Question 1

Specialization and trade are beneficial to society because:

Accepted Answer

A)  the output of economic goods may be increased with no increase in resources. 
B)  scarce resources are utilized more efficiently. 
C)  a division of labour lowers prices for products. 
D)  all of the above are correct. 
A)  the output of economic goods may be increased with no increase in resources. 
B)  scarce resources are utilized more efficiently. 
C)  a division of labour lowers prices for products. 
D)  all of the above are correct.

Question 2

A "hypothesis" is:

Accepted Answer

A)  a fundamental truth which all economists accept. 
B)  a tentative, untested principle. 
C)  the same as a normative statement. 
D)  always the result of induction. 
A)  a fundamental truth which all economists accept. 
B)  a tentative, untested principle. 
C)  the same as a normative statement. 
D)  always the result of induction.

Question 3

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 4

Which of the following will not require an outward shift of the production possibilities curve?

Accepted Answer

A)  an upgrading of the quality of a nation's human resources 
B)  the reduction of unemployment 
C)  an increase in the quantity of a society's labour force 
D)  the improvement of a society's technological knowledge 
A)  an upgrading of the quality of a nation's human resources 
B)  the reduction of unemployment 
C)  an increase in the quantity of a society's labour force 
D)  the improvement of a society's technological knowledge

Question 5

The future location of the economy's production possibilities curve will be affected by:

Accepted Answer

A)  the current division of domestic output between consumption and capital goods. 
B)  the rate of technological progress. 
C)  the growth of the economy's supplies of resources. 
D)  all of the above. 
A)  the current division of domestic output between consumption and capital goods. 
B)  the rate of technological progress. 
C)  the growth of the economy's supplies of resources. 
D)  all of the above.

Question 6

Which of the following is a normative statement?

Accepted Answer

A)  The temperature is high today. 
B)  The humidity is high today. 
C)  It is too hot to play tennis today. 
D)  It will cool off later this evening. 
A)  The temperature is high today. 
B)  The humidity is high today. 
C)  It is too hot to play tennis today. 
D)  It will cool off later this evening.

Question 7

-Refer to the above diagram for athletic shoes. If the current output of shoes is Q3, then:

Accepted Answer

A)  resources are being allocated efficiently to the production of shoes. 
B)  society would consider additional units of shoes to be more valuable than alternative products. 
C)  society would consider additional units of shoes to be less valuable than alternative products. 
D)  society would experience a net gain by producing more shoes. 
A)  resources are being allocated efficiently to the production of shoes. 
B)  society would consider additional units of shoes to be more valuable than alternative products. 
C)  society would consider additional units of shoes to be less valuable than alternative products. 
D)  society would experience a net gain by producing more shoes.

Question 8

Refer to the diagram below, suppose you have a money income of $10 all of which you spend on Coke and boxes of popcorn. The prices of Coke and popcorn respectively are:

Accepted Answer

A)  $.50 and $1.00. 
B)  $1.00 and $.50. 
C)  $1.00 and $2.00. 
D)  $.40 and $.50. 
A)  $.50 and $1.00. 
B)  $1.00 and $.50. 
C)  $1.00 and $2.00. 
D)  $.40 and $.50.

Question 9

Which of the following is a microeconomic statement?

Accepted Answer

A)  The real domestic output increased by 2.5 percent last year. 
B)  Unemployment was 8.3 percent of the labour force last year. 
C)  The price of personal computers declined last year. 
D)  The general price level increased by 4 percent last year. 
A)  The real domestic output increased by 2.5 percent last year. 
B)  Unemployment was 8.3 percent of the labour force last year. 
C)  The price of personal computers declined last year. 
D)  The general price level increased by 4 percent last year.

Question 10

-Refer to the above diagram. Which one of the following would shift the production possibilities curve from PP1 to PP2?

Accepted Answer

A)  immigration of skilled workers into the economy 
B)  worsening of the AIDS epidemic 
C)  an increase in consumer prices 
D)  a reduction in the age of retirement. 
A)  immigration of skilled workers into the economy 
B)  worsening of the AIDS epidemic 
C)  an increase in consumer prices 
D)  a reduction in the age of retirement.

Question 11

The institution that coordinates actions of consumers and producers to establish prices for goods and services is known as:

Accepted Answer

A)  a market. 
B)  a monopoly. 
C)  a production possibilities curve. 
D)  consumer sovereignty. 
A)  a market. 
B)  a monopoly. 
C)  a production possibilities curve. 
D)  consumer sovereignty.

Question 12

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 two units of capital goods?

Accepted Answer

A)  4 units of consumer goods 
B)  5 units of consumer goods 
C)  9 units of consumer goods 
D)  13 units of consumer goods 
A)  4 units of consumer goods 
B)  5 units of consumer goods 
C)  9 units of consumer goods 
D)  13 units of consumer goods

Question 13

The fact that economic generalizations are abstract renders them impractical and useless.

Accepted Answer

A) True 
 B)False

Question 14

Marginal analysis means that decision-makers compare the extra benefits with the extra costs of a specific choice.

Accepted Answer

A) True 
 B)False

Question 15

The study of economics is primarily concerned with:

Accepted Answer

A)  keeping private businesses from losing money. 
B)  demonstrating that capitalistic economies are superior to socialistic economies. 
C)  choices which are made in seeking to use scarce resources efficiently. 
D)  determining the most equitable distribution of society's output. 
A)  keeping private businesses from losing money. 
B)  demonstrating that capitalistic economies are superior to socialistic economies. 
C)  choices which are made in seeking to use scarce resources efficiently. 
D)  determining the most equitable distribution of society's output.

Question 16

Which of the following statements pertains to macroeconomics?

Accepted Answer

A)  Because the minimum wage was raised, Mrs. Beepath decided to enter the labour force. 
B)  A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. 
C)  The national productivity rate grew by 1.4 percent last year. 
D)  The Pumpkin Center Chartered Bank increased its interest rate on consumer loans by 1 percent. 
A)  Because the minimum wage was raised, Mrs. Beepath decided to enter the labour force. 
B)  A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. 
C)  The national productivity rate grew by 1.4 percent last year. 
D)  The Pumpkin Center Chartered Bank increased its interest rate on consumer loans by 1 percent.

Question 17

The "economic perspective" refers to:

Accepted Answer

A)  macroeconomic phenomena, but not microeconomic phenomena. 
B)  microeconomic phenomena, but not macroeconomic phenomena. 
C)  the making of rational decisions in a context of marginal costs and marginal benefits. 
D)  unlimited resources in a context of limited material wants. 
A)  macroeconomic phenomena, but not microeconomic phenomena. 
B)  microeconomic phenomena, but not macroeconomic phenomena. 
C)  the making of rational decisions in a context of marginal costs and marginal benefits. 
D)  unlimited resources in a context of limited material wants.

Question 18

Opportunity cost is best defined as:

Accepted Answer

A)  marginal cost minus marginal benefit. 
B)  the time spent on an economic activity. 
C)  the value of the best foregone alternative. 
D)  the money cost of an economic decision. 
A)  marginal cost minus marginal benefit. 
B)  the time spent on an economic activity. 
C)  the value of the best foregone alternative. 
D)  the money cost of an economic decision.

Question 19

The typical production possibilities curve is:

Accepted Answer

A)  an upward sloping line which is concave to the origin. 
B)  a downward sloping line which is convex to the origin. 
C)  a downward sloping line which is concave to the origin. 
D)  a straight upward sloping line. 
A)  an upward sloping line which is concave to the origin. 
B)  a downward sloping line which is convex to the origin. 
C)  a downward sloping line which is concave to the origin. 
D)  a straight upward sloping line.

Question 20

Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment so that investment would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate.
-Refer to the above information. Using i and I to indicate the interest rate and investment (in billions of dollars) respectively, which of the following is the correct tabular presentation of the described relationship?

Accepted Answer

A)  column (
A)  
B)  column (
B)  
C)  column (
C)  
D)  column (
D)  
A)  column (
A)  
B)  column (
B)  
C)  column (
C)  
D)  column (
D)

Specialization and trade are beneficial to society because:

A "hypothesis" is:

Which of the following is a macroeconomic statement?

Which of the following will not require an outward shift of the production possibilities curve?

The future location of the economy's production possibilities curve will be affected by:

Which of the following is a normative statement?

-Refer to the above diagram for athletic shoes. If the current output of shoes is Q₃, then:

Refer to the diagram below, suppose you have a money income of $10 all of which you spend on Coke and boxes of popcorn. The prices of Coke and popcorn respectively are:

Which of the following is a microeconomic statement?

-Refer to the above diagram. Which one of the following would shift the production possibilities curve from PP₁ to PP₂?

The institution that coordinates actions of consumers and producers to establish prices for goods and services is known as:

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 two units of capital goods?

The fact that economic generalizations are abstract renders them impractical and useless.

Marginal analysis means that decision-makers compare the extra benefits with the extra costs of a specific choice.

The study of economics is primarily concerned with:

Which of the following statements pertains to macroeconomics?

The "economic perspective" refers to:

Opportunity cost is best defined as:

The typical production possibilities curve is:

The Market System and the Circular Flow

Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

Exam 1: Limits, Alternatives, and Choices

Specialization and trade are beneficial to society because:

A "hypothesis" is:

Which of the following is a macroeconomic statement?

Which of the following will not require an outward shift of the production possibilities curve?

The future location of the economy's production possibilities curve will be affected by:

Which of the following is a normative statement?

-Refer to the above diagram for athletic shoes. If the current output of shoes is Q3, then:

Refer to the diagram below, suppose you have a money income of $10 all of which you spend on Coke and boxes of popcorn. The prices of Coke and popcorn respectively are:

Which of the following is a microeconomic statement?

-Refer to the above diagram. Which one of the following would shift the production possibilities curve from PP1 to PP2?

The institution that coordinates actions of consumers and producers to establish prices for goods and services is known as:

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 two units of capital goods?

The fact that economic generalizations are abstract renders them impractical and useless.

Marginal analysis means that decision-makers compare the extra benefits with the extra costs of a specific choice.

The study of economics is primarily concerned with:

Which of the following statements pertains to macroeconomics?

The "economic perspective" refers to:

Opportunity cost is best defined as:

The typical production possibilities curve is:

The Market System and the Circular Flow

Introduction to Macroeconomics

Measuring the Economys Output

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, Surpluses, and Debt

Money, Banking, and Money Creation

Interest Rates and Monetary Policy

Financial Economics

Long-Run Macroeconomic Adjustments

International Trade

Exchange Rates and the Balance of Payments

Filters

-Refer to the above diagram for athletic shoes. If the current output of shoes is Q₃, then:

-Refer to the above diagram. Which one of the following would shift the production possibilities curve from PP₁ to PP₂?