Principles of macroeconomics chapter 1 exam

The cost of something is what you give up to get it. Critical Thinking Questions A balanced federal budget and a balance of trade are considered secondary goals of macroeconomics, while growth in the standard of living for example is considered a primary goal.

Macroeconomics chapter 1 3 quiz

Households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desireable market outcomes. For the United States, this is the Federal Reserve. Government is needed to promote "efficiency" and "equity" when for some reason, the invisible hand does not function properly. The "invisible hand" might fail to ensure that economic prosperity is distributed equitably because a market economy rewards people according to their ability to produce things that other people are willing to pay for - not according to even minimal needs. People face Tradeoffs. Macroeconomics is an aggregate of what happens at the microeconomic level. How can macroeconomic policy be used to pursue these goals? Inflation is an increase in the overall level of prices in the economy. The cost of something is what you give up to get it. Welcome to Economics! What are two possible causes of a "market failure"? Rent control. What is "productivity"?

For the United States, this is the Federal Reserve. Glossary economic policies that involve government spending and taxes macroeconomics the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance.

macroeconomics chapter 1 flashcards

It probes questions like how to tell when big businesses or big labor unions are operating in a way that benefits society as a whole and when they are operating in a way that benefits their owners or members at the expense of others.

Rent control. What adverse effect results from government interference with prices?

Macroeconomics chapter 2

That ground can be divided into two parts: Microeconomics focuses on the actions of individual agents within the economy, like households, workers, and businesses; Macroeconomics looks at the economy as a whole. Government is needed to promote "efficiency" and "equity" when for some reason, the invisible hand does not function properly. Why might the "invisible hand" fail to ensure that economic prosperity is distributed equitably? Macroeconomics is an aggregate of what happens at the microeconomic level. What are the 4 economics principles of individual decision making? Would it be possible for what happens at the macro level to differ from how economic agents would react to some stimulus at the micro level? One person who sets out to study the lake might focus on specific topics: certain kinds of algae or plant life; the characteristics of particular fish or snails; or the trees surrounding the lake. Glossary economic policies that involve government spending and taxes macroeconomics the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance. What are the three main goals of macroeconomics? Sales tax. What do economists mean by "marginal changes"? Governments can sometimes improve market outcomes. What generally determines the standard of living for a country? Review Questions What is the difference between microeconomics and macroeconomics? Americans tend to expect that government can fix whatever economic problems we encounter, but to what extent is that expectation realistic?

When the government prevents prices from adjusting naturally to supply and demand, it impedes the "invisible hand's" ability to coordinate the millions of households and firms that make up the economy.

What are examples of individual economic agents?

Principle of macroeconomics chapter 2

What combination of goods and services will best fit their needs and wants, given the budget they have to spend? One person who sets out to study the lake might focus on specific topics: certain kinds of algae or plant life; the characteristics of particular fish or snails; or the trees surrounding the lake. Whether you are looking at lakes or economics, the micro and the macro insights should blend with each other. A market economy is one in which there is no central planner. How do people decide whether to work, and if so, whether to work full time or part time? Both approaches are useful, and both examine the same lake, but the viewpoints are different. What are the three economic principles that concernin how people interact with one another? Productivity is the amount of goods and serives produced from each hour of a worker's time. What adverse effect results from government interference with prices? It looks at how government spending, taxes, and regulations affect decisions about production and consumption. In the microeconomic part of this book, we will learn about the theory of consumer behavior and the theory of the firm. What are the three economic principles that describe how the economy as a whole works? Government is needed to promote "efficiency" and "equity" when for some reason, the invisible hand does not function properly.

That ground can be divided into two parts: Microeconomics focuses on the actions of individual agents within the economy, like households, workers, and businesses; Macroeconomics looks at the economy as a whole.

What are two possible causes of a "market failure"?

macroeconomics chapter 1 quiz
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Principles of Macroeconomics