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Chapter 2 Thinking Like an Economist




Question;224. Home is a country that produces two goods, pears and cellular;phones. Last year, Home produced 450 bushels of pears and 1050 cellular phones.;This year it produced 450 bushels of pears and 2000 cellular phones. Given no;other information, which of the following events could explain this change?;a.;Home;experienced increased unemployment.;b.;Home;experienced a decline in pear-producing technology.;c.;Home;experienced an improvement in cellular phone-making technology.;d.;Home;experienced a reduction in resources.;225. Indiadesh is a country that produces two goods, textiles and;computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This;year it produced 450 textiles and 1100 computers. Given no further information;which of the following events could explain this change?;a.;Indiadesh;decreased unemployment.;b.;Indiadesh;experienced an improvement in textile-making technology.;c.;Indiadesh;experienced an improvement in computer-making technology.;d.;Indiadesh;experienced a reduction in resources.;226. The field of economics is traditionally divided into two broad;subfields;a.;national;economics and international economics.;b.;consumer;economics and producer economics.;c.;private;sector economics and public sector economics.;d.;microeconomics;and macroeconomics.;227. Microeconomics is the study of;a.;how;money affects the economy.;b.;how;individual households and firms make decisions.;c.;how;government affects the economy.;d.;how the;economy as a whole works.;228. Macroeconomics is the study of;a.;individual;decision makers.;b.;international;trade.;c.;economy-wide;phenomena.;d.;markets;for large products.;229. A microeconomist ? as opposed to a macroeconomist ? might study;a.;the;effect of borrowing by the federal government on the inflation rate.;b.;the;effect of rising oil prices on employment in the airline industry.;c.;changes;in the nation?s unemployment rate over short periods of time.;d.;alternative;policies to promote higher living standards throughout the nation.;230. Which of the following areas of study typifies microeconomics as;opposed to macroeconomics?;a.;the;impact of minimum-wage laws on employment in the fast food industry;b.;the;effect of changes in household saving rates on the growth rate of national;income;c.;the;impact of faster money growth on the rate of inflation;d.;a;comparison of alternative tax policies and their respective impacts on the;rate of the nation?s economic growth;231. Which of the following would likely be studied by a microeconomist;rather than a macroeconomist?;a.;the;effect of foreign direct investment on economic growth;b.;the;effect of a sales tax on the cigarette industry;c.;the;effect of an investment tax credit on the economy?s capital stock;d.;the;effect of a war on government spending;232. A macroeconomist ? as opposed to a microeconomist ? might study;a.;the;effect of agricultural price support programs on the cotton industry;b.;the;effect on U.S. steel producers of an import quota imposed on foreign steel;c.;the;effect of an increasing inflation rate on national living standards;d.;the;effect of an increase in the price of imported coffee beans on the U.S.;coffee industry;233. Which of the following areas of study typifies macroeconomics as;opposed to microeconomics?;a.;the;effects of rent control on the availability of housing in New York City;b.;the;economic impact of tornadoes on cities and towns in Oklahoma;c.;how;tariffs on shoes affects the shoe industry;d.;the;effect on the economy of changes in the nation?s unemployment rate


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