Macro Principles Exam 1

How does a normative economic statement differ from other types of economic statements?

• It relies on factual data

• It reflects a hopeful outlook

• It expresses a value judgement

• It can be empirically verified

Macroeconomics differs from microeconomics in that macroeconomics:

• Examines the behavior of individual households and firms

• Studies the decision-making processes of single economic entities

• Analyzes the economy as a whole, including inflation, unemployment, and economic growth

• Focuses exclusively on the stock market and financial investments

What fundamental question does the study of economics address?

• The allocation of limited resources

• The pursuit of wealth

• The structures of financial institutions

• The impact of price increases

Which of the following components of the scientific method is generally possible within the study of Economics?

• Repetition

• Observation

• Experimentation

• None of the above

Adbul is considering two colleges for his undergraduate degree. Based on his financial aid package, Washington college will cost $20,000 per year, and Jefferson college will cost $25,000 per year. After visiting each, he selects Washington College, but he still has one month to change his mind. Which of the following could cause him to change his mind?

• Washington College reduces its price to $18,000

• He discovers that Washington College has significantly better dining options

• He learns that Jefferson College charges $5,000 in fees that are not covered by financial aid

• He is alerted to the fact that Jefferson college has a far superior pre-med program (which is his desired major)

Which statement best reflects the treatment of opportunity costs in accounting and economics?

• Accounting recognizes opportunity costs in financial statements, while economics does not consider opportunity costs relevant

• Economics incorporates opportunity costs in its analysis, particularly through implicit costs. Traditional accounting does not include these in financial statements

• Both accounting and economics equally emphasize the importance and calculation of opportunity costs in their analyses

• Opportunity costs are considered a non-financial metric and thus are excluded from both accounting and economic analyses

Dr. Chen offers her students 10 bonus points if they attend a guest speaker. This offer of bonus points best represents what economic concept?

• Incentives

• Marginal Cost

• Circular flow

• Explicit costs

How do models that prioritize understanding over realism benefit economic analysis?

• They ensure that economic predictions are always correct

• They allow for a clearer illustration of casual relationships by assuming away less relevant details

• They are universally accepted by all economists without critique

• They provide a detailed account of every individual's behavior in the economy

What role does entrepreneurship play in the factors of production?

• Entrepreneurs primarily provide the labor for produciton processes

• Entrepreneurs organize the other factors of production and take on the risks of business

• Entrepreneurs are solely responsible for providing all the capital necessary for production

• Entrepreneurs have no significant role in the factors of production

Which of hte following best distinguishes human capital from labor

• Human capital refers to the physical strength of workers, while labor refers to the mental capabilties

• Human capital is the total number of people available for work, while labor is the skills and knowledge they possess

• Human captial refers to the skills, knowledge, and experience posessed by and individual, while labor refers to the effort used in the production of goods and services

• Human capital and labor are essentially the same, with no distinct difference between them