Question 1

The "economic perspective" entails:

Accepted Answer

A)  rational behaviour by individuals and institutions. 
B)  a comparison of marginal benefits and marginal costs in decision making. 
C)  the altering of behaviour when marginal benefits and marginal costs change. 
D)  all of the above. 
A)  rational behaviour by individuals and institutions. 
B)  a comparison of marginal benefits and marginal costs in decision making. 
C)  the altering of behaviour when marginal benefits and marginal costs change. 
D)  all of the above.

Question 2

-Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Other things being equal, society's current choice of point P on curve (a) will:

Accepted Answer

A)  allow it to achieve more rapid economic growth than would the choice of point N. 
B)  entail a slower rate of economic growth than would the choice of point N. 
C)  entail the same rate of growth as would the choice of point N. 
D)  be unobtainable because it exceeds the productive capacity of the economy. 
A)  allow it to achieve more rapid economic growth than would the choice of point N. 
B)  entail a slower rate of economic growth than would the choice of point N. 
C)  entail the same rate of growth as would the choice of point N. 
D)  be unobtainable because it exceeds the productive capacity of the economy.

Question 3

The measured slope of a line:

Accepted Answer

A)  is independent of how the two variables are denominated. 
B)  will be affected by how the two variables are denominated. 
C)  necessarily diminishes as one moves rightward on the line. 
D)  necessarily increases as one moves rightward on the line. 
A)  is independent of how the two variables are denominated. 
B)  will be affected by how the two variables are denominated. 
C)  necessarily diminishes as one moves rightward on the line. 
D)  necessarily increases as one moves rightward on the line.

Question 4

Which of the following statements is not correct?

Accepted Answer

A)  A reduction in money income will shift the budget line to the right. 
B)  A reduction in money income accompanied by an increase in product prices will necessarily shift the budget line to the left. 
C)  An increase in product prices will shift the budget line to the left. 
D)  An increase in money income will shift the budget line to the right. 
A)  A reduction in money income will shift the budget line to the right. 
B)  A reduction in money income accompanied by an increase in product prices will necessarily shift the budget line to the left. 
C)  An increase in product prices will shift the budget line to the left. 
D)  An increase in money income will shift the budget line to the right.

Question 5

An economy will always operate at some point on its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 6

Production possibilities tables for two countries, North Cantina and South Cantina:
North Cantina
Production possibilities (alternatives)
   South Cantina
Production possibilities (alternatives)
  
-Refer to the above tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be:

Accepted Answer

A)  10 units of capital goods. 
B)  1/4 of a unit of capital goods. 
C)  8 units of capital goods. 
D)  1/8 of a unit of capital goods. 
A)  10 units of capital goods. 
B)  1/4 of a unit of capital goods. 
C)  8 units of capital goods. 
D)  1/8 of a unit of capital goods.

Question 7

The individuals and society both face an economic problem. This problem arises from the fact that:

Accepted Answer

A)  wants are limited but the resources are not. 
B)  resources are scarce relative to individual's wants. 
C)  individuals and institutions behave only in their self-interest. 
D)  both wants and resources are unlimited. 
A)  wants are limited but the resources are not. 
B)  resources are scarce relative to individual's wants. 
C)  individuals and institutions behave only in their self-interest. 
D)  both wants and resources are unlimited.

Question 8

-Refer to the above graph. Using Qd for quantity demanded and P for price, which of the following equations correctly states the demand for this product?

Accepted Answer

A)  P = Qd/10. 
B)  P = 50 - P/2. 
C)  P = 10 - .2Qd. 
D)  P = 10 - 2Qd. 
A)  P = Qd/10. 
B)  P = 50 - P/2. 
C)  P = 10 - .2Qd. 
D)  P = 10 - 2Qd.

Question 9

Money is not considered to be an economic resource because:

Accepted Answer

A)  money, as such, is not productive. 
B)  idle money balances do not earn interest income. 
C)  the terms of trade can be determined in non-monetary terms. 
D)  money is a free gift of nature. 
A)  money, as such, is not productive. 
B)  idle money balances do not earn interest income. 
C)  the terms of trade can be determined in non-monetary terms. 
D)  money is a free gift of nature.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  the construction of more capital goods 
B)  a decrease in discrimination based on race 
C)  an increase in the number of skilled immigrant workers 
D)  the destruction from bombing and warfare in a losing military conflict 
A)  the construction of more capital goods 
B)  a decrease in discrimination based on race 
C)  an increase in the number of skilled immigrant workers 
D)  the destruction from bombing and warfare in a losing military conflict

Question 12

If the equation y = 5 + 6x was graphed, the:

Accepted Answer

A)  slope would be -5. 
B)  slope would be +5. 
C)  slope would be +6. 
D)  vertical intercept would be +.6. 
A)  slope would be -5. 
B)  slope would be +5. 
C)  slope would be +6. 
D)  vertical intercept would be +.6.

Question 13

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.

Question 14

Microeconomics:

Accepted Answer

A)  is concerned with the aggregate or total levels of income, employment, and output. 
B)  is not concerned with details, but only with the overall "big picture" of the economy. 
C)  is concerned with individual economic units and specific markets. 
D)  describes the aggregate flows of output and income. 
A)  is concerned with the aggregate or total levels of income, employment, and output. 
B)  is not concerned with details, but only with the overall "big picture" of the economy. 
C)  is concerned with individual economic units and specific markets. 
D)  describes the aggregate flows of output and income.

Question 15

-The law of increasing opportunity costs exists because:

Accepted Answer

A)  resources are not equally efficient in producing various goods. 
B)  the value of the dollar has diminished historically because of persistent inflation. 
C)  wage rates invariably rise as the economy approaches full employment. 
D)  consumers tend to value any good more highly when they have little of it. 
A)  resources are not equally efficient in producing various goods. 
B)  the value of the dollar has diminished historically because of persistent inflation. 
C)  wage rates invariably rise as the economy approaches full employment. 
D)  consumers tend to value any good more highly when they have little of it.

Question 16

The production possibilities curve represents which of the following?

Accepted Answer

A)  the amount of goods attainable with variable resources 
B)  the maximum amount of goods attainable with variable resources 
C)  maximum combinations of goods attainable with fixed resources 
D)  the amount of goods attainable if prices decline 
A)  the amount of goods attainable with variable resources 
B)  the maximum amount of goods attainable with variable resources 
C)  maximum combinations of goods attainable with fixed resources 
D)  the amount of goods attainable if prices decline

Question 17

The slope of the typical production possibilities curve:

Accepted Answer

A)  is positive. 
B)  increases as one moves southeast along the curve. 
C)  is constant as one moves down the curve. 
D)  decreases as one moves southeast along the curve. 
A)  is positive. 
B)  increases as one moves southeast along the curve. 
C)  is constant as one moves down the curve. 
D)  decreases as one moves southeast along the curve.

Question 18

The price ratio of the two products is the:

Accepted Answer

A)  marginal rate of substitution. 
B)  slope of the budget line. 
C)  point of tangency for equilibrium. 
D)  elasticity of demand for the two products. 
A)  marginal rate of substitution. 
B)  slope of the budget line. 
C)  point of tangency for equilibrium. 
D)  elasticity of demand for the two products.

Question 19

The production possibilities curve:

Accepted Answer

A)  shows all of those levels of production which are consistent with a stable price level. 
B)  indicates that any combination of goods lying outside the curve is economically inefficient. 
C)  is a frontier between all combinations of two goods which can be produced and those combinations which cannot be produced. 
D)  shows all of those combinations of two goods which are most preferred by society. 
A)  shows all of those levels of production which are consistent with a stable price level. 
B)  indicates that any combination of goods lying outside the curve is economically inefficient. 
C)  is a frontier between all combinations of two goods which can be produced and those combinations which cannot be produced. 
D)  shows all of those combinations of two goods which are most preferred by society.

Question 20

-Refer to the above diagram. The variables X and Y are:

Accepted Answer

A)  inversely related. 
B)  directly related. 
C)  unrelated. 
D)  negatively related. 
A)  inversely related. 
B)  directly related. 
C)  unrelated. 
D)  negatively related.

The "economic perspective" entails:

-Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Other things being equal, society's current choice of point P on curve (a) will:

The measured slope of a line:

Which of the following statements is not correct?

An economy will always operate at some point on its production possibilities curve.

The individuals and society both face an economic problem. This problem arises from the fact that:

-Refer to the above graph. Using Q_d for quantity demanded and P for price, which of the following equations correctly states the demand for this product?

Money is not considered to be an economic resource because:

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

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

If the equation y = 5 + 6x was graphed, the:

A point inside a production possibilities curve may indicate:

Microeconomics:

-The law of increasing opportunity costs exists because:

The production possibilities curve represents which of the following?

The slope of the typical production possibilities curve:

The price ratio of the two products is the:

The production possibilities curve:

-Refer to the above diagram. The variables X and Y are:

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

The "economic perspective" entails:

-Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Other things being equal, society's current choice of point P on curve (a) will:

The measured slope of a line:

Which of the following statements is not correct?

An economy will always operate at some point on its production possibilities curve.

The individuals and society both face an economic problem. This problem arises from the fact that:

-Refer to the above graph. Using Qd for quantity demanded and P for price, which of the following equations correctly states the demand for this product?

Money is not considered to be an economic resource because:

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

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

If the equation y = 5 + 6x was graphed, the:

A point inside a production possibilities curve may indicate:

Microeconomics:

-The law of increasing opportunity costs exists because:

The production possibilities curve represents which of the following?

The slope of the typical production possibilities curve:

The price ratio of the two products is the:

The production possibilities curve:

-Refer to the above diagram. The variables X and Y are:

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 graph. Using Q_d for quantity demanded and P for price, which of the following equations correctly states the demand for this product?