Question 1

The above data suggest that:

Accepted Answer

A) consumption varies inversely with after-tax income. 
B) consumption varies directly with after-tax income. 
C) consumption and after-tax income are unrelated. 
D) a tax increase will increase consumption. 
A) consumption varies inversely with after-tax income. 
B) consumption varies directly with after-tax income. 
C) consumption and after-tax income are unrelated. 
D) a tax increase will increase consumption.

Question 2

A typical concave production possibilities curve implies:

Accepted Answer

A) that economic resources are scarce. 
B) that society must choose among various attainable combinations of goods. 
C) increasing opportunity costs. 
D) all of the above. 
A) that economic resources are scarce. 
B) that society must choose among various attainable combinations of goods. 
C) increasing opportunity costs. 
D) all of the above.

Question 3

The process of developing hypotheses, testing them against facts, and using the results to construct theories is called:

Accepted Answer

A) opportunity cost calculation. 
B) the scientific method. 
C) marginal analysis. 
D) microeconomics. 
A) opportunity cost calculation. 
B) the scientific method. 
C) marginal analysis. 
D) microeconomics.

Question 4

Refer to the above graph.Which of the following statements is correct?

Accepted Answer

A) Quantity demanded and quantity supplied are independent of price. 
B) Price and quantity demanded are directly related. 
C) Price and quantity supplied are directly related. 
D) Price and quantity supplied are inversely related. 
A) Quantity demanded and quantity supplied are independent of price. 
B) Price and quantity demanded are directly related. 
C) Price and quantity supplied are directly related. 
D) Price and quantity supplied are inversely related.

Question 5

The process by which capital goods are accumulated is known as investment.

Accepted Answer

A) True 
 B)False

Question 6

Refer to the above graph.Which of the following schedules correctly reflects "demand"?

Accepted Answer

A) schedule (
A)  
B) schedule (
B)  
C) schedule (
C)  
D) schedule (
D)  
A) schedule (
A)  
B) schedule (
B)  
C) schedule (
C)  
D) schedule (
D)

Question 7

The fundamental problem of economics is:

Accepted Answer

A) to establish a democratic political framework for the provision of social goods and services. 
B) the establishment of prices which accurately reflect the relative scarcities of products and resources. 
C) the scarcity of productive resources relative to material wants. 
D) to achieve a more equitable distribution of money income in order to mitigate poverty. 
A) to establish a democratic political framework for the provision of social goods and services. 
B) the establishment of prices which accurately reflect the relative scarcities of products and resources. 
C) the scarcity of productive resources relative to material wants. 
D) to achieve a more equitable distribution of money income in order to mitigate poverty.

Question 8

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.   Refer to the above table.What is the total opportunity cost of producing three units of capital goods?

Accepted Answer

A) 6 units of consumer goods 
B) 7 units of consumer goods 
C) 15 units of consumer goods 
D) 22 units of consumer goods 
A) 6 units of consumer goods 
B) 7 units of consumer goods 
C) 15 units of consumer goods 
D) 22 units of consumer goods

Question 9

Production possibilities (alternatives)   Refer to the above table.If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:

Accepted Answer

A) 4 units of capital goods. 
B) 2 units of capital goods. 
C) 3 units of capital goods. 
D) 1/3 of a unit of capital goods. 
A) 4 units of capital goods. 
B) 2 units of capital goods. 
C) 3 units of capital goods. 
D) 1/3 of a unit of capital goods.

Question 10

Refer to the above graph.Which of the following schedules correctly reflects "supply"?

Accepted Answer

A) schedule (
A)  
B) schedule (
B)  
C) schedule (
C)  
D) schedule (
D)  
A) schedule (
A)  
B) schedule (
B)  
C) schedule (
C)  
D) schedule (
D)

Question 11

Like other branches of social science, economics relies on the:

Accepted Answer

A) trial and error method. 
B) sub-optimization model. 
C) heuristic method. 
D) scientific method. 
A) trial and error method. 
B) sub-optimization model. 
C) heuristic method. 
D) scientific method.

Question 12

If the equation y = -10 + 2.5x was plotted

Accepted Answer

A) the vertical intercept would be -10. 
B) the slope would be +2.5. 
C) it would graph as an upsloping line. 
D) all of the above would be true. 
A) the vertical intercept would be -10. 
B) the slope would be +2.5. 
C) it would graph as an upsloping line. 
D) all of the above would be true.

Question 13

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

Accepted Answer

A) the discovery of a low-cost means of generating and storing solar energy 
B) the entrance of more women into the labour force 
C) a law requiring mandatory retirement from the labour force at age 55 
D) an increase in the proportion of total output which consists of capital or investment goods 
A) the discovery of a low-cost means of generating and storing solar energy 
B) the entrance of more women into the labour force 
C) a law requiring mandatory retirement from the labour force at age 55 
D) an increase in the proportion of total output which consists of capital or investment goods

Question 14

The basic purpose of the "other things equal" assumption is to:

Accepted Answer

A) allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. 
B) allow one to focus upon micro variables by ignoring macro variables. 
C) allow one to focus upon macro variables by ignoring micro variables. 
D) determine whether X causes Y or vice versa. 
A) allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. 
B) allow one to focus upon micro variables by ignoring macro variables. 
C) allow one to focus upon macro variables by ignoring micro variables. 
D) determine whether X causes Y or vice versa.

Question 15

Refer to the above diagram.Starting at point A, the opportunity cost of producing each successive unit of tractors is:

Accepted Answer

A) a constant 2 units of bread. 
B) 2, 4, 6, and 8 units of bread. 
C) 8, 6, 4, and 2 units of bread. 
D) the reciprocal of the output of tractors. 
A) a constant 2 units of bread. 
B) 2, 4, 6, and 8 units of bread. 
C) 8, 6, 4, and 2 units of bread. 
D) the reciprocal of the output of tractors.

Question 16

Which of the following is a macroeconomic statement?

Accepted Answer

A) The gross profits of all Canadian businesses were $70 billion last year. 
B) The price of beef declined by 3 percent last year. 
C) General Motors' profits increased in 2012. 
D) The productivity of steelworkers increased by 1 percent in 2012. 
A) The gross profits of all Canadian businesses were $70 billion last year. 
B) The price of beef declined by 3 percent last year. 
C) General Motors' profits increased in 2012. 
D) The productivity of steelworkers increased by 1 percent in 2012.

Question 17

Answer on the basis of the relationships shown in the above four figures.The amount of Y is inversely related to the amount of X in:

Accepted Answer

A) 2 only. 
B) both 1 and 3. 
C) 3 only. 
D) 1 only. 
A) 2 only. 
B) both 1 and 3. 
C) 3 only. 
D) 1 only.

Question 18

If the production possibilities curve were a straight downsloping line, this would suggest that:

Accepted Answer

A) resources are perfectly substitutable between the production of these two goods. 
B) it is possible to produce more of both products. 
C) both products are equally capable of satisfying consumer wants. 
D) the two products have identical prices. 
A) resources are perfectly substitutable between the production of these two goods. 
B) it is possible to produce more of both products. 
C) both products are equally capable of satisfying consumer wants. 
D) the two products have identical prices.

Question 19

The production possibilities curve tells us:

Accepted Answer

A) what specific combinations of two products is most desired by society. 
B) that costs do not change as society varies its output. 
C) costs are irrelevant in a society which has fixed resources. 
D) what combinations of two goods can be produced with society's available resources. 
A) what specific combinations of two products is most desired by society. 
B) that costs do not change as society varies its output. 
C) costs are irrelevant in a society which has fixed resources. 
D) what combinations of two goods can be produced with society's available resources.

Question 20

A point inside a production possibilities curve may indicate:

Accepted Answer

A) unemployment. 
B) the inefficient use of resources. 
C) failure to use the best available technology. 
D) all of the above. 
A) unemployment. 
B) the inefficient use of resources. 
C) failure to use the best available technology. 
D) all of the above.

Exam 1: B: Limits, Alternatives, and Choices

The above data suggest that:

A typical concave production possibilities curve implies:

The process of developing hypotheses, testing them against facts, and using the results to construct theories is called:

Refer to the above graph.Which of the following statements is correct?

The process by which capital goods are accumulated is known as investment.

Refer to the above graph.Which of the following schedules correctly reflects "demand"?

The fundamental problem of economics is:

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. Refer to the above table.What is the total opportunity cost of producing three units of capital goods?

Production possibilities (alternatives) Refer to the above table.If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:

Refer to the above graph.Which of the following schedules correctly reflects "supply"?

Like other branches of social science, economics relies on the:

If the equation y = -10 + 2.5x was plotted

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

The basic purpose of the "other things equal" assumption is to:

Refer to the above diagram.Starting at point A, the opportunity cost of producing each successive unit of tractors is:

Which of the following is a macroeconomic statement?

Answer on the basis of the relationships shown in the above four figures.The amount of Y is inversely related to the amount of X in:

If the production possibilities curve were a straight downsloping line, this would suggest that:

The production possibilities curve tells us:

A point inside a production possibilities curve may indicate:

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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