Choose the Correct Option from the Following Macroeconomics Terms Flashcards

1. Which of the four types of economic decision makers is most important? a. firms, because they produce all goods and services in the economy b. households, because they demand goods and services and supply resources c. government, because it ultimately sets and enforces the "rules of the game" d. government, because it steps in when there is market failure e. the rest of the world, because there are over 150 countries

2. Households act as demanders when they demand a. that corporate executives and government officials be held accountable for their actions b. dividends from the stocks they hold c. interest and capital gains from the bonds they hold d. goods and services from firms and the government e. payment for the goods and services they sell to firms and governments

3. In the United States since World War II, there has been a. a dramatic increase in the population living in rural areas b. a decline in the number of women in the labor force c. a decrease in the opportunity cost of working in the home d. more specialization of production within households e. a dramatic increase in the number of married women in the labor force

4. The term "utility" means a. Satisfaction b. a low-valued good c. Productivity d. Adaptability e. Efficiency

5. Economists generally assume that a. firms act to maximize the dividends paid to stockholders b. households act to maximize their wealth c. households act to maximize utility d. firms act to maximize revenue e. both households and firms act to minimize expenditures

6. Which resource generates the largest share of the income in the United States? a. Labor b. Land c. Capital d. entrepreneurial ability e. Money

7. Which of the following is an example of an in-kind transfer? a. welfare payments b. most Social Security benefits c. unemployment compensation payments d. food stamps e. charitable contributions

8. Luigi owns and operates a small restaurant. The income he receives from the restaurant is classified as a. Saving b. proprietor's income c. wages and salaries d. rental income e. Dividends

9. Households supply four basic types of resources. They include all of the following except a. natural resources b. final goods and services c. Capital d. entrepreneurial ability e. Labor

10. Household income is spent on all of the following except one. Which is the exception? a. Services b. tax payments c. durable goods d. nondurable goods e. Dividends

11. Which of the following is an example of a durable good? a. food prepared at home b. food eaten at a restaurant c. high-fashion clothing d. binoculars e. motor oil

12. Which component of U.S. household spending has grown the most over the past ten years? a. Taxes b. Savings c. spending on services d. spending on nondurable goods e. spending on durable goods

13. A cottage industry is one that a. produces rural housing b. takes advantage of the division of labor c. uses highly specialized resources in a complex production process d. produces cottage cheese e. carries out production in workers' homes

14. Which of the following is a major advantage of the sole proprietorship? a. separation of ownership and control b. limited liability for business debt c. transferability of ownership and firm continuity over time d. ease of start-up e. ease of obtaining financing

15. Which form of business organization is the most common in the United States? a. sole proprietorship b. Partnership c. Corporation d. nonprofit organization e. S-corporation