Deck 2: The Australian and Global Economies

Question 1

Human capital can be increased through

A) investment in new machinery.
B) education, on-the-job training and work experience.
C) increasing the nation's production of consumption goods.
D) decreases in population.
E) investment in new technology.

Answer 1

education, on-the-job training and work experience.

Question 2

The difference between consumption and capital goods is that

A) capital goods are used to produce additional goods while consumption goods are not.
B) capital goods are provided by the government.
C) it is illegal to export capital goods.
D) consumption goods can be enjoyed by many people at the same time.
E) only big corporations can afford capital goods.

Answer 2

capital goods are used to produce additional goods while consumption goods are not.

Question 3

Australia possesses a large amount of human capital. As a result of this fact, in Australia there is a

A) large number of kind and generous humans.
B) large amount of machinery and equipment.
C) highly skilled and educated labour force.
D) large number of people and a great deal of land.
E) large amount of machinery (capital) that is run by people (humans).

Answer 3

highly skilled and educated labour force.

Question 4

Items bought by businesses to help produce other goods and services are called

A) capital goods.
B) government goods and services.
C) productive goods.
D) exports of goods and services.
E) consumption goods and services.

Question 5

Human capital ________ as you work. As a result, the ________ of goods and services ________.

A) declines; quality; increases.
B) increases; quantity; increases.
C) improves; quality; does not change.
D) decreases; quantity; decreases.
E) does not change; quality; does not change.

Question 6

Which of the following is NOT considered an example of a capital good?

A) A miner's cap
B) A stethoscope
C) An airport bookshop
D) A GPS tracking device
E) An Australian government bond

Question 7

As a factor of production, oil reserves are counted as

A) labour.
B) capital.
C) financial capital.
D) land.
E) entrepreneurship.

Question 8

An export good is a good produced

A) in another country and purchased by Australian residents.
B) in Australia and sold to foreigners living in Australia.
C) in another country and purchased by foreigners not residing in Australia.
D) in Australia and sold in other countries.
E) by foreigners in Australia and purchased by Australian households.

Question 9

The productive resource that includes all the 'gifts of nature' is called

A) capital.
B) labour.
C) entrepreneurship.
D) land.
E) land if undeveloped and capital if developed.

Question 10

What would be an example of a government good?

A) Jake buys an iPhone.
B) The local driver's licence office purchases a new digital camera and printer.
C) Rhianna gets a haircut.
D) Tony AbbottScott Morrison purchases furniture for his office.
E) Antonio, the manager of your local fish and chip shop, purchases a new deep fryer.

Question 11

Which of the following is a consumption good or service?

A) An Australia Post truck delivering Christmas gifts.
B) A personal computer purchased in order to play games at home.
C) The Endeavour space shuttle.
D) A Virgin Airlines ticket counter.
E) A satellite dish installed by Foxtel to download programs that are then distributed through its cable system.

Question 12

The largest share of total production in Australia is

A) consumption goods and services.
B) imported goods and services.
C) capital goods.
D) government goods and services.
E) exported goods and services.

Question 13

Items that are purchased by individuals for their own enjoyment are called

A) government goods and services.
B) exports of goods and services.
C) private goods.
D) consumption goods and services.
E) capital goods.

Question 14

Which of the following is NOT considered one of the factors of production?

A) Capital
B) Land
C) Entrepreneurship
D) Technology
E) Labour

Question 15

Which of the following correctly lists the categories of factors of production?

A) Labour, money, stocks and bonds
B) Forests, fish, buildings, capital and entrepreneurship
C) Land, labour, capital and entrepreneurship
D) Land, buildings, capital and entrepreneurship
E) Labour, machines, buildings, capital and entrepreneurship

Question 16

Factors of production are the

A) goods that are bought by individuals and used to provide personal enjoyment.
B) productive resources used to produce goods and services.
C) goods that are bought by businesses to produce productive resources.
D) productive resources used by government to increase the productivity of consumption.
E) goods and services produced by the economy.

Question 17

What would be an example of a consumption good?

A) Jake buys an iPhone.
B) Tony AbbottScott Morrison purchases furniture for his office.
C) The local driver's licence office purchases a new digital camera and printer.
D) Antonio, the manager of the local chicken shop, purchases a new deep fryer.
E) Rhianna gets a haircut.

Question 18

Which of the following has been the bigger contributor to increases in the quantity of labour in Australia during the past 50 years?

A) The proportion of young adults entering university has trended down.
B) The proportion of women taking paid jobs has trended up.
C) Total population growth has increased dramatically.
D) The proportion of men taking paid jobs has trended up.
E) The proportion of seniors taking early retirement has trended down.

Question 19

The Melbourne Ski Shop, based in Melbourne, Victoria, sold 60 ski jackets to a Belgian company's headquarters located in Paris, France. The ski jackets are a(n)

A) government good.
B) capital good.
C) consumption service.
D) export good.
E) import.

Question 20

Over time, the percentage of total employment in services has ________ and in agriculture employment has ________.

A) stayed about the same; decreased
B) decreased; increased
C) increased; increased
D) increased; decreased
E) stayed about the same; increased

Question 21

The income earned by entrepreneurs is

A) wages.
B) interest.
C) profit or loss.
D) rent, wages and interest.
E) a mixture of rent, wages, interest and profit.

Question 22

The total value of capital in Australia is around

A) $45 trillion.
B) $145 trillion.
C) $100 trillion.
D) $10 trillion.
E) $79 trillion.

Question 23

According to the functional distribution of income, in Australia

A) the income earned by capital and labour are approximately equal.
B) entrepreneurs earn most of the income.
C) land earns most of the income.
D) capital earns most of the income.
E) labour earns most of the income.

Question 24

Which factor of production is paid 'interest'?

A) Capital
B) Entrepreneurship
C) Human capital
D) Labour
E) Land

Question 25

The personal distribution of income measures which of the following?

A) The distribution of earnings by the factors of production.
B) How federal tax revenues are related to the type of businesses that employs the taxpayers.
C) The distribution of income among households.
D) The distribution of income among nations.
E) The proportion of income generated by the four types of expenditures on goods and services.

Question 26

The personal distribution of income in Australia shows that

A) the richest 20 per cent of individuals receive approximately 25 per cent of total income.
B) the poorest 60 per cent of individuals receive approximately 50 per cent of total income.
C) income is equally distributed.
D) the richest 20 per cent of individuals receive approximately 50 40 per cent of total income.
E) the poorest 20 per cent of individuals receive approximately 20 per cent of total income.

Question 27

In Australia, the poorest 20 per cent of households receive about ________ per cent of total income.

A) 38
B) 23
C) 49
D) 15
E) 20

Question 28

The richest 20 per cent of individuals in Australia receive about ________ of the nation's total income.

A) 23 per cent
B) 5140 per cent
C) 91 per cent
D) 21 per cent
E) 99 per cent

Question 29

Goods and services produced in Australia and sold in other countries are called

A) government goods and services.
B) export goods and services.
C) import goods and services.
D) capital goods.
E) consumption goods and services.

Question 30

Entrepreneurship, as a factor of production, refers to

A) the human capital accumulated by workers.
B) the value of the firm's stock.
C) the human resource that organises labour, land and capital.
D) the capital the firm uses.
E) the technology used by firms.

Question 31

Capital is a factor of production. Which of the following is an example of capital?
i) $1,000 in money
Ii) 100 shares of Microsoft stock
Iii) $10,000 in bonds issued by General Motors
Iv) A drill press in your local engineering firm

A) i and ii
B) ii only
C) iii only
D) iv only
E) ii and iii

Question 32

In economics, the factor of production 'land' includes all of the following EXCEPT

A) wild plants.
B) plastics.
C) oil.
D) energy.
E) animals, birds and fish.

Question 33

When Ethan continues his education beyond high school he is increasing his

A) capital.
B) quantity of labour.
C) human capital.
D) wage rate.
E) rent.

Question 34

Payments to the factors of production are

A) rent, interest, bonds, and profit or loss.
B) land, labour, capital and entrepreneurship.
C) rent, mortgage, interest and bonds.
D) rent, wages, interest, and profit or loss.
E) rent, wages, profit or loss, and bonuses.

Question 35

The majority of the income earned in Australia is paid in

A) dividends.
B) interest.
C) profit.
D) wages.
E) rent.

Question 36

One of the productive resources is capital. Capital includes

A) tools, buildings and machine tools.
B) money in a savings account at a bank.
C) money borrowed from a bank.
D) a company's stocks and bonds.
E) toys, t-shirts, CD players, and pencils.

Question 37

Wages are paid to ________ and interest is paid to ________.

A) labour; land
B) labour; entrepreneurs
C) entrepreneurs; land
D) entrepreneurs; capital
E) labour; capital

Question 38

Which factor of production is paid 'profit'?

A) Capital
B) Entrepreneurship
C) Land
D) Labour
E) Human capital

Question 39

Which of the following is NOT considered capital?

A) A nail gun used for building houses
B) A computer used by your lecturer for presentations in class
C) An assembly line at a General Motors plant
D) The furniture in the Prime Minister's office
E) Stocks and bonds that are sold by Pepsico

Question 40

________ earns the highest amount of income among the factors of production in Australia.

A) Land
B) Entrepreneurship
C) Capital
D) Investment
E) Labour

Question 41

Physical capital differences across countries can be seen in the fact that

A) furniture factories in China use machines like those in North America.
B) the iPhone's components are produced in 30 countries.
C) advanced economies produce 53 per cent of the world's income.
D) more advanced economies typically have more sophisticated technology.
E) students in India study the same subjects as those in Australia.

Question 42

In the circular flow model, which of the following is on the selling side in the goods market?

A) Exporters
B) Both firms and households
C) Firms only
D) Federal, state and local governments
E) Households only

Question 43

The circular flow model shows the flow of

A) only funds in stock and bond markets.
B) only money throughout the economy.
C) expenditure and income throughout the economy.
D) only tax payments and government expenditures.
E) goods markets and factor markets as they move through the economy.

Question 44

Which of the following is an example of an effort to decrease physical capital differences between an advanced and a developing economy?

A) Australian troops build roads in Afghanistan.
B) Through World Vision, women and children in Africa receive education.
C) Habitat for Humanity builds houses for low income families in Australia.
D) NGO volunteers teach English around the world.
E) Creating Hope International trains women in Afghanistan to become tailors.

Question 45

Which of the following is true? i. The advanced economies account for more than half of global production.
Ii) Almost four out of every five people in the world live in the developing economies.
Iii) In the advanced economies, agriculture accounts for a larger part of total production than in the developing economies.

A) Only i and ii
B) Only ii and iii
C) Only i
D) Only i and iii
E) i, ii, and iii

Question 46

The emerging market economies are

A) the largest grouping including the nations of China and India.
B) most of the nations of Western Europe.
C) the nations that are currently agricultural in nature.
D) in transition from state-owned production to free markets.
E) the nations with the highest standards of living.

Question 47

The world population is approximately ________ people.

A) 7.3 6 trillion
B) 2 trillion
C) 7.3 6 billion
D) 7.3 6 million
E) 730 760 million

Question 48

Income equality has

A) narrowed within countries but increased across countries.
B) increased within countries but narrowed across countries.
C) decreased in Australia as manufacturing has increased.
D) not changed in the advanced economies over the past 50 years.
E) increased in developing economies as manufacturing has decreased.

Question 49

Nigeria would be classified by the International Monetary Fund as

A) a transition economy.
B) an emerging market economy.
C) a developing economy.
D) a resource-based economy.
E) an advanced economy.

Question 50

When describing the IMF broad country classification, the most accurate statement is that

A) about 50 per cent of the world's population lives in the advanced economies and the other 50 per cent lives in the emerging market and developing economies.
B) most of the nations in Western Europe are considered emerging market economies.
C) most of the world's population lives in advanced economies.
D) the category with the greatest number of countries is the advanced economies.
E) the emerging market economies are countries that were, until the early 1990s, part of the Soviet Union or its satellites.

Question 51

The circular flow model is used to show the

A) flow of expenditures and incomes in the economy.
B) flow of renewable natural resources.
C) recycling process of production materials.
D) flow of supply and the flow of demand.
E) expansions and contractions of economic activity.

Question 52

In the circular flow model, consumption goods are bought and sold in the

A) government market.
B) monetary flows.
C) goods markets.
D) financial market.
E) factor markets.

Question 53

Most countries in the world are classified as

A) emerging markets.
B) advanced.
C) in transition.
D) industrialised.
E) developing.

Question 54

What two groups of decision makers are represented in the basic circular flow model?

A) Bankers and regulators
B) Governments and financial institutions
C) Wholesalers and retailers
D) Lenders and borrowers
E) Households and firms

Question 55

In the circular flow model, which of the following is on the buying side in the goods market? i. Firms
Ii) Households
Iii) Federal, state and local governments

A) i only
B) ii only
C) iii only
D) i and ii
E) ii and iii

Question 56

Among the United States, Canada, Russia, India and the United Kingdom, the country with the highest average income per person is

A) Canada.
B) Russia.
C) the United States.
D) the United Kingdom.
E) India.

Question 57

Most people live in ________ economies and the fewest people live in ________ economies.

A) emerging market; developing
B) advanced; developing
C) advanced; emerging market
D) developing; emerging market
E) developing; advanced

Question 58

Which of the following is NOT classified as an advanced economy?

A) Australia
B) Canada
C) South Korea
D) the United Kingdom
E) Russia

Question 59

As a percentage of total world production, production in the 29 advanced economies is about ________ per cent of total world production and in the 118 developing economies is about ________ per cent of total world production.

A) 53; 12
B) 19; 73
C) 30; 46
D) 53; 39
E) 23; 62

Question 60

The majority of the value of production in the world economy is produced in

A) all of the advanced economies taken together.
B) all of the emerging market economies taken together.
C) China and other Asian developing economies.
D) all of Africa and the Middle East taken together.
E) all of the developing economies taken together.

Question 61

Terri is enrolled in her first economics course. She is required to give a presentation about the circular flow. Which of the following statements should she include in her presentation?

A) Households receive wages for the amount of entrepreneurship they provide to firms.
B) Firms pay wages for the amount of entrepreneurship they provide to households.
C) Households choose the amount of the factors of production to provide to firms.
D) Firms choose the amount of the factors of production to provide to households.
E) The flows of goods and services and payments for the goods and services flow in the same direction.

Question 62

In the circular flow model, which of the following flows in the opposite direction to the flow of factors of production?

A) Interests payments of federal, state and local governments
B) The goods market
C) Finished goods and services
D) Wages, rent, interest and profit
E) Firm's profit incentives

Question 63

An example of a real flow in the circular flow diagram is

A) Nike's payment of wages to workers in China.
B) your council's collection of property taxes.
C) a household's supply of work effort at its new business.
D) the government's payment of wages to a soldier.
E) a teacher's salary at the local high school.

Question 64

Tax revenues are transferred from

A) one state government to other state governments.
B) the state and local governments to the federal government.
C) the federal government to state and local governments.
D) state governments to the federal government.
E) local governments to state and federal governments.

Question 65

A real flow in the circular flow diagram is i. a firm's payments of wages to its workers.
Ii) a household's purchase of a new car.
Iii) a farmer's use of land to grow corn.

A) i and iii
B) i only
C) ii only
D) ii and iii
E) i, ii and iii

Question 66

In the factor market, firms ________ and households ________.

A) supply land, labour, capital and entrepreneurship services; hire land, labour, capital and entrepreneurship services
B) supply goods and services; purchase goods and services
C) pay rent, wages, interest and profit; earn rent, wages, interest and profit
D) hire land, labour, capital and entrepreneurship services; purchase goods and services
E) purchase goods and services; supply goods and services

Question 67

Which of the following is a function of the Australian federal government?

A) Distributing private goods and services
B) Deciding for whom firms should produce goods and services
C) Providing the legal and social framework for economic activity
D) Determining what wages firms will pay their workers.
E) Deciding how much to produce of private goods and services

Question 68

Households and firms in the Australian economy interact with those in the rest of the world in the ________ market and in the ________ market.

A) goods; financial
B) firm; government
C) financial; factor
D) government; goods
E) goods; factor

Question 69

________ choose the quantities of goods and services to produce, while ________ choose the quantities of goods and services to buy

A) Firms; households and the government
B) The government; firms
C) Households; the government
D) Households; firms
E) Firms; only households

Question 70

An example of a money flow in the circular flow diagram is

A) a firm's production of goods to sell to a foreign country.
B) a student's payment of tuition to her university.
C) a farmer's use of land to grow wheat.
D) the government's operation of the court system.
E) the government's financing of the national debt.

Question 71

In the circular flow model with the government sector, transfers

A) to firms flow in the same direction as rent, wages, interest and profits.
B) flow in the opposite direction to taxes.
C) to households flow in the same direction as expenditures on goods and services.
D) flow only through the goods market.
E) flow in the same direction as taxes.

Question 72

An example of an Australian export is

A) matchbooks made in Mexico sold to a buyer in New Jersey.
B) a TV made in China sold to a buyer in Azerbaijan.
C) a washing machine made in Adelaide sold to a buyer in France.
D) diamonds mined in Africa sold to buyers in South America.
E) pasta made in Italy sold to buyers in Spain.

Question 73

In the circular flow model, the factor markets are the markets in which

A) government goods and services are provided.
B) land, labour, capital and entrepreneurship are bought and sold.
C) governments impose all their taxes.
D) investment goods and services are bought and sold.
E) consumption goods and services are bought and sold.

Question 74

Which of the following is NOT shown explicitly in the circular flow model?

A) The taxes the government collects from households
B) The legal system
C) The transfers the government makes to households
D) The government's purchases in the goods market
E) The government's interaction with firms

Question 75

In the circular flow model with the government sector, taxes

A) on households flow in the same direction as goods and services.
B) flow in the opposite direction to transfers.
C) flow from the goods market to the factor markets.
D) on firms flow in the same direction as factors of production.
E) flow in the same direction as transfers.

Question 76

State and local governments finance expenditures mainly from

A) private bank loans.
B) lottery funds.
C) funds provided by the federal government.
D) government bonds issued at the state level.
E) tax revenue.

Question 77

Which of the following are sources of revenue for state and local governments? i. Property taxes
Ii) Stamp duties
Iii) Transfers from the federal government

A) i, ii and iii
B) i and iii
C) ii and iii
D) i and ii
E) i only

Question 78

Which of the following is NOT a function of the federal government?

A) Imposing a personal income tax
B) Providing public goods and services
C) Making transfers to state and local governments
D) Making social security and welfare payments
E) Collecting property taxes

Question 79

A market is defined as

A) a place where money is exchanged for goods.
B) another name for a store.
C) the physical place where goods and services are sold.
D) the physical place where goods (but not services) are sold.
E) any arrangement that brings buyers and sellers together.

Question 80

A money flow in the circular flow diagram is i. the government's collection of taxes.
Ii) Ford's production of SUVs.
Iii) Nike's payment of wages to its workers.

A) ii and iii
B) i, ii and iii
C) i and iii
D) i only
E) ii only