Macroeconomics Quiz 1

Monroe College

Student’s name: Macroeconomics Quiz 1
Class & Section:
All answers must be typewritten

1. The general concern of economics is with the study of the ( ) a. degree of competition in stock and bond markets in the economy. b. efficient use of limited productive resources to satisfy economic wants. c. issue of equality in the distribution of income and wealth among households. d. budget deficits in the domestic economy and trade deficits in the international economy.

2. The term scarcity in economics refers to the fact that ( ) a. economic wants are limited and resources are abused. b. even in the richest country some people go hungry. c. no country can produce enough products to satisfy everybody's economic wants. d. it is impossible to produce too much of any particular good or service in a market economy.

3. Are the goods that businesses offer for "free" to consumers also free to society? ( ) a. Yes, because the individual consumer does not have to pay for them. b. Yes, because the marginal benefit is greater than the marginal cost. c. No, because scarce resources were used to produce the free goods. d. No, because society does not assign a value to free goods.

4. Which is considered to be an economic resource by economists? ( ) a. Rent b. Money c. Labor d. Wages
5. Along a production possibilities curve, an increase in the production of one type of good can be accomplished only by ( ) a. decreasing the production of the other type of good. b. increasing the production of the other type of good. c. holding constant the production of the other type of good. d. decreasing the price of the other type of good.

6. Which statement best describes a command economy? ( )
a. The production of goods and services is determined primarily by markets, but the allocation of goods and services is determined primarily by government.
b. The production of goods and services is determined primarily by government, but the allocation of goods and services is determined primarily by markets. c. The production and allocation of goods and services is determined primarily through markets. d. The production and allocation of goods and services is determined primarily through government.

7. The term consumer sovereignty means that ( ) a. consumers are controlled by the actions of the marketplace. b. what is produced is ultimately determined by what consumers buy. c. there are no limits on what consumers may buy under capitalism. d. businesses produce with consumer satisfaction as their primary goal.

8. In the circular flow model, households ( ) a.buy products and resources. b.sell products and resources. c. buy products and sell resources. d. sell products and buy resources.

9. By free enterprise, we mean that ( ) a. products are provided free to those who can't afford to buy them. b.individual producers determine how to produce, but government agencies determine what will be produced. c. individuals may obtain resources, organize production, and sell the resulting output in any legal way they choose. d. individuals are free to produce those products that government agencies determine can be produced profitably.

10. Consider a barter situation where you have pens and you want pencils. To achieve your objective, there must be a(n) ( ) a. use of capital goods. b.entry and exit from the market. c. large number of sellers. d. coincidence of wants.

11. After graduating from high school, Ron Willis plans to go to Monroe college. The college tuition is $15,000 a year. But, instead of going to college, Ron could take a full-time job paying $20,000. If Ron decides to go to college, what is Ron Willis’ opportunity cost for attending for one year? ($ )

What is direct cost of attending college? ( $ )

What is his total cost of attending college? ( $ )

12. What does “Invisible Hand” mean? Use a (business) real world example to prove your answer.