Question 1

Which of the following is an example of a macroeconomic topic?

Accepted Answer

The causes of unemployment during a national recession.

Question 2

Which of the following best describes the ceteris paribus assumption in economic analysis?

Accepted Answer

Assuming that only one variable changes while all others remain constant.

Question 3

Which of the following statements is a normative economic statement?

Accepted Answer

The government should increase spending to reduce unemployment.

Question 4

A study finds that people who eat more vegetables tend to have lower rates of heart disease. Concluding that eating vegetables directly causes lower heart disease rates is an example of which fallacy?

Accepted Answer

Association is causation fallacy

Question 5

Suppose a country can produce either 100 units of wheat or 200 units of corn using all its resources. What is the opportunity cost of producing 1 unit of wheat?

Accepted Answer

$$2$$ units of corn

Question 6

If Country A can produce more of both cars and computers than Country B with the same resources, but Country B can produce computers at a lower opportunity cost, which country has the comparative advantage in computers?

Accepted Answer

Country B

Question 7

Which of the following best states the law of demand?

Accepted Answer

As the price of a good increases, the quantity demanded decreases, ceteris paribus.

Question 8

Which of the following would cause a rightward shift in the demand curve for electric cars?

Accepted Answer

An increase in consumer income, assuming electric cars are normal goods.

Question 9

Which of the following is NOT a determinant of supply?

Accepted Answer

Consumer tastes

Question 10

Suppose the market for oranges is in equilibrium. If a disease destroys half the orange crop, what will happen to the equilibrium price and quantity?

Accepted Answer

Price will increase, quantity will decrease.

Question 11

If the government sets a price ceiling below the equilibrium price for rental apartments, what is the most likely outcome?

Accepted Answer

A shortage of apartments.

Question 12

Which of the following would shift the supply curve for smartphones to the left?

Accepted Answer

An increase in wages paid to workers assembling smartphones.

Question 13

If both the demand and supply curves for a product shift to the right, what can we say about the new equilibrium?

Accepted Answer

Equilibrium quantity will definitely increase.

Question 14

A point inside the Production Possibilities Frontier (PPF) represents:

Accepted Answer

An inefficient use of resources.

Question 15

Which of the following would cause the PPF to shift outward?

Accepted Answer

A technological advancement in production.

Question 16

Suppose the demand for a product is given by $$Q_d = 100 - 2P$$ and the supply is given by $$Q_s = 20 + 3P. $$What is the equilibrium price?

Accepted Answer

$$P = 16$$

Question 17

Which of the following is an example of the fallacy of composition?

Accepted Answer

Assuming that what is true for one individual is true for the group.

Question 18

If the price of a substitute good increases, what happens to the demand for the original good?

Accepted Answer

It increases.

Question 19

Suppose a government imposes a price ceiling of $$\5$ on a good whose equilibrium price is $$\$$8. $$What is the likely result?

Accepted Answer

A shortage of the good.

Question 20

Which of the following best explains why the law of increasing opportunity costs exists?

Accepted Answer

Resources are specialized and not perfectly adaptable to alternative uses.

Macroeconomics Midterm 1 Study Guide: Core Concepts and Models

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