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# Macroeconomics Principles Applications and Tools

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## Quiz 2 : The Key Principles of Economics

Figure 2.2 -Figure 2.2 presents a production possibilities curve for a country that can either produce highways or provide people with medical care in a given year. The reason why the production possibilities curve is shaped as it is (bowed outward) is because inputs for healthcare and highways are:
Free
Multiple Choice

B

When people interact in markets for their own self interest, it is described as the:
Free
Multiple Choice

B

The economic reason why you voluntarily pay tuition to get into the university/college that you are in right now is because:
Free
Multiple Choice

A

Spending money on a fixed budget is an example of:
Multiple Choice
Suppose prices increase by 4% per year. What nominal percentage return on your savings account would you require to get a 1% real return?
Multiple Choice
Suppose your bank pays you 6% interest per year on your savings account, so that $100 grows to$106 over a one- year period. If prices increase by 3% per year over that time, approximately how much real value do you gain by keeping $100 in the bank for a year? Multiple Choice Answer: If a consumer can buy four pizzas for$24 and five pizzas for $25, then the marginal cost of the fifth pizza is: Multiple Choice Answer: Figure 2.1 -On the production possibilities curve in Figure 2.1 the gain from decreasing manufacturing production from 700 tons to 500 tons is: Multiple Choice Answer: Figure 2.4 -Joe runs a business and needs to decide how many hours to stay open. Figure 2.4 illustrates his marginal benefit of staying open for each additional hour. Suppose that Joe's marginal cost of staying open per hour is$40. How many hours should Joe stay open?
Multiple Choice
-Julianne runs a business and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying open for each additional hour. Suppose that Julianne's marginal benefit of staying open per hour is $3. If she is following the marginal principle, how many hours should Julianne stay open? Multiple Choice Answer: The marginal principle states that "we should increase the level of an activity as long as: Multiple Choice Answer: Recall Application 2, "Why Not Walk Up an Escalator?," to answer the following questions -According to the application, an individual would walk up the stairs to listen to a music being played if: Multiple Choice Answer: Figure 2.4 -Joe runs a business and needs to decide how many hours to stay open. Figure 2.4 illustrates his marginal benefit of staying open for each additional hour. Suppose that we observe Joe staying open 4 hours per day. If he is following the marginal principle, what must his marginal cost be? Multiple Choice Answer: Suppose your bank pays you 5% interest per year on your savings account while prices increase by 3% per year over that time. Approximately how much nominal value do you gain by keeping$100 in the bank for a year?
Multiple Choice
According to the marginal principle, an individual will do best by producing or consuming where:
Multiple Choice
Recall Application 5, "The Declining Real Minimum Wage," to answer the following questions: -According to the application, if the nominal minimum wage is unchanged while prices fall, then the real minimum wage:
Multiple Choice