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ECON 248 (Macroeconomics) Exam Questions and Answers
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Macroeconomics ECON 248 Final ReviewChapters 1-6, 13 & 14 Answer Key
Multiple Choice Questions
Chapter 1
1. In economics, the pleasure, happiness, or satisfaction received from a product is
called:
A. marginal
cost.
B. rational
outcome.
C. status
fulfillment.
D. utility
.
2. Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least
I didn't lose any money on my financial investment." His economist friend points out
that in effect he did lose money because he could have received a 3 percent return
on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The
economist's analysis in this case incorporates the idea of:
A. opportunity
costs.
B. marginal benefits that exceed marginal
costs.
C. imperfect
information.
D. normative
economics.
3. A person should consume more of something when its marginal:
A. benefit exceeds its marginal
cost.
B. cost exceeds its marginal
benefit.
C. cost equals its marginal
benefit.
D. benefit is still
better.
,4. Economics may best be defined as the:
A. interaction between macro and micro
considerations.
B. social science concerned with how individuals, institutions, and society make
optimal choices under conditions of scarcity.
C. empirical testing of value judgments through the use of
logic.
D. study of why people are
rational.
5. The economic perspective entails:
A. irrational behavior by individuals and
institutions.
B. a comparison of marginal benefits and marginal costs in decision
making.
C. short-term but not long-term
thinking.
D. rejection of the scientific
method.
6. The assertion that "there is no free lunch" means that:
A. there are always trade-offs between economic
goals.
B. all production involves the use of scarce resources and thus the sacrifice of
alternative goods.
C. marginal analysis is used in economic
reasoning.
D. choices need not be made if behavior is
rational.
7. The process by which economists test hypotheses against facts to develop theories,
principles, and models is called:
A. the economic
perspective.
B. the scientific
method.
C. policy
economics.
D. microeconomic
s.
, 8. Ben says that "an increase in the tax on beer will raise its price." Holly argues that
"taxes should be increased on beer because college students drink too much." We
can conclude that:
A. Ben's statement is normative, but Holly's is
positive.
B. Holly's statement is normative, but Ben's is
positive.
C. Both statements are
normative.
D. Both statements are
positive.
9. The economizing problem is:
A. the need to make choices because economic wants exceed economic
means.
B. how to distribute resources equally among all members of
society.
C. that people's means often exceed their
wants.
D. that people do not know how to rationally allocate
resources.
10. The budget line shows:
A. the amount of product A that a consumer is willing to give up to obtain one more
unit of product B.
B. all possible combinations of two goods that can be purchased, given money
income and the prices of the goods.
C. the minimum amount of two goods that a consumer can purchase with a specific
money income.
D. all possible combinations of two goods that yield the same level of utility to the
consumer.
Chapter 2
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