Macroeconomics

‭Chapter 1: Review Questions‬

‭1.‬‭What is the main focus of macroeconomics?‬

‭A.‬ ‭The study of individual economic units and their interactions‬ ‭B.‬ ‭The study of government policies only‬ ‭C.‬ ‭The study of international trade only‬ ‭D.‬ ‭The study of the economy as a whole‬

‭2.‬‭What does the Law of Demand state?‬

‭A.‬ ‭Higher prices lead to higher quantity demanded.‬ ‭B.‬ ‭Higher prices lead to lower quantity supplied.‬ ‭C.‬ ‭Lower prices lead to higher quantity demanded.‬ ‭D.‬ ‭Lower prices lead to higher quantity supplied.‬

‭3. What do economists call the best alternative foregone for every choice made?‬

‭A.‬ ‭Average cost‬ ‭B.‬ ‭Accounting cost‬ ‭C.‬ ‭Production cost‬ ‭D.‬ ‭Opportunity cost‬

‭4. Which of the following‬ ‭must‬ ‭exist to allow two‬‭countries to mutually beneft from specialization‬ ‭and trade?‬

‭A.‬ ‭Absolute advantage in the production of a good or service‬ ‭B.‬ ‭Absolute and comparative advantage in the production of a good or service‬ ‭C.‬ ‭Comparative advantage in the production of a good or service‬ ‭D.‬ ‭Free trade‬

‭5. A decrease in the price of coffee will‬ ‭most likely‬ ‭reduce the demand for:‬

‭A.‬ ‭Sugar‬ ‭B.‬ ‭Milk‬ ‭C.‬ ‭Tea‬ ‭D.‬ ‭Biscuits‬

‭6.‬‭Consumers‬‭expect‬‭the‬‭price‬‭of‬‭wheat‬‭to‬‭increase‬‭in‬‭the‬‭few‬‭upcoming‬‭months.‬‭What‬‭would‬‭occur‬ ‭as a result of these expectations?‬

‭A.‬ ‭The quantity demanded of wheat will increase today.‬ ‭B.‬ ‭The demand for wheat will increase today.‬ ‭C.‬ ‭The quantity demanded of wheat will decrease today.‬ ‭D.‬ ‭The demand for wheat will decrease today.‬

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