Lesson 2 Quiz over Chapter 2

Question 1

Macroeconomic analysis is concerned with the economic activity of specific firms and industries.

Answer 1

False

Question 2

In the circular flow model, firms…

Answer 2

sell goods and buy labor

Question 3

The society’s limited resources include land, labor, and capital.
True or False?

Answer 3

True

Question 4

In a market economy the government owns most of the property resources (land and capital).
True or False?

Answer 4

False

In a command economy, the government owns most of the property resources (land and capital).

Question 5

A positive statement is a statement of opinion.

True or False?

Answer 5

False

A positive statement is a statement which describes the world as it is.

Question 6

What is a normative statement?

example?

Answer 6

Normative statement example:

The unemployment rate of 6.8 is too high.

Question 7

The Production Possibilities Frontier is used to explain why society as a whole cannot have everything it might want.
True or False?

Answer 7

True

Choices outside the PPF are unattainable and choices inside the PPF are wasteful.

Question 8

The market economy is a method where…

Answer 8

economic decisions are decentralized.

Question 9

Allocative efficiency means…

Answer 9

that the particular mix of goods a society produces represents the combination that society most wants.

Question 10

The two kinds of markets found in the circular flow model are…

Answer 10

goods/services and labor markets