Macroeconomics Part 1

In economics, scarcity means that:

• Resources will never run out.

• The world is rapidly running out of resources.

• There is a finite amount of resources.

• There are not enough resources to go around.

What is the primary difference between microeconomics and macroeconomics?

• Microeconomics looks at scarcity for individuals, while macroeconomics looks at it for entire companies.

• Microeconomics looks at scarcity for companies, while macroeconomics looks at it for entire economies.

• Microeconomics looks at utility, while macroeconomics examines scarcity.

• Microeconomics looks at scarcity for non-profit groups, while macroeconomics looks at its effect on for-profit groups.

What are the factors of production?

• Labor and investment.

• Investments and capital.

• Land, labor, and income.

• Land, labor, capital, and entrepreneurship.

What does the circular flow model of the economy illustrate?

• Injections and leakages that take place in the economy.

• How fast the economy grew during the previous ten years.

• The price of every product and service.

• How households pay rent to the government.

When savings leaks out of the circular flow model, what happens to it?

• It flows to the government.

• It flows to borrowers who then inject it back into the economy.

• Savings does not leak out of the circular flow model.

• It shrinks the size of the economy.

Which of the following is an injection into the circular flow model?

• Government taxes

• Savings

• Imports

• Exports

Which of the following statements is true regarding the relationships in a market economy?

• Businesses pay wages, interest, and profits to households in exchange for use of their factors of production.

• Governments pay wages, rent, interest, and profits to firms who buy physical capital from households.

• Households pay wages, rent, interest, and profits to business in exchange for their factors of production.

• Government buys goods and services from households in exchange for taxes.

Which of the following is NOT a valid exchange medium for factors of production?

• Profit

• Wages

• Imports

• Rent

What are the two methods economists use to measure Gross Domestic Product (GDP)?

• The earnings and depreciation approach.

• The receipts and payments method.

• The income and expenditure approach.

• The nominal and the actual methods.

When economists estimate Gross Domestic Product using the income approach, which types of income are included?

• Profit, depreciation, and interest.

• Wages, interest, and taxes.

• Profit, wages, interest, and land.

• Rent, wages, interest, and profit.