Macroeconomics Test Review Guide

Topics: Supply and demand, Economics, Inflation Pages: 1 (365 words) Published: September 10, 2013
Scarce goods have positive market prices.
An increase in money supply causes inflation. (positive statement). •Government budget deficits are higher during recessions. When the government spends more than it collects in revenues, recessions result. (association by causation). •Macroeconomics is the study of nation and global economics without assuming individuals are rational. •Increase in the income of consumers would result in an increase in the equilibrium price of iPods. •A market allocation system leads to the increase of the quantity and quality of goods offered for sale. •First come first serve wastes resources in an attempt to be first. •Barter exchanges require double conscious of wants and involve higher transaction costs than monetary exchanges. •The double conscious of wants is eliminated by the use of money. •The law of demand states that as price increases, quantity demanded decreases. •Inferior goods are purchased during recession.

A rightward shift in the demand curve for automobiles would result from an increase in the value of household stock portfolios •Items with same input: increase in price of one leads to decrease in the supply of the other. •Decrease in equilibrium price of butter caused from a decrease in the price of margarine (complementary good) •Leftward shift in the demand curve for automobiles results from an increase in the price of steel and an input in production. •“Since a household cannot afford to keep adding indefinitely to its debt, a country cannot afford to do so either.” The fallacy of composition. •Price ceiling of $3 per gallon on gas would lead to long lines and a black market or higher secondary price for gasoline. •Minimum wage is an example of market intervention. A minimum wage is a price floor that can result in unemployment. •Market systems: command or planned economies experienced both surpluses and shortages of goods and services. •Those with the most and highest quality...
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