Specialization makes businesses and economies more productive and benefits all.

True

False

Opportunity cost is an implicit cost associated with every choice individuals and societies make.

True

False

Cost-benefit analysis teaches us optimum choices are made at the margin where marginal benefits equal marginal costs.

True

False

If supply increases or shifts to the right along a stationary demand curve, then the equilibrium price will decrease and the equilibrium quantity will increase.

True

False

If demand decreases or shifts to the left along a stationary supply curve, then the market's equilibrium price and quantity will decrease.

True

False

National income is measured by GDP.

True

False

Unemployment is the percentage of the labor force that is unemployed.

True

False

Inflation is an increase in the average level of prices.

True

False

The four phases of the business cycle are the peak, the recession, the trough and the expansion.

True

False

Cyclical unemployment occurs if GDP is below the economy's long-run potential.

True

False

Money can be anything a society readily recognizes as having value in exchange.

True

False

Measures of the money supply are M1 and M2 with M1 being a part of M2.

True

False

Money is created when banks make loans.

True

False

A role of the U.S. Federal Reserve System is conducting monetary policy to achieve macroeconomic objectives.

True

False

According to Keynesian theory, if aggregate expenditures increase from a discretionary increase in government spending, output, employment and the average price level will increase. This is a fiscal policy used to address high unemployment when the economy is in recession.

True

False

According to the Keynesian theory, a contractionary monetary policy can be used to address the problem of high inflation.

True

False

An expansionary monetary policy will bring about a decrease in interest rates and greater spending on U.S. exports and less spending on U.S. imports from a dollar devaluation.

True

False

Economic growth is measured by an increase in output.

True

False

A source of economic growth is increases in labor productivity brought about by human capital investment.

True

False