MacroEconomics Questions

Factual Questions
1

Just took a Macro test and out of 40, I have a total of 7 questions I was unsure of. So Hopefully I’ll get the right answers here instead of waiting a week or so to find out my grade.

  1. The economy is the institutional structure through which:

a. individuals in a society coordinate their wants and desires
b. government allocate scarce resources
c. social and political forces allocate resources
d. economic forces are translated into political and social forces

I put a. but now I am regretting it after reading the question over several times.

  1. To engage in economic reasoning, you must compare:

a. total cost and marginal cost
b. sunk cost, total cost, and total benefit.
c. total benefit and marginal benefit.
d. marginal cost and marginal benefit.

I put b.

  1. Socialism is based on the principle that individuals should:

a. let the government meet everyone’s needs.
b. meet their own needs and not worry about the needs of others.
c. work together to meet their needs
d. compete with one another to meet their needs

I put c.

  1. Market economies are based upon:

a. individual planning and individual good will towards others
b. government planning and indivudal good will towards others
c. government planning and private property
d. individual self-interest and private property.

I put d. and am pretty sure of my answer.

  1. Globalization:

a. is decreasing in importance
b. increases competition
c. reduces the need to specialize
d. reduces productivity

I guessed b.

  1. A market demand curve is constructed from individual demand curves by:

a. taking the maximum quantity of the demand curves at each price as the market quantity demanded at that price.
b. adding quantities demanded at each price for each demand curve.
c. taking the demand curve that is the furthest to the right as the market demand curve.
d. multiplying the quantities demanded on each demand curve at each price.

This question has me thinking for a very very long time. I finally decided to guess a., even though I felt strongly about d. also

  1. If the CPI increased from 120 to 126, the rate of inflation is:

a. 4 percent
b. 5 percent
c. 6 percent.
d. 26 percent.

Right off the bat I circled c. 6 percent, but then I divided 126/120 and got 1.05 so I then decided to circle b. 5 percent…this question is really gonna bug me until I get the correct answer and the reasoning.
Well thats all of em, hopefully I got at least 5 of the 7 correct.

2
  1. The economy is the institutional structure through which:

The key here is “…allocation of scarce resources”. That’s THE term you have to use in defining econonomics. Whether it’s the government or society depends on whether you’re talking about a market or command economy. In the US it would be ©.

  1. To engage in economic reasoning, you must compare:

d. marginal cost and marginal benefit.
(not sure about this one)

  1. Socialism is based on the principle that individuals should:

c. work together to meet their needs

  1. Market economies are based upon:

d. individual self-interest and private property.

  1. Globalization:

b. increases competition

  1. A market demand curve is constructed from individual demand curves by:

a. taking the maximum quantity of the demand curves at each price as the market quantity demanded at that price.
b. adding quantities demanded at each price for each demand curve.
c. taking the demand curve that is the furthest to the right as the market demand curve.
d. multiplying the quantities demanded on each demand curve at each price.

Haven’t got a clue. Never even heard of market/individual demand curves, at least not in those terms.

  1. If the CPI increased from 120 to 126, the rate of inflation is:

c. 6%

The CPI is a percentage. Further calculation is not needed.

3

Uhh, no, it’s an index (Consumer Price Index). The rate of inflation over the named period would be (126/120*100 = ) 5 percent.

Here’s one web page that lists some historical CPI values and corresponding inflation rates. You can get from one to the other using the above math.

http://minneapolisfed.org/research/data/us/calc/hist1913.cfm

4

I agree with dutchboy on everything except the CPI question which is 5%. And number 24 is B. adding quantities demanded at each price for each demand curve.

5

I agree with KidC, except that for question 1 I think either A or C is a reasonable answer. The best answer would be a combination of the two: Individuals, acting on their needs and desires, along with political forces, allocate scarce resources.

6

And I agree too that they are poorly worded answers. Regarding question 1, “A” isn’t a reasonable answer because, as someone else said, there is no mention of allocating scarce resources. Like you said, “C” should include a reference to individuals.

7

17 is A in my book.

8

Whoops. Thanks for the correction.

9

There is no way A is correct though C is a poorly written answer as well. In socialism, the means of production are owned by the government or community, but the government doesn’t simply meet the needs of the people independent of the people’s input.