with the overall behavior of the economy, such as output, employment, and inflation. The other options (interest rates, the growth rate of output, aggregate investment, and monetary policy) are all directly related to macroeconomics.

Question 11

Suppose that everyone in the population of Country A is employed and equally productive. If the population grows by 5%,hours of work fall by 3%,and output per hour grows by 4%,then output per person,or output per capita rises by approximately

A) 1%
B) 6%
C) 12%
D) 3%
E) 7%

Accepted Answer

The answer of Suppose that everyone in the population of...

Question 12

A general definition of economics is the study of&#10;A) money&#10;B) the allocation of resources&#10;C) the distribution of income&#10;D) the production of goods&#10;E) the role of government in society

Accepted Answer

The answer of A general definition of economics is the...

Deck 1: What Is Macroeconomics