Quiz1_Questions - PRINCIPLES OF MACROECONOMICS QUIZ#1...

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PRINCIPLES OF MACROECONOMICS QUIZ #1 – COVERING CHAPTERS 1-4 DUE BACK ON FEBRUARY 3, 2010 INSTRUCTIONS: Please answer each question to your best ability. Each question requires a short answer. Please answer on a separate sheet of paper. When you hand in your quizzes to me, we will go over the answers in class. The answer key will be available on eLearning. You will receive credit for this quiz if I see that a reasonable attempt was made at each question. Please feel free to see me at my office hours if you have any questions. PLEASE PRINT THE QUIZ AND RETURN TO ME IN CLASS NEXT MONDAY (2/1/10) 1. For each of the following, list whether the topic is microeconomic or macroeconomic in nature: (a.) The price of gasoline. (b.) The national unemployment rate. (c.) The quantity of new cars sold each year. (d.) The wage rate paid to steel workers. (e.) The amount of national output in an economy. 2. Most economists will argue that the minimum wage causes unemployment. Even politicians will recognize this when pressed. However, typically liberals will tout the benefits of the minimum wage while conservatives will decry the disruption that it causes in the labor market. Which economic objective seems to be more important for liberals and which is more important to conservatives if this general observation is correct? Which side is right? 3. Because of the quantity and quality of its resources, the U.S. has an absolute advantage in the production of many goods and services. Does this imply that the U.S. cannot benefit from trading with a developing country that has less productive ability? Why or why not? 4. The following table shows output per hour for Martha and Stewart who make gift baskets and potholders: Output per Hour Martha Stewart Gift Baskets 10 8 Potholders 20 12 What is the opportunity cost of a potholder for Martha?
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