macro test 1

Question 1

what is the definition of economics?

Answer 1

the study of how society manages scarce ressources to satisfy endless needs

Question 2

what is macroeconomics

Answer 2

it is the focus on total economic activity

Question 3

what are some examples of economic activity

Answer 3

GDP, inflation, unemployment

Question 4

what is microeconomics

Answer 4

the focus on individual markets and choices

Question 5

what are some examples of markets and choices?

Answer 5

consumers, firms

Question 6

what is scarcity

Answer 6

when the resources are limited but the needs are endless

Question 7

what are some economic actors

Answer 7

households, businesses, government, workers

Question 8

what are the factors of production

Answer 8

natural resources (N), Labour (L), Physical Capital (K), Human Capital (HK), Technology (A)

Question 9

what is a trade-off

Answer 9

a balance achieved between two desirable but incompatible features

Question 10

what is an opportunity cost

Answer 10

cost the the next best alternative that is foregone when making a decision

Question 11

what is marginal thinking

Answer 11

decisions made by comparing marginal benefits and marginal costs

Question 12

what are incentives

Answer 12

factors that motivate individuals to act

Question 13

what is the definition of PPF

Answer 13

it is a graph that shows combinations of output that an economy can produce using available resources and technology

Question 14

where does efficiency point to the PPF

Answer 14

it points on it

Question 15

where does inefficiency point to the PPF

Answer 15

inside

Question 16

where does unattainable point to the PPF

Answer 16

outside

Question 17

what does the opportunity cost moving along the PPF involve

Answer 17

shifting resources between goods

Question 18

what is economic growth

Answer 18

it is an outward shift due to more resources or better technology

Question 19

what is a market?

Answer 19

a group of buyers and sellers

Question 20

what is the law of demand

Answer 20

when the quantity of goods demanded falls as prices rises (ceteris paribus)

Question 21

what is equilibrium

Answer 21

where quantity demanded equals quantity supplied

Question 22

what are shifts in demand/supply caused by?

Answer 22

factors other than prices; incomes, tastes, technology

Question 23

what is the fundamental economic problem addressed by macroeconomics?

Answer 23

scarcity of resources and how to allocate the efficiently

Question 24

what are the four main factors of production

Answer 24

1- natural resources
2- labour
3- physical capital
4- human capital

Question 25

how do markets achieve equilibirum?

Answer 25

through the interaction of supply and demand where quantity supplied equals quantity demanded

Question 26

what are positive and normative statements in economics

Answer 26

positive statements are objective and fact based, while normative statements are subjective and value based

Question 27

what role do incentives play by economics

Answer 27

they motivate individuals to make certain choices, influencing economic behavior

Question 28

why is marginal analysis important in decision-making

Answer 28

it helps compare additional benefits and costs, ensuring optimal decisions

Question 29

what does ppf stand for

Answer 29

production possibilities frontier