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Take Test: Unit 1 Exam
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tatus:
Question 1
1.
Which of the following is one of the Five Fundamental Questions?
Which products will be in scarce supply and which in excess supply? |
Who should appoint the head of the central bank? |
How much should society save? |
What goods and services will be produced? |
1 points
Question 2
1.
In terms of the circular flow diagram, businesses obtain revenue through the _____ market and make expenditures in the _____ market.
product; financial |
resource; product |
product; resource |
capital; product |
1 points
Question 3
1.
An economic system:
requires a grouping of private markets linked to one another. |
is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem. |
requires some sort of centralized authority (such as government) to coordinate economic activity. |
is a plan or scheme that allows a firm to make money at some other firm’s expense. |
1 points
Question 4
1.
Economic systems differ according to which two main characteristics?
Who owns the factors of production, and the methods used to coordinate economic activity. |
The technology used in production, and the quantity and quality of natural resources. |
How goods are produced, and who gets them. |
The political system in place, and the degree of scarcity facing the economy. |
1 points
Question 5
Which of the following is assumed in constructing a typical production possibilities curve?
the economy is using its resources inefficiently. |
resources are perfectly shiftable among alternative uses. |
production technology is fixed. |
the economy is engaging in international trade. |
1 points
Question 6
1.
The typical production possibilities curve is:
an upsloping line that is bowed out from the origin. |
a downsloping line that is bowed in toward the origin. |
a downsloping line that is bowed out from the origin. |
a straight upsloping line. |
1 points
Question 7
1.
Broadly defined, competition involves:
private property and freedom of expression. |
independently acting buyers and sellers and freedom to enter or leave markets. |
increasing opportunity costs and diminishing marginal utility. |
capital goods and division of labor. |
1 points
Question 8
1.
Refer to the above diagram. Arrows (1) and (2) represent:
goods and resources respectively. |
|
money incomes and output respectively. |
|
output and money incomes respectively. |
|
resources and goods respectively. |
1 points
Question 9
1.
Which of the following is not considered by economists to be an economic resource?
money |
factory workers |
computers at a retail store |
a forest |
1 points
Question 10
1.
Slopes of lines are especially important in economics because:
they measure marginal changes. |
they always tell us something about profits. |
positive slopes are always preferred to negative slopes. |
they always relate to resource and output scarcity. |
1 points
Question 11
1.
Which of the following would not be classified as an economic resource by economists?
a professional soccer player |
water in a town’s reservoir |
money in a business checking account |
the manager of the local hamburger restaurant |
1 points
Question 12
1.
The optimal point on a production possibilities curve is achieved where:
the smallest physical amounts of inputs are used to produce each good. |
each good is produced at a level where marginal benefits equal marginal costs. |
large amounts of capital goods are produced relative to consumer goods. |
large amounts of consumer goods are produced relative to capital goods. |
1 points
Question 13
1.
The problems of aggregate inflation and unemployment are:
major topics of macroeconomics. |
not relevant to the U.S. economy. |
major topics of microeconomics. |
peculiar to command economies. |
1 points
Question 14
1.
(Consider This) A direct cost of going to college is:
tuition, while an indirect cost (opportunity cost) is books and other supplies. |
forgone income while in college, while an indirect cost (opportunity cost) is tuition. |
tuition, while an indirect cost (opportunity cost) is forgone income while in college. |
books and supplies, while an indirect cost (opportunity cost) is food and housing. |
1 points
Question 15
1.
If products were in short or surplus supply in the Soviet Union:
price and profit signals eliminated those shortages and surpluses. |
price and profit signals intensified those shortages and surpluses. |
producers would not react because no price or profit signals occurred. |
the planners would immediately adjust production to achieve equilibrium. |
1 points
Question 16
1.
The optimal allocation of resources is found:
where MB = MC. |
at every point along a production possibilities curve. |
where the marginal benefit is at its greatest. |
where the marginal cost is at its lowest. |
1 points
Question 17
1.
(Consider This) Since World War II:
North Korea’s command economy has significantly outperformed South Korea’s market economy. |
South Korea’s command economy has significantly outperformed North Korea’s market economy. |
North Korea’s market economy has significantly outperformed South Korea’s command economy. |
South Korea’s market economy has significantly outperformed North Korea’s command economy. |
1 points
Question 18
1.
Command systems are also known as:
market systems. |
pure capitalism. |
laissez-faire capitalism. |
communism. |
1 points
Question 19
1.
The construction of a production possibilities curve assumes:
the quantities of all resources are unlimited. |
technology is fixed. |
some resources are unemployed. |
there is no inflation in the economy. |
1 points
Question 20
1.
Which of the following best describes the invisible-hand concept?
The desires of resource suppliers and producers to further their own self-interest will automatically further the public interest. |
The non-substitutability of resources creates a conflict between private and public interests and calls for government intervention. |
The market system is the best system for overcoming the scarce resources-unlimited wants problem. |
Central direction by the government will improve resource allocation in a capitalistic economy. |
1 points
Question 21
1.
The production possibilities curve has:
a positive slope that increases as we move along it from left to right. |
a negative slope that increases as we move along it from left to right. |
a negative slope that decreases as we move along it from left to right. |
a negative slope that is constant as we move along it from left to right. |
1 points
Question 22
1.
Households and businesses are:
both buyers in the resource market. |
both sellers in the product market. |
sellers in the resource and product markets respectively. |
sellers in the product and resource markets respectively. |
1 points
Question 23
1.
If we say that two variables are inversely related, this means that:
the two graph as an upsloping line. |
an increase in one variable is associated with a decrease in the other. |
an increase in one variable is associated with an increase in the other. |
the resulting relationship can be portrayed by a straight line parallel to the horizontal axis. |
1 points
Question 24
1.
The process of producing and accumulating capital goods is called:
money capital. |
depreciation. |
investment. |
consumption. |
1 points
Question 25
1.
In the simple circular flow model:
households are buyers of resources. |
businesses are sellers of final products. |
households are sellers of final products. |
there are real flows of goods, services, and resources, but not money flows. |
1 points
Question 26
1.
A country can achieve some combination of goods outside its production possibilities curve by:
idling some of its resources. |
specializing and engaging in international trade. |
buying the debt (bonds and stocks) of foreign nations. |
producing more capital goods and fewer consumer goods. |
1 points
Question 27
1.
The French term “laissez-faire” means:
“there is no free lunch.” |
“let it be.” |
“circular flow.” |
“public ownership.” |
1 points
Question 28
1.
The alternative combinations of two goods which a consumer can purchase with a given money income is shown by:
a production possibilities curve. |
a demand curve. |
consumer expenditure line. |
a budget line. |
1 points
Question 29
1.
Which of the following is a distinguishing feature of a command system?
private ownership of all capital. |
|
central planning. |
|
heavy reliance on markets. |
|
wide-spread dispersion of economic power. |
1 points
Question 30
1.
The dollar votes of consumers ultimately determine the composition of output and the allocation of resources in a market economy. This statement best describes the concept of:
derived demand. |
consumer sovereignty. |
the invisible hand. |
market failure. |
1 points
Question 31
1.
The main function of the entrepreneur is to:
make routine pricing decisions. |
innovate. |
purchase capital. |
create market demand. |
1 points
Question 32
1.
For economists, the word “utility” means:
versatility and flexibility. |
rationality. |
pleasure or satisfaction. |
purposefulness. |
1 points
Question 33
1.
Economic theories:
are useless because they are not based on laboratory experimentation. |
that are true for individual economic units are never true for the economy as a whole. |
are generalizations based on a careful observation of facts. |
are abstractions and therefore of no application to real situations. |
1
Question 34
1.
Which of the following statements is true?
Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole. |
Macroeconomics focuses on specific decision-making units of the economy; microeconomics examines the economy as a whole. |
Every topic in economics is either a microeconomic or a macroeconomic issue; a topic cannot be both. |
Topics in microeconomics have public policy implications; topics in macroeconomics do not. |
1
Question 35
1.
(Last Word) The fallacy of composition states that:
because economic systems are composed of so many diverse economic units, economic laws are necessarily inexact. |
the anticipation of a particular event can affect the composition of that event when it occurs. |
what is true for the individual must necessarily be true for the group. |
because event A precedes event B, A is necessarily the cause of B. |
1 points
Question 36
1.
Which of the following is a fundamental characteristic of the market system?
property rights. |
central planning by government. |
unselfish behavior. |
government-set wages and prices. |
1 points
Question 37
1.
The production possibilities curve:
shows all of those levels of production that are consistent with a stable price level. |
indicates that any combination of goods lying outside the curve is economically inefficient. |
is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced. |
shows all of those combinations of two goods that are most preferred by society. |
1 points
Question 38
1.
The slope of a budget line reflects the:
desirability of the two products. |
price ratio of the two products. |
amount of the consumer’s income. |
utility ratio of the two products. |
1 points
Question 39
1.
The two basic markets shown by the simple circular flow model are:
capital goods and consumer goods. |
free and controlled. |
product and resource. |
household and business. |
1 points
Question 40
1.
Which of the following is not a characteristic of the market system?
private property. |
freedom of enterprise. |
government ownership of major industries. |
competition in product and resource markets. |
1 points
Question 41
1.
The economizing problem is:
the need to make choices because economic wants exceed economic means. |
how to distribute resources equally amongst all members of society. |
that people’s means often exceed their wants. |
that people do not know how to rationally allocate resources. |
1 points
Question 42
1.
Which of the following is a distinguishing feature of a market system?
public ownership of all capital. |
wide-spread private ownership of capital. |
a circular flow of goods, resources, and money. |
1 points
Question 43
1.
(Consider This) North Korea’s command economy:
is one of the few remaining command economies. |
has grown much faster than South Korea since the two countries were divided after World War II. |
produces a per capita GDP of nearly $25,000. |
has undergone significant market reforms and is now one of the fastest growing economies. |
1 points
Question 44
1.
Macroeconomics can best be described as the:
analysis of how a consumer tries to spend income. |
study of the large aggregates of the economy or the economy as a whole. |
analysis of how firms attempt to maximize their profits. |
study of how supply and demand determine prices in individual markets. |
1 points
Question 45
1.
Purposeful behavior means that:
people are selfish in their decision-making. |
people weigh costs and benefits to make decisions. |
people are immune from emotions affecting their decisions. |
decision-makers do not make mistakes when weighing costs and benefits. |
1 points
Question 46
1.
The division of labor means that:
labor markets are geographically segmented. |
unskilled workers outnumber skilled workers. |
workers specialize in various production tasks. |
each worker performs a large number of tasks. |
1 points
Question 47
1.
The point on the production possibilities curve that is most desirable can be found by:
estimating the marginal costs of both products in real or physical terms. |
comparing marginal benefits and marginal costs. |
determining where least-cost production occurs. |
calculating where economic growth will be greatest. |
1 points
Question 48
1.
The most efficient combination of resources in producing a given output is the combination that:
comes closest to using the same quantities of land, labor, capital, and entrepreneurial ability. |
can be obtained for the smallest money outlay. |
uses the smallest total quantity of all resources. |
conserves most on the use of labor. |
1 points
Question 49
1.
Refer to the above diagram. Arrows (3) and (4) represent:
goods and services respectively. |
incomes and consumer expenditures respectively. |
consumer expenditures and income respectively. |
1 points
Question 50
1.
Which of the following terms implies the least degree of confidence in an economic generalization?
a hypothesis. |
a theory. |
a principle. |
a law. |
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