Question 1

Worldwide economic melt-down that began in 2008 as a result of low interest rate raises profound questions about the appropriate roles of government and regulations in the financial markets.

Accepted Answer

A) True 
 B)False

Question 2

-The production possibilities frontier in Figure 1.1 is concave to the origin because:

Accepted Answer

A)  resources are equally substitutable between the production of food and films. 
B)  society can have more food only if it produces more films. 
C)  the cost of food in terms of films is constant. 
D)  the opportunity cost of food in terms of films increases are more films are produced.

Question 3

The economic fluctuations and growth rates of an economy are considered as microeconomic issues.

Accepted Answer

A) True 
 B)False

Question 4

When considering an economy producing only two goods, economic growth can be illustrated by:

Accepted Answer

A)  a movement along its production possibilities frontier. 
B)  a movement of its production possibilities frontier toward the origin. 
C)  moving to a point beneath its production possibilities frontier. 
D)  an outward shift of its production possibilities frontier.

Question 5

The invisible hand is:

Accepted Answer

A)  when individuals' pursuit of self-interest within free markets may allocate resources efficiently. 
B)  when the state plans resource allocation. 
C)  the inland revenue. 
D)  fiscal policy.

Question 6

Unemployment, inflation, and deflation are important topics in microeconomics.

Accepted Answer

A) True 
 B)False

Question 7

-The combination of food and films shown by point G in Figure 1.1:

Accepted Answer

A)  is an efficient use of society's resources because it is below the production possibilities frontier. 
B)  is more desirable than point E because producing at point G does not place a strain on society's production capacity. 
C)  is attainable but involves the unemployment and inefficient used of some of society's resources. 
D)  is beyond the capacity of society to produce.

Question 8

The Federal government has decided that more middle-class Canadians should benefit from the growth of the economy in the next 20 years. Among the three fundamental questions in economics, which one applies to this situation?

Accepted Answer

A)  What to produce. 
B)  How to produce. 
C)  For whom to produce. 
D)  Not to produce at all.

Question 9

Property rights are unimportant in developing economies as long as there is a rule of law.

Accepted Answer

A) True 
 B)False

Question 10

Benny has one hour before bedtime and he can either watch TV or listen to his new Korn CD. He chooses to listen to the CD. The scarcity problem's influence on Benny is seen in:

Accepted Answer

A)  a the decision to listen to music. 
B)  the decision not to watch TV. 
C)  the fixed amount of time before bed. 
D)  the decision to choose between TV and music.

Question 11

Economists frequently talk about the importance of 'property rights.' What have they got in mind?

Accepted Answer

The answer of Economists frequently talk about the importance of...

Question 12

When economists say there is no such thing as a free lunch, they mean that:

Accepted Answer

A)  we must pay money for everything we get. 
B)  it is against the law to accept goods or services without paying for them. 
C)  the more lunch a person eats the more weight the person will gain. 
D)  every choice we make involves a trade-off.

Question 13

If you are a macroeconomist, you might study:

Accepted Answer

A)  changing national employment rates from one month to the next. 
B)  the level of saving and investment spending in the economy. 
C)  the effect of increased oil prices upon the production of goods and services in the economy. 
D)  all of the above.

Question 14

Most real world economic systems are:

Accepted Answer

A)  pure market systems. 
B)  pure command systems. 
C)  mixed economic systems. 
D)  planned economic systems.

Question 15

All of the following statements, except one, are valid examples of the way economists use the term 'scarcity.' Which is the exception?

Accepted Answer

A)  Households face a scarcity of income. 
B)  Individuals face a scarcity of time. 
C)  Economies face a scarcity of resources. 
D)  The world faces a scarcity of ideas.

Question 16

The concept of scarcity applies equally to Bill Gates and a homeless person because:

Accepted Answer

A)  both have the same legal rights protected by the U.S. constitution. 
B)  they have the same access to the markets for goods and services. 
C)  there are only 24 hours in the day for both of them. 
D)  they are both consumers.

Question 17

Forest is a mountain man living in complete isolation in the Yukon. He is self-sufficient. through hunting, fishing, and farming. He has not been in the city to buy anything in five years. Therefore:

Accepted Answer

A)  the scarcity problem does not apply to Forest. 
B)  Forest is not required to make choices. 
C)  the scarcity problem still applies because more hunting means less fishing and so on. 
D)  Forest is very satisfied.

Question 18

The provincial government of British Columbia has to decide whether to construct 10 hospitals without research facilities or 5 with such facilities. Among the three fundamental questions in economics, which one applies here?

Accepted Answer

A)  What to produce. 
B)  When to produce. 
C)  How to produce. 
D)  For whom.

Question 19

-Referring to Figure 1.1, points A, B, C, and D illustrate:

Accepted Answer

A)  an inefficient allocation of society's scarce resources. 
B)  possible combinations of food output and film output. 
C)  a constant trade-off between food output and film output. 
D)  society prefers food output to film output.

Question 20

Studying the causes of unemployment is an example of normative economics.

Accepted Answer

A) True 
 B)False

Exam 1: Introduction to Key Ideas

Worldwide economic melt-down that began in 2008 as a result of low interest rate raises profound questions about the appropriate roles of government and regulations in the financial markets.

-The production possibilities frontier in Figure 1.1 is concave to the origin because:

The economic fluctuations and growth rates of an economy are considered as microeconomic issues.

When considering an economy producing only two goods, economic growth can be illustrated by:

The invisible hand is:

Unemployment, inflation, and deflation are important topics in microeconomics.

-The combination of food and films shown by point G in Figure 1.1:

The Federal government has decided that more middle-class Canadians should benefit from the growth of the economy in the next 20 years. Among the three fundamental questions in economics, which one applies to this situation?

Property rights are unimportant in developing economies as long as there is a rule of law.

Benny has one hour before bedtime and he can either watch TV or listen to his new Korn CD. He chooses to listen to the CD. The scarcity problem's influence on Benny is seen in:

Economists frequently talk about the importance of 'property rights.' What have they got in mind?

When economists say there is no such thing as a free lunch, they mean that:

If you are a macroeconomist, you might study:

Most real world economic systems are:

All of the following statements, except one, are valid examples of the way economists use the term 'scarcity.' Which is the exception?

The concept of scarcity applies equally to Bill Gates and a homeless person because:

Forest is a mountain man living in complete isolation in the Yukon. He is self-sufficient. through hunting, fishing, and farming. He has not been in the city to buy anything in five years. Therefore:

The provincial government of British Columbia has to decide whether to construct 10 hospitals without research facilities or 5 with such facilities. Among the three fundamental questions in economics, which one applies here?

-Referring to Figure 1.1, points A, B, C, and D illustrate:

Studying the causes of unemployment is an example of normative economics.