Question 1

A country is categorized as a low-income economy by the World Bank if its per capita income is below:

Accepted Answer

A) $1, 000. 
B) $100. 
C) $10, 000 
D) $50. 
E) $5, 000. 
A) $1, 000. 
B) $100. 
C) $10, 000 
D) $50. 
E) $5, 000.

Question 2

Which of the following institutions form the private sector in an economy?

Accepted Answer

A) Only households 
B) Households and the government 
C) Households, businesses, and foreign firms 
D) Households and businesses only 
E) Foreign investors and foreign governments 
A) Only households 
B) Households and the government 
C) Households, businesses, and foreign firms 
D) Households and businesses only 
E) Foreign investors and foreign governments

Question 3

The wireless communication business has changed dramatically since the 1980s, going from mobile phones to smartphones.This was only possible because:

Accepted Answer

A) of the persuasive advertising campaigns undertaken by firms in the wireless communication industry. 
B) consumers welcomed the changes and were willing and able to pay for them. 
C) of the dot-com stock market bubble that lasted from 1995 to 2000. 
D) the government tightly regulated the wireless communication industry with regulations and taxes. 
E) businesses needed to produce these products in order to recoup their investment in research and development. 
A) of the persuasive advertising campaigns undertaken by firms in the wireless communication industry. 
B) consumers welcomed the changes and were willing and able to pay for them. 
C) of the dot-com stock market bubble that lasted from 1995 to 2000. 
D) the government tightly regulated the wireless communication industry with regulations and taxes. 
E) businesses needed to produce these products in order to recoup their investment in research and development.

Question 4

A person obtains income is obtained by selling the services of the resources that he or she owns.

Accepted Answer

A) True 
 B)False

Question 5

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.If the price in the Delivery Meals market remains at $10 but demand shifts to D2 which of the following situations will be observed?

Accepted Answer

A) People would be willing and able to purchase 75 units while only 60 units would be available. 
B) People would be willing and able to purchase only 60 units while 75 units would be available. 
C) People would be willing and able to purchase 75 units while only 50 units would be available. 
D) People would be willing and able to purchase 75 units while only 25 units would be available. 
E) People would be willing and able to purchase 50 units and producers would supply exactly 50 units. 
A) People would be willing and able to purchase 75 units while only 60 units would be available. 
B) People would be willing and able to purchase only 60 units while 75 units would be available. 
C) People would be willing and able to purchase 75 units while only 50 units would be available. 
D) People would be willing and able to purchase 75 units while only 25 units would be available. 
E) People would be willing and able to purchase 50 units and producers would supply exactly 50 units.

Question 6

Based on the fact that the companies Ford, IBM, PepsiCo, and McDonald's own and operate units in many different countries, they are categorized as:

Accepted Answer

A) joint ventures. 
B) sole proprietorship firms. 
C) partnership firms. 
D) multinational firms. 
E) co-operative firms. 
A) joint ventures. 
B) sole proprietorship firms. 
C) partnership firms. 
D) multinational firms. 
E) co-operative firms.

Question 7

When the government sector is included in the circular flow diagram, the total value of private production will equal the value of household income.

Accepted Answer

A) True 
 B)False

Question 8

The figure given below represents the circular flow of income between households, firms, financial intermediaries, and foreign countries. Figure 4.2   Refer to Figure 4.2.Assume investment spending decreases by $4, 000.Everything else being the same, what must be the new value of net trade flows in order to maintain total expenditures on business firms' output at $35, 000?

Accepted Answer

A) -$2, 500 
B) -$1, 500 
C) $3, 500 
D) $6, 500 
E) $7, 500 
A) -$2, 500 
B) -$1, 500 
C) $3, 500 
D) $6, 500 
E) $7, 500

Question 9

Mark's ability to purchase goods and services depends on:

Accepted Answer

A) his aesthetic sense. 
B) his ability to hunt out the best bargains. 
C) the amount of information that he has. 
D) his money income. 
E) his intelligence level. 
A) his aesthetic sense. 
B) his ability to hunt out the best bargains. 
C) the amount of information that he has. 
D) his money income. 
E) his intelligence level.

Question 10

The replacement of film-based still cameras by digital cameras and recently by digital SLR cameras exemplifies creative destruction.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true of Western Europe, Japan, Canada, Mexico, and China taken together?

Accepted Answer

A) All these countries are classified as high-income countries by the World Bank. 
B) They are all members of the North American Free Trade Agreement [NAFTA]. 
C) All these countries are considered developed countries by the World Bank. 
D) They are collectively the largest trade partners of the U.S. 
E) They are the five largest exporters of agricultural produce in the world. 
A) All these countries are classified as high-income countries by the World Bank. 
B) They are all members of the North American Free Trade Agreement [NAFTA]. 
C) All these countries are considered developed countries by the World Bank. 
D) They are collectively the largest trade partners of the U.S. 
E) They are the five largest exporters of agricultural produce in the world.

Question 12

The term consumer sovereignty refers to:

Accepted Answer

A) the fact that consumers' choices are limited to what the producers decide to produce. 
B) a situation in which the government decides what is produced. 
C) the idea that consumers ultimately determine what is produced. 
D) the idea that consumers try to maximize their utility. 
E) the idea that the preferences of both producers and the government ultimately determine what is produced. 
A) the fact that consumers' choices are limited to what the producers decide to produce. 
B) a situation in which the government decides what is produced. 
C) the idea that consumers ultimately determine what is produced. 
D) the idea that consumers try to maximize their utility. 
E) the idea that the preferences of both producers and the government ultimately determine what is produced.

Question 13

In a market system, which of the following factors determines a consumers's ability to pay for a good or service?

Accepted Answer

A) Technology 
B) Consumer's income 
C) Cost of production 
D) Consumer's wants 
E) Market supply 
A) Technology 
B) Consumer's income 
C) Cost of production 
D) Consumer's wants 
E) Market supply

Question 14

A surplus in a country's trade balance means that:

Accepted Answer

A) net exports exceed transfer payments. 
B) the country's currency is over-valued. 
C) the value of net exports is positive. 
D) imports into the country exceed exports. 
E) domestic savings exceeds domestic investment. 
A) net exports exceed transfer payments. 
B) the country's currency is over-valued. 
C) the value of net exports is positive. 
D) imports into the country exceed exports. 
E) domestic savings exceeds domestic investment.

Question 15

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.In which direction will the resources flow following a shift in the demand for Restaurant Meals and Delivery Meals as represented by the figure?

Accepted Answer

A) Resources flow from where they are more highly valued to where they are less highly valued in order to make the consumer better off. 
B) Resources flow from where they are more highly valued to where they are less highly valued in order to reduce prices. 
C) Resources flow from where they are more highly valued to where they are less valued in order to reduce costs. 
D) Resources flow from Restaurant production and sales to Delivery production and sales. 
E) Resources flow to Restaurant production and sales and away from Delivery production and sales. 
A) Resources flow from where they are more highly valued to where they are less highly valued in order to make the consumer better off. 
B) Resources flow from where they are more highly valued to where they are less highly valued in order to reduce prices. 
C) Resources flow from where they are more highly valued to where they are less valued in order to reduce costs. 
D) Resources flow from Restaurant production and sales to Delivery production and sales. 
E) Resources flow to Restaurant production and sales and away from Delivery production and sales.

Question 16

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 17

A trade deficit occurs when:

Accepted Answer

A) a country imposes a price floor. 
B) a country's imports exceed its exports. 
C) a country imposes a price ceiling. 
D) a country's exports exceed its imports. 
E) when the domestic product market is in disequilibrium. 
A) a country imposes a price floor. 
B) a country's imports exceed its exports. 
C) a country imposes a price ceiling. 
D) a country's exports exceed its imports. 
E) when the domestic product market is in disequilibrium.

Question 18

Consumption or household spending of an economy comprises of both consumer spending and business spending.

Accepted Answer

A) True 
 B)False

Question 19

Total government spending in the U.S.economy was around _____ of GDP in the financial year 2010.

Accepted Answer

A) 5 percent 
B) 36 percent 
C) 25 percent 
D) 44 percent 
E) 16 percent 
A) 5 percent 
B) 36 percent 
C) 25 percent 
D) 44 percent 
E) 16 percent

Question 20

A household consists of only related family members like a father, mother, and children and not unrelated members like two students sharing a rented apartment.

Accepted Answer

A) True 
 B)False

Exam 5: The Market System and the Private and Public Sector

A country is categorized as a low-income economy by the World Bank if its per capita income is below:

Which of the following institutions form the private sector in an economy?

The wireless communication business has changed dramatically since the 1980s, going from mobile phones to smartphones.This was only possible because:

A person obtains income is obtained by selling the services of the resources that he or she owns.

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.If the price in the Delivery Meals market remains at $10 but demand shifts to D2 which of the following situations will be observed?

Based on the fact that the companies Ford, IBM, PepsiCo, and McDonald's own and operate units in many different countries, they are categorized as:

When the government sector is included in the circular flow diagram, the total value of private production will equal the value of household income.

Mark's ability to purchase goods and services depends on:

The replacement of film-based still cameras by digital cameras and recently by digital SLR cameras exemplifies creative destruction.

Which of the following is true of Western Europe, Japan, Canada, Mexico, and China taken together?

The term consumer sovereignty refers to:

In a market system, which of the following factors determines a consumers's ability to pay for a good or service?

A surplus in a country's trade balance means that:

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.In which direction will the resources flow following a shift in the demand for Restaurant Meals and Delivery Meals as represented by the figure?

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

A trade deficit occurs when:

Consumption or household spending of an economy comprises of both consumer spending and business spending.

Total government spending in the U.S.economy was around _____ of GDP in the financial year 2010.

A household consists of only related family members like a father, mother, and children and not unrelated members like two students sharing a rented apartment.

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

Elasticity: Demand and Supply

National Income Accounting

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

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

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

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

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.If the price in the Delivery Meals market remains at $10 but demand shifts to D₂ which of the following situations will be observed?

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