Question 1

Which of the following statements pertains to macroeconomics?

Accepted Answer

A)  Because the minimum wage was raised, Mrs. Olsen decided to enter the labor force. 
B)  A decline in the price of soybeans caused farmer Wanek to plant more wheat. 
C)  National income grew by 2.7 percent last year. 
D)  The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point. 
A)  Because the minimum wage was raised, Mrs. Olsen decided to enter the labor force. 
B)  A decline in the price of soybeans caused farmer Wanek to plant more wheat. 
C)  National income grew by 2.7 percent last year. 
D)  The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point.

Question 2

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia

Accepted Answer

A)  should only buy muffins. 
B)  should only buy lattes. 
C)  can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods. 
D)  can buy 5 lattes and 10 muffins with her $20 gift card. 
A)  should only buy muffins. 
B)  should only buy lattes. 
C)  can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods. 
D)  can buy 5 lattes and 10 muffins with her $20 gift card.

Question 3

All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve, except

Accepted Answer

A)  emigration of skilled workers to other nations. 
B)  a decline in the birthrate. 
C)  an increase in the average skill level of all occupational groups. 
D)  depletion and reduced availability of major energy resources. 
A)  emigration of skilled workers to other nations. 
B)  a decline in the birthrate. 
C)  an increase in the average skill level of all occupational groups. 
D)  depletion and reduced availability of major energy resources.

Question 4

If the production possibilities curve is a straight line,

Accepted Answer

A)  the two goods will sell at the same market prices. 
B)  economic resources are perfectly substitutable between the production of the two goods. 
C)  the two goods are equally important to consumers. 
D)  equal quantities of the two goods will be produced at each possible point on the curve. 
A)  the two goods will sell at the same market prices. 
B)  economic resources are perfectly substitutable between the production of the two goods. 
C)  the two goods are equally important to consumers. 
D)  equal quantities of the two goods will be produced at each possible point on the curve.

Question 5

Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert. This suggests that

Accepted Answer

A)  the production possibilities curves of such nations are more bowed out from the origin. 
B)  the production possibilities curves of such nations have shifted inward. 
C)  the production possibilities curves of such nations have shifted outward. 
D)  these nations are operating at some point outside of their production possibilities curves. 
A)  the production possibilities curves of such nations are more bowed out from the origin. 
B)  the production possibilities curves of such nations have shifted inward. 
C)  the production possibilities curves of such nations have shifted outward. 
D)  these nations are operating at some point outside of their production possibilities curves.

Question 6

Answer the question on the basis of the following data.   The data indicate that

Accepted Answer

A)  consumers spend 80 percent of their after-tax incomes. 
B)  consumers spend 90 percent of their after-tax incomes. 
C)  a tax reduction will reduce consumption. 
D)  the relationship between consumption and after-tax income is random. 
A)  consumers spend 80 percent of their after-tax incomes. 
B)  consumers spend 90 percent of their after-tax incomes. 
C)  a tax reduction will reduce consumption. 
D)  the relationship between consumption and after-tax income is random.

Question 7

The scientific method does not apply to economics, because economics studies human behavior, which cannot be generalized.

Accepted Answer

A) True 
 B)False

Question 8

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that

Accepted Answer

A)  the principle of increasing opportunity costs is relevant. 
B)  society's resources are limited. 
C)  the opportunity cost of producing each product is constant. 
D)  resources are perfectly substitutable between alternative uses. 
A)  the principle of increasing opportunity costs is relevant. 
B)  society's resources are limited. 
C)  the opportunity cost of producing each product is constant. 
D)  resources are perfectly substitutable between alternative uses.

Question 9

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates

Accepted Answer

A)  distorted priorities. 
B)  opportunity costs. 
C)  increasing opportunity costs. 
D)  productive efficiency. 
A)  distorted priorities. 
B)  opportunity costs. 
C)  increasing opportunity costs. 
D)  productive efficiency.

Question 10

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

Accepted Answer

A)  manager. 
B)  entrepreneur. 
C)  stockbroker. 
D)  banker. 
A)  manager. 
B)  entrepreneur. 
C)  stockbroker. 
D)  banker.

Question 11

A nation's production possibilities curve is bowed out from the origin because

Accepted Answer

A)  resources are not generally equally efficient in producing every good. 
B)  opportunity costs of producing a good tend to fall as more of the good is produced. 
C)  resources are scarce. 
D)  wants are virtually unlimited. 
A)  resources are not generally equally efficient in producing every good. 
B)  opportunity costs of producing a good tend to fall as more of the good is produced. 
C)  resources are scarce. 
D)  wants are virtually unlimited.

Question 12

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Accepted Answer

A)  an increase in unemployment 
B)  an increase in the amount of imports 
C)  an increase in the number of skilled immigrant workers 
D)  the destruction caused by bombing and warfare in a losing military conflict 
A)  an increase in unemployment 
B)  an increase in the amount of imports 
C)  an increase in the number of skilled immigrant workers 
D)  the destruction caused by bombing and warfare in a losing military conflict

Question 13

Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as

Accepted Answer

A)  rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants. 
B)  greedy because he is asking for a high wage that some of his neighbors can't afford to pay. 
C)  selfish because he is asking for a wage that is higher than others might charge. 
D)  irrational because some neighbors refused his offer. 
A)  rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else's wants. 
B)  greedy because he is asking for a high wage that some of his neighbors can't afford to pay. 
C)  selfish because he is asking for a wage that is higher than others might charge. 
D)  irrational because some neighbors refused his offer.

Question 14

Scarcity

Accepted Answer

A)  persists only because countries have failed to achieve continuous full employment. 
B)  persists because economic wants exceed available resources. 
C)  has been solved in all industrialized nations. 
D)  has been eliminated in affluent societies such as the United States and Canada. 
A)  persists only because countries have failed to achieve continuous full employment. 
B)  persists because economic wants exceed available resources. 
C)  has been solved in all industrialized nations. 
D)  has been eliminated in affluent societies such as the United States and Canada.

Question 15

A society can consume a combination of goods outside its production possibilities if there is

Accepted Answer

A)  lower unemployment and increased capacity utilization. 
B)  specialization in production and International trade. 
C)  a change in consumers' tastes or preference for one good over another. 
D)  a change in prices of the two products. 
A)  lower unemployment and increased capacity utilization. 
B)  specialization in production and International trade. 
C)  a change in consumers' tastes or preference for one good over another. 
D)  a change in prices of the two products.

Question 16

The following graph is the production possibilities curve of a nation.   Which of the following combinations would be unattainable?

Accepted Answer

A)  8 drill presses and 1 bread 
B)  7 drill presses and 2 bread 
C)  10 drill presses and 4 bread 
D)  2 drill presses and 3 bread 
A)  8 drill presses and 1 bread 
B)  7 drill presses and 2 bread 
C)  10 drill presses and 4 bread 
D)  2 drill presses and 3 bread

Question 17

Purposeful behavior means that

Accepted Answer

A)  people are selfish in their decision making. 
B)  people weigh costs and benefits to make decisions. 
C)  people are immune from emotions affecting their decisions. 
D)  decision makers do not make mistakes when weighing costs and benefits. 
A)  people are selfish in their decision making. 
B)  people weigh costs and benefits to make decisions. 
C)  people are immune from emotions affecting their decisions. 
D)  decision makers do not make mistakes when weighing costs and benefits.

Question 18

A positive statement is one that

Accepted Answer

A)  is derived by induction. 
B)  is derived by deduction. 
C)  focuses on the best course of action and is based on value judgments. 
D)  focuses on facts, descriptions, and theoretical relationships. 
A)  is derived by induction. 
B)  is derived by deduction. 
C)  focuses on the best course of action and is based on value judgments. 
D)  focuses on facts, descriptions, and theoretical relationships.

Question 19

In a graph of the relationship between income and saving, economists generally consider

Accepted Answer

A)  income to be the independent variable and place it on the vertical axis. 
B)  income to be the dependent variable and place it on the horizontal axis. 
C)  saving to be the dependent variable and place it on the vertical axis. 
D)  saving to be the independent variable and place it on the vertical axis. 
A)  income to be the independent variable and place it on the vertical axis. 
B)  income to be the dependent variable and place it on the horizontal axis. 
C)  saving to be the dependent variable and place it on the vertical axis. 
D)  saving to be the independent variable and place it on the vertical axis.

Question 20

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina.   Refer to the tables. The opportunity cost of the fifth unit of capital goods

Accepted Answer

A)  is higher in North Cantina than in South Cantina. 
B)  is the same in North Cantina and South Cantina. 
C)  is lower in North Cantina than in South Cantina. 
D)  cannot be determined from the information provided. 
A)  is higher in North Cantina than in South Cantina. 
B)  is the same in North Cantina and South Cantina. 
C)  is lower in North Cantina than in South Cantina. 
D)  cannot be determined from the information provided.

Exam 1: Limits, Alternatives, and Choices

Which of the following statements pertains to macroeconomics?

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia

All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve, except

If the production possibilities curve is a straight line,

Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert. This suggests that

Answer the question on the basis of the following data. The data indicate that

The scientific method does not apply to economics, because economics studies human behavior, which cannot be generalized.

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the

A nation's production possibilities curve is bowed out from the origin because

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as

Scarcity

A society can consume a combination of goods outside its production possibilities if there is

The following graph is the production possibilities curve of a nation. Which of the following combinations would be unattainable?

Purposeful behavior means that

A positive statement is one that

In a graph of the relationship between income and saving, economists generally consider

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina. Refer to the tables. The opportunity cost of the fifth unit of capital goods

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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