Question 1

According to the World Bank, low-income economies are heavily concentrated in:

Accepted Answer

A)  Europe and Africa. 
B)  Europe and Asia. 
C)  Asia and Africa. 
D)  Asia and Australia. 
E)  North America and Australia. 
A)  Europe and Africa. 
B)  Europe and Asia. 
C)  Asia and Africa. 
D)  Asia and Australia. 
E)  North America and Australia. C

Question 2

Firms try to minimize costs and maximize profits and in the process produce:

Accepted Answer

A)  the goods and services that buyers want at the highest possible cost. 
B)  the goods and services that buyers want at the least possible cost. 
C)  the maximum amount of goods or services that they are capable of producing. 
D)  economically inefficient amounts of goods or services. 
E)  only those goods and services which command a very high price in the market. 
A)  the goods and services that buyers want at the highest possible cost. 
B)  the goods and services that buyers want at the least possible cost. 
C)  the maximum amount of goods or services that they are capable of producing. 
D)  economically inefficient amounts of goods or services. 
E)  only those goods and services which command a very high price in the market. B

Question 3

The figure given below represents the equilibrium price and output in the market for restaurant meals and delivery meals.
Figure 4.1
  
-Refer to Figure 4.1. Which of the following is represented by this figure?

Accepted Answer

A)  Delivery meals and restaurant meals are complementary goods. 
B)  When producers of delivery and restaurant meals change their preferences, the consumers respond. 
C)  The increase in demand for delivery meals could have been caused by a change in consumers' tastes. 
D)  The fall in demand for restaurant meals was caused by an increase in the price for restaurant meals. 
E)  The demand for delivery meals is less elastic than that for restaurant meals. 
A)  Delivery meals and restaurant meals are complementary goods. 
B)  When producers of delivery and restaurant meals change their preferences, the consumers respond. 
C)  The increase in demand for delivery meals could have been caused by a change in consumers' tastes. 
D)  The fall in demand for restaurant meals was caused by an increase in the price for restaurant meals. 
E)  The demand for delivery meals is less elastic than that for restaurant meals. C

Question 4

Which of the following is a valid difference between sole proprietorship and partnership?

Accepted Answer

A)  Partnerships require a written agreement while sole proprietorships do not. 
B)  Partnerships require a state charter while sole proprietorships do not. 
C)  Partnerships generate lower profits than sole proprietorships. 
D)  Partnerships are characterized by unlimited liability, while sole proprietorships are not. 
E)  Partnerships consist of two or more partners sharing the responsibility of the firm, while sole proprietorship consist of a single individual. 
A)  Partnerships require a written agreement while sole proprietorships do not. 
B)  Partnerships require a state charter while sole proprietorships do not. 
C)  Partnerships generate lower profits than sole proprietorships. 
D)  Partnerships are characterized by unlimited liability, while sole proprietorships are not. 
E)  Partnerships consist of two or more partners sharing the responsibility of the firm, while sole proprietorship consist of a single individual.

Question 5

Which of the following economic indicators is used by the World Bank to classify countries as industrial economies or developing countries?

Accepted Answer

A)  GDP 
B)  Rate of inflation 
C)  Net exports 
D)  Per capital income 
E)  Budget deficits 
A)  GDP 
B)  Rate of inflation 
C)  Net exports 
D)  Per capital income 
E)  Budget deficits

Question 6

In a market system, consumer demands dictate _____ and the search for profit defines _____.

Accepted Answer

A)  for whom goods and services are produced; how goods and services are produced 
B)  what is produced; for whom goods and services are produced 
C)  where goods and services are produced; for whom goods and services are produced 
D)  what is produced; where goods and services are produced 
E)  what is produced; how goods and services are produced 
A)  for whom goods and services are produced; how goods and services are produced 
B)  what is produced; for whom goods and services are produced 
C)  where goods and services are produced; for whom goods and services are produced 
D)  what is produced; where goods and services are produced 
E)  what is produced; how goods and services are produced

Question 7

Which of the following is true of fiscal spending at the federal, state, and local levels of the U.S. government?

Accepted Answer

A)  In 2009, total government spending equalled around $1 billion. 
B)  Investment expenditure in the U.S. exceeds the total spending at all levels of government. 
C)  Government spending at federal, state, and local levels declined steadily from the 1960s until about 1980. 
D)  Through the 1950s and 1960s, the U.S. government maintained a balanced budget. 
E)  Federal government spending exceeds state and local government spending in the U.S. 
A)  In 2009, total government spending equalled around $1 billion. 
B)  Investment expenditure in the U.S. exceeds the total spending at all levels of government. 
C)  Government spending at federal, state, and local levels declined steadily from the 1960s until about 1980. 
D)  Through the 1950s and 1960s, the U.S. government maintained a balanced budget. 
E)  Federal government spending exceeds state and local government spending in the U.S.

Question 8

The idea that in a market system the consumer determines what is to be produced is called:

Accepted Answer

A)  consumer monopoly. 
B)  habeas corpus. 
C)  consumer sovereignty. 
D)  business sovereignty. 
E)  caveat emptor. 
A)  consumer monopoly. 
B)  habeas corpus. 
C)  consumer sovereignty. 
D)  business sovereignty. 
E)  caveat emptor.

Question 9

Which of the following situations is an example of creative destruction?

Accepted Answer

A)  An aspiring fashion designer acting as a part-time model in fashion shows 
B)  Farm workers moving to technologically advanced industrial sector after undergoing proper training 
C)  An old residential building demolished for constructing a new shopping mall and multiplex 
D)  A garment manufacturer reducing production to recover its losses 
E)  An athlete serving as a brand ambassador for Nike 
A)  An aspiring fashion designer acting as a part-time model in fashion shows 
B)  Farm workers moving to technologically advanced industrial sector after undergoing proper training 
C)  An old residential building demolished for constructing a new shopping mall and multiplex 
D)  A garment manufacturer reducing production to recover its losses 
E)  An athlete serving as a brand ambassador for Nike

Question 10

Balance in international trade suggests that:

Accepted Answer

A)  a trade surplus exists. 
B)  there is a net flow of goods and services from foreign countries to domestic firms. 
C)  a trade deficit exists. 
D)  domestic firms buy more foreign products than they sell. 
E)  the value of net exports is zero. 
A)  a trade surplus exists. 
B)  there is a net flow of goods and services from foreign countries to domestic firms. 
C)  a trade deficit exists. 
D)  domestic firms buy more foreign products than they sell. 
E)  the value of net exports is zero.

Question 11

The government sector sells resource services to households and buys goods and services from firms.

Accepted Answer

A) True 
 B)False

Question 12

The figure given below represents the equilibrium price and output in the market for restaurant meals and delivery meals.
Figure 4.1
  
-Refer to Figure 4.1. The demand for Restaurant Meals shift in one direction while the demand for Delivery Meals shift in another direction. Which of the following impacts will it have on the quantity of Restaurant Meals and Delivery meals purchased by consumers?

Accepted Answer

A)  The quantity of Restaurant Meals purchased declines while the quantity of Delivery Meals purchased rises. 
B)  The quantity of Restaurant Meals purchased rises while the quantity of Delivery Meals purchased declines. 
C)  Both the quantity of Restaurant Meals purchased and the quantity of Delivery Meals purchased declines. 
D)  Both the quantity of Restaurant Meals purchased and the quantity of Delivery Meals purchased increases. 
E)  The quantity of Restaurant Meals purchased and the quantity of Delivery Meals purchased add up to 100. 
A)  The quantity of Restaurant Meals purchased declines while the quantity of Delivery Meals purchased rises. 
B)  The quantity of Restaurant Meals purchased rises while the quantity of Delivery Meals purchased declines. 
C)  Both the quantity of Restaurant Meals purchased and the quantity of Delivery Meals purchased declines. 
D)  Both the quantity of Restaurant Meals purchased and the quantity of Delivery Meals purchased increases. 
E)  The quantity of Restaurant Meals purchased and the quantity of Delivery Meals purchased add up to 100.

Question 13

The _____ tend to have a smaller public sector relative to the total economy.

Accepted Answer

A)  communist economies 
B)  centrally planned economies 
C)  socialist economies 
D)  market economies 
E)  mercantilist economies 
A)  communist economies 
B)  centrally planned economies 
C)  socialist economies 
D)  market economies 
E)  mercantilist economies

Question 14

Which of the following statements about transfer payments is true?

Accepted Answer

A)  Transfer payments are not included in total government expenditures. 
B)  Transfer payments involve the international remittance of funds. 
C)  Transfer payments refer to the transfer of money by the commercial banks to the people. 
D)  Transfer payments are made by the government to taxpayers. 
E)  Transfer payments are made when governments purchase goods and services. 
A)  Transfer payments are not included in total government expenditures. 
B)  Transfer payments involve the international remittance of funds. 
C)  Transfer payments refer to the transfer of money by the commercial banks to the people. 
D)  Transfer payments are made by the government to taxpayers. 
E)  Transfer payments are made when governments purchase goods and services.

Question 15

According to the circular flow diagram, with households and firms as the only two sectors, money saved by the households reenters the economy in the form of:

Accepted Answer

A)  human capital. 
B)  investment spending. 
C)  fiscal spending. 
D)  consumption spending. 
E)  deposits. 
A)  human capital. 
B)  investment spending. 
C)  fiscal spending. 
D)  consumption spending. 
E)  deposits.

Question 16

Which of the following will invariably be illustrated by a circular flow of income diagram?

Accepted Answer

A)  The value of foreign net output 
B)  Trade deficit always equals payments for resource services 
C)  The value of output is equal to income 
D)  The value of private production always equals the value of household income 
E)  The value of net exports is positive 
A)  The value of foreign net output 
B)  Trade deficit always equals payments for resource services 
C)  The value of output is equal to income 
D)  The value of private production always equals the value of household income 
E)  The value of net exports is positive

Question 17

Which of the following sectors in the economy accounted for about 70% of the spending in the U.S. during 2009?

Accepted Answer

A)  The government 
B)  Firms 
C)  The foreign sector 
D)  Investors 
E)  Households 
A)  The government 
B)  Firms 
C)  The foreign sector 
D)  Investors 
E)  Households

Question 18

If total U.S. trade consists of $10 billion in electronics imports from Japan and $9 billion in automobile exports to Germany, then the U.S. net export account will be negative.

Accepted Answer

A) True 
 B)False

Question 19

The _____ illustrates the money flows that connect the various sectors in the economy.

Accepted Answer

A)  aggregate demand and aggregate supply diagram 
B)  circular flow diagram 
C)  liquidity preference theory 
D)  income-expenditure diagram 
E)  quantity theory of money 
A)  aggregate demand and aggregate supply diagram 
B)  circular flow diagram 
C)  liquidity preference theory 
D)  income-expenditure diagram 
E)  quantity theory of money

Question 20

If a corporation cannot pay its debts, creditors cannot seek payment from shareholders' personal wealth.

Accepted Answer

A) True 
 B)False

According to the World Bank, low-income economies are heavily concentrated in:

Firms try to minimize costs and maximize profits and in the process produce:

The figure given below represents the equilibrium price and output in the market for restaurant meals and delivery meals. Figure 4.1 -Refer to Figure 4.1. Which of the following is represented by this figure?

Which of the following is a valid difference between sole proprietorship and partnership?

Which of the following economic indicators is used by the World Bank to classify countries as industrial economies or developing countries?

In a market system, consumer demands dictate _ and the search for profit defines _.

Which of the following is true of fiscal spending at the federal, state, and local levels of the U.S. government?

The idea that in a market system the consumer determines what is to be produced is called:

Which of the following situations is an example of creative destruction?

Balance in international trade suggests that:

The government sector sells resource services to households and buys goods and services from firms.

The _____ tend to have a smaller public sector relative to the total economy.

Which of the following statements about transfer payments is true?

According to the circular flow diagram, with households and firms as the only two sectors, money saved by the households reenters the economy in the form of:

Which of the following will invariably be illustrated by a circular flow of income diagram?

Which of the following sectors in the economy accounted for about 70% of the spending in the U.S. during 2009?

If total U.S. trade consists of $10 billion in electronics imports from Japan and $9 billion in automobile exports to Germany, then the U.S. net export account will be negative.

The _____ illustrates the money flows that connect the various sectors in the economy.

If a corporation cannot pay its debts, creditors cannot seek payment from shareholders' personal wealth.

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 4: The Market System and the Private and Public Sector

According to the World Bank, low-income economies are heavily concentrated in:

Firms try to minimize costs and maximize profits and in the process produce:

The figure given below represents the equilibrium price and output in the market for restaurant meals and delivery meals. Figure 4.1 -Refer to Figure 4.1. Which of the following is represented by this figure?

Which of the following is a valid difference between sole proprietorship and partnership?

Which of the following economic indicators is used by the World Bank to classify countries as industrial economies or developing countries?

In a market system, consumer demands dictate _____ and the search for profit defines _____.

Which of the following is true of fiscal spending at the federal, state, and local levels of the U.S. government?

The idea that in a market system the consumer determines what is to be produced is called:

Which of the following situations is an example of creative destruction?

Balance in international trade suggests that:

The government sector sells resource services to households and buys goods and services from firms.

The _____ tend to have a smaller public sector relative to the total economy.

Which of the following statements about transfer payments is true?

According to the circular flow diagram, with households and firms as the only two sectors, money saved by the households reenters the economy in the form of:

Which of the following will invariably be illustrated by a circular flow of income diagram?

Which of the following sectors in the economy accounted for about 70% of the spending in the U.S. during 2009?

If total U.S. trade consists of $10 billion in electronics imports from Japan and $9 billion in automobile exports to Germany, then the U.S. net export account will be negative.

The _____ illustrates the money flows that connect the various sectors in the economy.

If a corporation cannot pay its debts, creditors cannot seek payment from shareholders' personal wealth.

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

In a market system, consumer demands dictate _ and the search for profit defines _.