Question

True or false questions on micro and macro economics

Answer 1

1. 

A number of years ago, a company that is now out of business disposed of its chemical waste products by spraying them on the ground. It will take the EPA millions of dollars to clean up this site. This situation is an example of an externality. 

A. 

True

B. 

False

 

2. 

A market economy is usually an efficient method of organizing economic activity.

A. 

True

B. 

False

 

3. 

The statement, "The government should step in to increase farm subsidies in times of drought," is an example of a normative economic statement. 

A. 

True

B. 

False

 

4. 

A critical part of economic modeling is to make the correct assumptions for the model. 

A. 

True

B. 

False

 

5. 

When considering two goods, two countries will benefit from trading the goods only when one country has an absolute advantage over teh other in the production of both goods. 

A. 

True

B. 

False

 

6. 

The reason trade makes everyone better off is that businesses can specialize in the things in which they can best use their resources, then trade for the things they are not so efficient at producing. 

A. 

True

B. 

False

 

7. 

For some goods and services, it would be wise for a society to produce at a level inside the production possibilities frontier. 

A. 

True

B. 

False

 

8. 

The statement, " A cut in income tax rates spurs growth in the economy." is an example of a positive economic statement. 

A. 

True

B. 

False

 

9. 

According to the table above, Country B has an absolute advantage in the production of rifles. 

A. 

True

B. 

False

 

10. 

In the table above, the opportunity cost for Country B to produce a rifle would be 18.75 pounds of butter. 

A. 

True

B. 

False

 

11. 

According to the table, Country A has a comparative advantage in the production of butter. 

A. 

True

B. 

False

 

12. 

The principle of comparative advantage is the basis for most arguments in favor of free trade. 

A. 

True

B. 

False

Answer 2

1) Micro economics deals with the allocation of resources. True

2) Micro economics studies theory of firm. True

3) Dr. Marshall is known as the father of economics. False

4) Micro economic theory assumes full employment. True

5) Micro economics suggests theories to solve the problem of inflation. False _________________________________

1) The scope of micro economics is unlimited. False

2) Macro economics deals with the study of

individual behaviour. False

3) Macro economics is different from micro

economics. True

4) Micro economics uses slicing method. True

5) Micro economics is known as Income theory. False

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