Question

Which of the following is true regarding increasing output per person?

	a.	productivity increases
	b.	living standards increase
	c.	prices rise
	d.	a and b only

A dispute between Russia and Saudi Arabia has resulted in a flood of crude oil at the same time that global oil demand has fallen as governments across the globe ordered citizens to stay home because of the coronavirus; as a result the price of oil sold

	a.	must increase
	b.	must decrease
	c.	must remain constant
	d.	may increase, decrease, or stay constant depending on the magnitude of the shifts

Markets are ______ because _______

a. efficient; allow consumers to gain at the expense of producers

b. efficient; allocate resources to where they are most highly valued

c. inefficient; raise opportunity costs

d. inefficient; require complex planning systems

which of the following statements concern a macroeconomic topic?

a. oil prices are falling sharply during the coronavirus pandemic

b. the unemployment rate is rising during the coronavirus pandemic

c. bartenders and servers, hairdressers and hotel staff have suddenly found themselves with decreased or eliminated incomes

d. after just five weeks of covid -19 recession tens of millions of Americans are suddenly without the basic necessities

Answer 1

1> d. a and b only

If the output per person rises, then people can have more to consumer, thus standard of living will rise and also the productivity rises since there supply has increased more than the increase in the number of workers.

2> b must decrease

As a result of the price war between suppliers, the supply of oil has increased and at the same time, due to Covid, the demand for oil has fallen. Thus, the price will definitely fall because of the fall in both.

3> b. efficient; allocate resources to where they are most highly valued

Since markets have allocative efficiency in terms of allocating the product to the most highly valued buyers and least cost seller, it is efficient.

4> b. the unemployment rate is rising during the coronavirus pandemic

Unemployment rate concerns macroeconomics and the government has to use monetary policy for that.