Macro - 1 Unless business exactly maximizes profits and...

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1. Unless business exactly maximizes profits and consumers exactly maximize satisfaction, self-interest is NOT ruled out as economic motivation. 2. If a curve is positively sloped, there is a direct relationship between the dependent and independent variables. 3. A model does not actually describe reality. 4. A hypothesis is a statement of relationships that are not known to be true. 5. Economists can generally create controlled laboratory conditions that do not permit them to repeat laboratory experiments dealing with economic behavior. 6. You do not have to be an economist to make an economic policy. 7. Economists are generally more optimistic about today’s ability of people to solve problems than they were 150 years ago. 8. Economists do not assume that business firms maximize profits to the greatest degree possible. 9. Most economists accept the assumption of homo economicus as a way to explain the behavior of consumers and producers. 10. A nation isn’t usually on its production-possibilities curve. 11. If resources are not specialized at all, a production possibilities curve would b a straight line. 12. Opportunity cost is likely to increase for any nation. 13. Labor productivity tends to increase with increased specialization. 14. Economists do not assume that consumer and producers are more concerned with the interests of others than with their own interests. 15. The deficit in the federal budget last year was about $200 billion.
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17. Adam Smith believed that the public interest is best served by self interest harnessed to the public good, 18. Alfred Marshall argued that the economic motive of people is to achieve monetary gain. 19. Self interest as a motivation to economic activity and growth is reappearing in formerly socialist states of Eastern Europe and Asia. 20. Marxists seek to discredit homo economicus because they believe that, in a capitalist society, concentration of power in the hands of business firms leads to alienation of workers and consumers. 21. A positively sloped curve is one that slopes up or to the right. 22. A characteristic of economics is not dealing mostly with things that cannot be quantified. 23. The economist’s method is based on gathering facts, model building, and hypothesizing, but not transcendental meditation. 24. “Actions of buyers and sellers in a market environment maximizes the benefits from markets” best fits the “Invisible Hand” theory. 25. Low incomes are not a reason why we need a means of allocating resources. 26. “How should markets be made competitive?” is not a question confronting all economic societies. Chapter 2
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This note was uploaded on 03/26/2012 for the course ECO 3202 taught by Professor Telier during the Fall '08 term at FIU.

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Macro - 1 Unless business exactly maximizes profits and...

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