question
Increasing opportunity cost along a bowed out production possibilities frontier occurs because
A) of inefficient production.
B) of ineffective management by entrepreneurs.
C) some factors of production are not equally suited to producing both goods or services.
D) of the scarcity of factors of production.
A) of inefficient production.
B) of ineffective management by entrepreneurs.
C) some factors of production are not equally suited to producing both goods or services.
D) of the scarcity of factors of production.
answer
C
question
For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries?
A) Switzerland has the comparative advantage in chocolate. B) Switzerland has the comparative advantage in watches. C) Germany has the comparative advantage in watches and chocolate.
A) Switzerland has the comparative advantage in chocolate. B) Switzerland has the comparative advantage in watches. C) Germany has the comparative advantage in watches and chocolate.
answer
B
question
Which of the following will not shift the demand curve for a good?
A) an increase in population
B) an increase in the price of the good
C) a decrease in the price of a substitute good
D) an increase in consumer incomes
A) an increase in population
B) an increase in the price of the good
C) a decrease in the price of a substitute good
D) an increase in consumer incomes
answer
B
question
The terms of trade refers to
A) the rules and regulations that countries must adhere to when trading.
B) the ratio at which a country can trade its exports for imports from other countries.
C) the role of the government in overseeing international trade.
D) a legal document that specifies the trade quantities agreed to by two countries.
A) the rules and regulations that countries must adhere to when trading.
B) the ratio at which a country can trade its exports for imports from other countries.
C) the role of the government in overseeing international trade.
D) a legal document that specifies the trade quantities agreed to by two countries.
answer
B
question
Which of the following statements is false?
A) Not all individuals in both countries are made better off as a result of international trade.
B) Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall.
C) Although some individuals may not be made better off as a result of international trade, both countries may be made better off overall.
D) Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.
A) Not all individuals in both countries are made better off as a result of international trade.
B) Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall.
C) Although some individuals may not be made better off as a result of international trade, both countries may be made better off overall.
D) Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.
answer
B
question
What is the big innovation in the video that transformed international trade?
A. Amazon
B. hybrid vehicles
C. bar codes
D. shipping containers
A. Amazon
B. hybrid vehicles
C. bar codes
D. shipping containers
answer
D
question
In the market for coffee, what will happen if there is a fungus that damages the crop?
A. supply will shift left, and price will increase
B. supply will shift right, and price will increase
C. supply will shift left, and price will decrease
D. demand will shift left, and price will increase
A. supply will shift left, and price will increase
B. supply will shift right, and price will increase
C. supply will shift left, and price will decrease
D. demand will shift left, and price will increase
answer
A
question
You decided to try making your own pizza for your friends. What counts in GDP?
A. The value of the ingredients purchased and natural gas or electricity used to produce the pizza
B. The value of the finished product based on restaurant prices
C. None of it counts because you made it at home
A. The value of the ingredients purchased and natural gas or electricity used to produce the pizza
B. The value of the finished product based on restaurant prices
C. None of it counts because you made it at home
answer
A
question
The largest category of expenditures in the US, by far, is:
A. Consumption
B. Investment
C. Government spending
D. Net exports
A. Consumption
B. Investment
C. Government spending
D. Net exports
answer
A
question
In which measure would we include the value of production of a Swiss-owned watch factory located in Pennsylvania?
A. Swiss GDP and Swiss GNP
B. US GDP and US GNP
C. Swiss GDP and US GNP
D. US GDP and Swiss GNP
A. Swiss GDP and Swiss GNP
B. US GDP and US GNP
C. Swiss GDP and US GNP
D. US GDP and Swiss GNP
answer
D
question
Using the expenditure approach, what is the formula for GDP?
A. GDP=Y+I+C+(X-M)
B. GDP=Y+I+C+NX
C. GDP=C+I+G+NX
D. GDP=C+I+G+(X+M)
A. GDP=Y+I+C+(X-M)
B. GDP=Y+I+C+NX
C. GDP=C+I+G+NX
D. GDP=C+I+G+(X+M)
answer
C
question
You have been attending college for the last four years, and are focused solely on your studies. You
would be classified as:
A. discouraged worker
B. unemployed
C. employed
D. not in the labor force
would be classified as:
A. discouraged worker
B. unemployed
C. employed
D. not in the labor force
answer
D
question
The formula for the unemployment rate is: _ *100
A. unemployed/(employed+unemployed)
B. unemployed/employed
C. unemployed/(noninstitutionalized population
A. unemployed/(employed+unemployed)
B. unemployed/employed
C. unemployed/(noninstitutionalized population
answer
A
question
The point on a business cycle when real GDP stops falling and begins rising is called a(n):
A. trough
B. recession
C. peak
D. expansion
A. trough
B. recession
C. peak
D. expansion
answer
A
question
Which of the following statements is true of inflation?
A. It refers to a decrease in the general price level in an economy.
B. It refers to a rise in the price level of gasoline.
C. It refers to a constant general price level in an economy. D. It refers to an increase in the average level of prices.
A. It refers to a decrease in the general price level in an economy.
B. It refers to a rise in the price level of gasoline.
C. It refers to a constant general price level in an economy. D. It refers to an increase in the average level of prices.
answer
D
question
The basic concern of economics is to:
A) keep business firms from losing money.
B) prove that capitalism is better than socialism.
C) study the choices people make.
D) use unlimited resources to produce goods and services to satisfy limited wants.
A) keep business firms from losing money.
B) prove that capitalism is better than socialism.
C) study the choices people make.
D) use unlimited resources to produce goods and services to satisfy limited wants.
answer
C
question
Economics is a:
A) social science that studies goods with no alternative uses.
B) natural science that studies goods with no alternative uses.
C) social science concerned chiefly with how people choose among alternatives.
D) social science concerned chiefly with reasons why society has unlimited resources.
A) social science that studies goods with no alternative uses.
B) natural science that studies goods with no alternative uses.
C) social science concerned chiefly with how people choose among alternatives.
D) social science concerned chiefly with reasons why society has unlimited resources.
answer
C
question
When we are forced to make choices we are facing the concept of:
A) ceteris paribus.
B) free goods.
C) scarcity.
D) the margin.
A) ceteris paribus.
B) free goods.
C) scarcity.
D) the margin.
answer
C
question
Scarcity exists when:
A) a choice must be made among two or more alternatives. B) we face the notion of "all other things unchanged."
C) countries and people find themselves facing poverty.
D) the notions of normative economics come into play.
A) a choice must be made among two or more alternatives. B) we face the notion of "all other things unchanged."
C) countries and people find themselves facing poverty.
D) the notions of normative economics come into play.
answer
A
question
Scarcity in economics means:
A) not having sufficient resources to produce all the goods and services we want.
B) the wants of people are limited.
C) there must be poor people in rich countries.
D) economists are clearly not doing their jobs.
A) not having sufficient resources to produce all the goods and services we want.
B) the wants of people are limited.
C) there must be poor people in rich countries.
D) economists are clearly not doing their jobs.
answer
A
question
A tradeoff between two economic goals means that:
A) if achievement of one increases, then achievement of the other must increase.
B) if achievement of one decreases, then achievement of the other must decrease.
C) if you achieve more of one, you will achieve less of the other.
D) the goals are fully compatible.
A) if achievement of one increases, then achievement of the other must increase.
B) if achievement of one decreases, then achievement of the other must decrease.
C) if you achieve more of one, you will achieve less of the other.
D) the goals are fully compatible.
answer
C
question
The problem of determining what goods and services society should produce:
A) exists because we can produce more than we need or want.
B) exists because there are not enough resources to provide all the goods and services that people want to purchase.
C) would not exist if all goods and services were scarce.
D) would not exist if government owned all of the resources.
A) exists because we can produce more than we need or want.
B) exists because there are not enough resources to provide all the goods and services that people want to purchase.
C) would not exist if all goods and services were scarce.
D) would not exist if government owned all of the resources.
answer
B
question
The fundamental economic questions that every economic system must answer are:
A) what, how, and for whom.
B) what, why, and for whom.
C) when, why, and for whom.
D) how, when, and how much.
A) what, how, and for whom.
B) what, why, and for whom.
C) when, why, and for whom.
D) how, when, and how much.
answer
A
question
An answer to the question "How are goods produced?" determines:
A) who receives the goods that are produced.
B) how tastes and preferences are determined.
C) how resources are combined in the production of goods.
D) the types and quantities of goods and services produced.
A) who receives the goods that are produced.
B) how tastes and preferences are determined.
C) how resources are combined in the production of goods.
D) the types and quantities of goods and services produced.
answer
C
question
Many disagreements among economists result because:
A) economists deal only with positive economics.
B) economists sometimes make normative judgments.
C) economics is a social science.
D) economics deals so much with theories and models.
A) economists deal only with positive economics.
B) economists sometimes make normative judgments.
C) economics is a social science.
D) economics deals so much with theories and models.
answer
B
question
Economists concerned about economy-wide trends in the unemployment of labor, the rate of inflation, and the level of economic production are studying:
A) microeconomics.
B) macroeconomics.
C) specific units or parts of the economy.
D) the "trees" of economic behavior, rather than the "forest."
A) microeconomics.
B) macroeconomics.
C) specific units or parts of the economy.
D) the "trees" of economic behavior, rather than the "forest."
answer
B
question
The three fundamental economic questions of what, how, and for whom:
A) exist because of scarcity.
B) are much more serious in a socialist system.
C) are not serious in a capitalistic system.
D) are not relevant in the industrialized world of today.
A) exist because of scarcity.
B) are much more serious in a socialist system.
C) are not serious in a capitalistic system.
D) are not relevant in the industrialized world of today.
answer
A
question
A factor of production that is produced in order to produce something else is called:
A) money. B) labor. C) technology. D) capital.
A) money. B) labor. C) technology. D) capital.
answer
D
question
The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:
A) labor and a natural resource. B) labor and capital. C) a natural resource and capital. D) a natural resource and entrepreneurship.
A) labor and a natural resource. B) labor and capital. C) a natural resource and capital. D) a natural resource and entrepreneurship.
answer
C
question
An economy is said to have a comparative advantage in producing a particular good if it: A) can produce more of all goods than another economy. B) can produce less of all goods than another economy. C) has the highest cost for producing that good. D) has the lowest cost for producing that good.
answer
D
question
Trade can be beneficial to an economy because: A) it results in a more efficient use of the combined resources of some of the trading
countries, even though it reduces efficiency in others. B) more goods and services can be obtained at lower opportunity cost. C) it prevents specialization in those activities in which countries have a comparative advantage. D) It prevents unemployment.
countries, even though it reduces efficiency in others. B) more goods and services can be obtained at lower opportunity cost. C) it prevents specialization in those activities in which countries have a comparative advantage. D) It prevents unemployment.
answer
B
question
Technological improvements will:
A) leave the production possibilities curve unchanged. B) shift the production possibilities curve inward. C) shift the production possibilities curve to outward. D) necessarily lead to increased unemployment.
A) leave the production possibilities curve unchanged. B) shift the production possibilities curve inward. C) shift the production possibilities curve to outward. D) necessarily lead to increased unemployment.
answer
C
question
If the opportunity costs of production for two goods is different between two countries, then A) Trade cannot benefit either country. B) Only one country can be made better off by trade C) Mutually beneficial trade is possible D) Trade will only benefit both countries if one can lower its opportunity costs
answer
C
question
1) A negative relationship between the quantity demanded and price is called the law of ______. A) demand B) diminishing marginal returns C) market clearing D) supply
answer
A
question
2) The primary difference between a change in demand and a change in the quantity demanded is:
A) a change in demand is a movement along the demand curve, and a change in quantity demanded is a shift in the demand curve.
B) a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.
C) both a change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions.
D) both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions.
A) a change in demand is a movement along the demand curve, and a change in quantity demanded is a shift in the demand curve.
B) a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve.
C) both a change in quantity demanded and a change in demand are shifts in the demand curve, only in different directions.
D) both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions.
answer
B
question
A shift in the demand curve to the left, all other things unchanged: A) will cause the supply curve to shift to the left, too. B) will cause a movement upward along the supply curve and a higher equilibrium price. C) will cause a movement downward along the supply curve and a lower equilibrium quantity. D) will result in a lower equilibrium price and greater equilibrium quantity.
answer
C
question
Supply is best defined as the: A) relationship between the quantity of a good or service buyers are able to purchase, all other things unchanged. B) relationship between the quantity of a good or service buyers are willing to purchase, all other things unchanged. C) relationship between the quantity of a good or service sellers are willing to offer for sale and various prices, all other things unchanged. D) quantity of a good or service sellers are willing to offer for sale at a specific price, all other things unchanged.
answer
C
question
What is the difference between a shortage and scarcity? A) Scarcity will always exist because choices must be made, but a shortage will only exist if the price is kept below the equilibrium level. B) Scarcity is a result of two or more alternative uses and will always exist, and quantities of supply and demand adjusting to flexible prices will create shortages. C) A surplus will exist when a good is scarce; a shortage merely implies that there isn't as much of something as people would like, which is nearly always the case. D) There is no distinction between the two. They are the same thing
answer
A
question
Which of the following is counted as consumption expenditure? A) A person buying a government bond B) A person buying a toaster from your neighbor in a garage sale C) A firm renting a two-storied building D) A person buying a new car
answer
D
question
For computing GDP, the official measure of the value of all goods produced during a period for use in the production of other goods is called: A) personal investment expenditure. B) a capital consumption allowance. C) a transfer payment. D) gross private domestic investment.
answer
D
question
In the calculation of GDP, the value of a new house constructed by a firm is included in: A) personal consumption expenditures. B) personal saving. C) the depreciation of capital. D) private investment
answer
D
question
Social Security payments to U.S. citizens are considered: A) transfer payments and are included in GDP. B) transfer payments and are not included in GDP. C) income and are included in GDP. D) income and are not included in GDP.
answer
B
question
The gross domestic product of an economy is defined as the: A) total value of all industrial goods produced and sold during a given period. B) total value of all final goods and services produced during a given period. C) value of all noneconomic transactions made among consumers during a particular period. D) value of all non-monetary transactions between consumers and firms during a given period.
answer
B
question
he economy in a particular country is booming. Real GDP is growing at a rate of 6% per year, well above the average growth rate. Under these circumstances, which of the following types of unemployment is most likely to be the lowest? A) Frictional unemployment B) Cyclical unemployment C) Structural unemployment D) Involuntary unemployment
answer
B
question
Which of the following reduces the duration of frictional unemployment? A) Subsidizing research and development in new areas of science and technology B) Increasing the level of social security contributions from firms C) Establishing employment agencies which give out information about job vacancies D) Establishing labor unions which will protect workers from being laid off
answer
C
question
The natural rate of unemployment: A) reduces during recessions. B) is the same as cyclical unemployment. C) includes frictional and structural unemployment. D) is the level where the quantity of labor demanded is more than the quantity of labor supplied.
answer
C
question
Consider the following scenario: In January, 8 million people were seeking jobs but did not succeed. In February, 2 million of these people gave up and stopped looking for work. Holding all else constant, what happened to the unemployment rate in February? A) It increased. B) It decreased. C) It did not change. D) The change in the unemployment rate will depend on the number of people aged 16 and above.
answer
B
question
An unemployed person is: A) one who is eligible to work but chooses not to work. B) one who is physically disabled and is unable to work. C) a person without a job who is actively seeking and available for work. D) a person who is looking for a job that better suits his qualifications than his current job.
answer
C
question
What is a business cycle? A) It is a firm's pattern of sales during a given year. B) It is the economy's pattern of fluctuations in economic activity: expansion followed
by contraction and then by another expansion. C) It is the seasonal pattern of fluctuations in consumer spending: increased spending during the holiday season and decreased spending at other times of the year. D) It refers to the peaks and troughs in the demand for luxury goods in a country.
by contraction and then by another expansion. C) It is the seasonal pattern of fluctuations in consumer spending: increased spending during the holiday season and decreased spending at other times of the year. D) It refers to the peaks and troughs in the demand for luxury goods in a country.
answer
B
question
The point on a business cycle where real GDP stops rising and begins falling is called a(n): A) peak. B) trough. C) expansion. D) recession.
answer
A
question
Which of the following individuals benefits from inflation? A) Ben, who borrowed $1,000 from a friend and agreed to pay the same amount one year later B) Mark, who lent his friend $1,000 and agreed to accept repayment of the same amount one year later C) Randall, who lives on a fixed income of $800 per month D) Asuza, who keeps her savings in the form of cash in a safe at home
answer
A
question
The inflation rate in the year 2007 is defined as: A) the ratio of the nominal GDP in 2007 and the nominal GDP in 2006. B) the percentage of change between the price index in 2007 and the price index in 2006. C) the difference between the value of the price index in 2007 and the value of the price index in 2006. D) the ratio of the 2007 price index and 2006 price index.
answer
B
question
The formula for calculating a price index is: A) current cost of basket ÷ base-period cost of basket. B) base-period cost of basket ÷ current cost of basket × 100. C) (base-period cost of basket ÷ current cost of basket) × current nominal value of basket. D) percentage change in current cost of basket ÷ percentage change in base-period cost of basket.
answer
A
question
Which of the following would cause a decrease in the equilibrium price and decrease in the equilibrium quantity of papayas? A) a decrease in supply and an increase in demand B) a decrease in demand C) an increase in supply and an increase in demand greater than the increase in supply D) a decrease in supply and a decrease in demand
answer
B
question
Gross domestic product in the economy is measured by the A) total number of goods and services produced in the economy. B) dollar value of all final goods and services produced in the economy. C) total number of goods produced in the economy. D) total number of services produced in the economy
answer
B
question
Gross domestic product understates the total production of final goods and services because of the omission of A) the underground economy. B) intermediate goods. C) inflation. D) exports.
answer
A
question
Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to understate the true extent of joblessness? A) inflation B) discouraged workers C) people employed in the underground economy D) unemployed persons falsely report themselves to be actively looking for a job
answer
B
question
What are menu costs? A) the full list of a firm's costs of production B) the costs to a firm of changing prices C) the cost to a household of borrowing money when there is deflation D) the opportunity cost of dining in a restaurant instead of at home
answer
B
question
Countries gain from specializing in producing goods in which they have ________ and trading for goods in which other countries have ________. A) a comparative advantage; an absolute advantage B) an absolute advantage; an absolute advantage C) a comparative advantage; a comparative advantage D) an absolute advantage; a comparative advantage
answer
C
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