Chapter 3 Flashcards Preview

Macroeconomics > Chapter 3 > Flashcards

Flashcards in Chapter 3 Deck (29)
Loading flashcards...
1
Q

As more women entered the workforce:

A

household income increased and less production occurred in the home.

2
Q

What do economists view as the overall goal of a household?

A

Maximize utility.

3
Q

Over two-thirds of US personal income comes from:

A

labor earnings.

4
Q

A major advantage of a firm is its ability to:

A

to reduce transaction costs, promote division of labor, reduce transportation costs, and use expensive technology.

5
Q

Firms are assumed to:

A

maximize profits.

6
Q

Which is the most important form of business organization in terms of sales?

A

Corporation

7
Q

Transfer payments are:

A

cash transfers like welfare benefits and social security.

8
Q

The role of government is to:

A

all of these choices.

9
Q

Part of the reason for taxation is to redistribute income to those with lower incomes.

A

True

10
Q

The merchandise trade balance is the difference between the value of exported goods and imported goods.

A

True

11
Q

The price of one currency in terms of another is referred to as the:

A

exchange rate.

12
Q

Households ________, and ________.

A

supply labor, capital, land, and entrepreneurial ability to resource markets; demand goods and services from product markets

13
Q

Two key differences in households today relative to those in the 19th century are that households today have ________ and ________.

A

increased household reliance on markets for goods and services; higher rates of female employment outside the home

14
Q

Economists use the term “utility” to refer to the usefulness of a good or service, and so consequently aesthetic products like art, music, and vacations have no utility

A

False

15
Q

Which of the following represents the most valuable resource sold by most households?

A

Labor

16
Q

Which of the following best describes the percentage of personal income that households spend on consumption, as opposed to savings or taxes

A

80 percent

17
Q

Before the modern manufacturing firm evolved during the Industrial Revolution in Great Britain, entrepreneurs “put out” production to rural households in what came to be known as the cottage industry system.

A

True

18
Q

A sole proprietorship has ________, whereas a partnership has ________.

A

a single owner receiving the firm’s profit and bearing unlimited liability; multiple owners sharing the firm’s profit and bearing unlimited liability

19
Q

Advantages of the corporate structure for a firm include which of the following?

A

None of these choices are correct

20
Q

Corporations make up ________ percent of all U.S. businesses, and corporate sales make up ________ of all business sales.

A

20; 89

21
Q

As a market-based society, non-profit firms are illegal in the U.S.

A

False

22
Q

An externality is a cost or a benefit that falls on third parties and is therefore ignored by the two parties to a market transaction.

A

True

23
Q

Public goods feature rivalry in consumption, meaning that what is consumed by one is no longer available to someone else. In addition, consumption of public goods can easily be limited to paying customers

A

False

24
Q

Which of the following best describes a market failure (or market failures) that provide(s) an economic rationale for government intervention in markets?

A

All of these answers are correct.

25
Q

Which of the following is an example of regressive taxation, in which the percentage of income paid in taxes decreases as income increases?

A

U.S. payroll taxes for Social Security

26
Q

International trade occurs because the ________ cost of producing specific goods varies across countries.

A

opportunity

27
Q

The balance of payments system is the accounting record of all economic transactions between US residents and residents in the rest of the world.

A

True

28
Q

If one British pound can be exchanged for US $2.06 currently, how much currency would a British citizen need to purchase a dinner in New York that cost US $78.95?

A

38.33 pounds

29
Q

One form of trade protection that restricts the amount of imports of a particular good is called a(n):

A

quota.