a. affects the
important conclusions of an economic model.
b. increases the
level of detail in an economic model.
c. limits the
validity of an economic model’s conclusion.
d. eliminates unnecessary
details from an economic model.
2. The ultimate purpose of an economic
model is to
a. explain
reality as completely as possible.
b. establish
assumptions that closely resemble reality.
c. help us to
understand economic behavior.
d. guide government
policy decisions.
3. An economic model
a. uses
equations to understand normative economic phenomena.
b. often omits
crucial elements.
c. simplifies
reality in order to focus on crucial elements.
d. cannot be
proven wrong.
3. Which of the following activities would
occur in a market for factors of production?
a. Reesa buys a
new computer to help balance her personal checkbook.
b. Randy pays a
speeding ticket.
c. Ian mows his
grass.
d. General
Motors hires additional workers to run a third-shift at a factory.
4. Which of the following activities would
occur in a market for goods and services?
a. Harry mows
his grass.
b. General
Motors hires additional workers to run a third shift at a factory.
c. Jane bakes
pies for Thanksgiving dinner.
d. Dolly buys a
ticket to a ball game.
5. The three sources of income for the
household are
a. taxes,
subsidies from the government, and rent.
b. wages, rent,
and profit.
c. wages, rent,
and subsidies from the government.
d. wages,
rebates, and rent.
6. Households play what role(s) in the
circular flow diagram?
a. purchasers of
factors of production and sellers of services
b. purchasers of
factors of production and sellers of goods
c. purchasers of
goods and services only
d. purchasers of
goods and services and sellers of factors of production
7. Which of the following is not an
assumption that underlies an economy’s production possibilities frontier?
a. fixed income
b. fixed
resources
c. unchanged
technology
d. fully
employed resources
8. Which of the following would not result
in an outward shift of a nation’s production possibilities frontier?
a. a reduction
in the unemployment rate
b. a rise in
labor productivity
c. advances in
technology
d. an expanding
resource base
9. The production possibilities frontier
demonstrates the basic economic principle that:
a. economies are
always efficient.
b. assuming full
employment, supply will always determine demand.
c. assuming full
employment, an economy is efficient only when the production of capital goods
in a particular year is greater than the production of consumption goods in
that year.
d. assuming full
employment, to produce more of any one thing, the economy must produce less of
at least one other good.
10. Suppose an economy has the production
possibilities frontier shown in the diagram and is operating at positiona.
Which of the statements below is false?
a. This economy
could produce more of both capital and consumption goods.
b. This economy
is experiencing full employment.
c. This economy
could produce more capital goods without decreasing the quantity of consumption
goods produced.
d. This economy could produce more consumption goods without decreasing the quantity of capital goods produced.
d. This economy could produce more consumption goods without decreasing the quantity of capital goods produced.
11. If the economy shown in the diagram
moves from position A to position B, we would know that
a. the rate of
unemployment increased.
b. consumption
goods production increased, but capital goods production decreased.
c. its
unemployment decreased, but at the expense of either capital or consumption
good production.
d. it has
achieved full employment of its resources.
12. Opportunity costs most often increase
as you move down a production possibilities frontier because
a. resources are
not completely adaptable to alternative uses.
b. factors of
production are limited and human wants are unlimited.
c. efficiencies
are generated by large-scale production.
d. economic
efficiency is only possible in the short run.
13. All points on a production
possibilities frontier show the
a. maximum satisfaction
that households receive from their purchases of goods.
b. minimum
quantities of resources that must be used to produce a given quantity of
output.
c. maximum
output that society can produce with given resources and technology.
d. minimum output
that society can produce with given resources and technology.
14. The branch of economics that is
concerned with the overall performance of the economy is called
a. resource
economics.
b. contemporary
economics.
c. macroeconomics.
d. microeconomics.
15. Which of the following questions would
not be of particular interest to a microeconomist?
a. Why do
national economies grow?
b. What
percentage of consumer income is spent on entertainment?
c. Why do
workers prefer the 4-day workweek?
d. What happens
to worker productivity when a business shifts to a 4-day workweek?
16. The television network newscaster
reports that the national inflation rate in the past year equaled 4 percent.
This report is most likely prepared from work done by a(n)
a. microeconomist.
b. normative
economist.
c. macroeconomist.
d. social
scientist rather than an economist.
17. The Secretary of Labor states that wage
rates in the country have risen by 2 percent this past year. The head of a
local labor union states that wage gains should have been higher. The
Secretary’s statement is a __________ economic statement, and the labor head’s
statement is a __________economic statement.
a. normative;
normative
b. normative;
positive
c. positive;
normative
d. positive;
positive
18. “An increase in interest rates will
lower economic growth.” This statement is
a. a positive
economic statement.
b. a normative
economic statement.
c. untrue in
every case.
d. controversial,
and so not a valid economic issue.
19. The distinction between positive and
normative economics
a. is that
positive economics applies only to microeconomic problems.
b. is that
normative economics applies only to microeconomic problems.
c. explains why
economics is not a social science but a natural science.
d. helps us to
understand why economists sometimes disagree with one another.
20. Which of the following is most closely
associated with positive economics?
a. Determining
the impact of government spending on the actual level of total employment.
b. Determining
the best level of immigration into a country.
c. Determining
whether too many luxury goods are being produced.
d. Determining
whether or not the government should reduce poverty.
21. In the diagram, the slope of the curve
is
a. increasing at
a constant rate.
b. increasing at
a decreasing rate.
c. decreasing at
a constant rate.
d. decreasing at
an increasing rate.
22. In the diagram, the slope of the curve
between points A and B is
a. –5.
b. –1.
c. –1/5.
d. None of the
above are correct.
23. In the diagram, the slope of the curve
is
a. constant.
c. decreasing.
24. In the diagram, the slope of the curve
between points C and D is
b. 10
c. –10
d. 50
25. If two variables tend to increase and
decrease together, they are
a. positively
correlated.
b. negatively
correlated.
c. uncorrelated.
d. quasi-correlated
26. The number of rainy days in the year
and annual sales of suntan lotion are probably
a. positively
correlated.
b. negatively
correlated.
c. uncorrelated.
d. quasi-correlated.
27. A student’s course grade and amount of
time spent studying for the course are generally
a. positively
correlated.
b. negatively
correlated.
c. uncorrelated.
d. quasi-correlated.
No comments