macro hw 1 - hw1 Multiple Choice Identify the choice that...

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Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Economics deals primarily with the concept of a. scarcity. b. poverty. c. change. d. power. 2. Which of the following questions is not answered by the decisions that every society must make? a. What determines consumer preferences? b. What goods will be produced? c. Who will produce the goods? d. Who will consume the goods? 3. The overriding reason as to why households and societies face many decisions is that a. resources are scarce. b. goods and services are not scarce. c. incomes fluctuate with business cycles. d. people, by nature, tend to disagree. 4. Economics is the study of a. production methods. b. how society manages its scarce resources. c. how households decide who performs which tasks. d. the interaction of business and government. 5. In most societies, resources are allocated by a. a single central planner. b. a small number of central planners. c. those firms that use resources to provide goods and services. d. the combined actions of millions of households and firms. 6. The adage, "There is no such thing as a free lunch," means a. even people on welfare have to pay for food. b. the cost of living is always increasing. c. to get something we like, we usually have to give up another thing we like. d. all costs are included in the price of a product. 7. The principle that "people face tradeoffs" applies to a. individuals. b. families. c. societies. d. All of the above are correct. 8. A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between a. guns and butter. b. efficiency and equity. c. inflation and unemployment. d. work and leisure. 9. Guns and butter are used to represent the classic societal tradeoff between spending on a. durable and nondurable goods. b. imports and exports. c. national defense and consumer goods. d. law enforcement and agriculture. 10. Which of the following is true? a. Efficiency refers to the size of the economic pie; equity refers to how the pie is divided. b. Government policies usually improve upon both equity and efficiency. c. As long as the economic pie continually gets larger, no one will have to go hungry. d. Efficiency and equity can both be achieved if the economic pie is cut into equal pieces. 11. Senator Smith wants to increase taxes on people with high incomes and use the money to help the poor. Senator Jones argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that a. we should agree with Senator Smith. b. we should agree with Senator Jones. c. a good decision requires that we recognize both viewpoints. d. there are no tradeoffs between equity and efficiency. 12. When the government redistributes income from the wealthy to the poor,
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This note was uploaded on 04/02/2008 for the course ECONOMICS 103 taught by Professor Sheflin during the Spring '08 term at Rutgers.

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macro hw 1 - hw1 Multiple Choice Identify the choice that...

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