QUESTION 1

An optimal decision is one that chooses

	a.	among various possible goals and offends no one, so that all are equally happy.
	b.	the lowest cost method of meeting goals, without regard to quality or any other feature.
	c.	among possible goals in such a way that spends as little money as possible.
	d.	among equally important goals, and thereby avoids the "indispensable necessity" syndrome.
	e.	the most desirable alternative among the possibilities permitted by the resources available.

1 points

QUESTION 2

In a market system, the major coordination tasks are carried out

	a.	automatically by the market mechanism.
	b.	as part of the regular appropriation process of Congress.
	c.	irregularly by the major corporations.
	d.	with the approval of central planners.

1 points

QUESTION 3

Opportunity cost can best be defined as the

	a.	value of the best alternative forgone when the alternative at hand is chosen.
	b.	cost of the resources used to produce a good or service.
	c.	money cost plus interest on money borrowed to buy a good or service.
	d.	money cost of a good or service.

1 points

QUESTION 4

Figure 3-4

Which of the following would make point Q in Figure 3-4 attainable?

	a.	A technological advance strictly applicable to the production of apples
	b.	A transfer of available resources from apples to wheat production
	c.	Full-employment policies
	d.	An increase in land available for agricultural use

1 points

QUESTION 5

The definition of efficiency implies that production is carried out on the production possibilities frontier.

True

False

1 points

QUESTION 6

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

	a.	No, an economy can also grow by investment instead of capital spending.
	b.	Yes, although more capital clearly has a high opportunity cost.
	c.	Yes, because capital is the only constraining resource that limits growth.
	d.	Yes, more capital is the only way to expand its production possibilities frontier.
	e.	No, an economy can also expand by invention and innovation.

1 points

QUESTION 7

An optimal decision is one that chooses

	a.	the most desirable alternative among the possibilities permitted by the resources available.
	b.	the lowest cost method of meeting goals, without regard to quality or any other feature.
	c.	among equally important goals, and thereby avoids the "indispensable necessity" syndrome.
	d.	among various possible goals and offends no one, so that all are equally happy.
	e.	among possible goals in such a way that spends as little money as possible.

1 points

QUESTION 8

Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?

	a.	Because opportunity costs are different for different goods.
	b.	Because of existence of efficient markets.
	c.	Because there are trade-offs involved in any decision.
	d.	Because sometimes the market does not function well.

1 points

QUESTION 9

Which of the following is an explanation for why some poor countries suffer from lower productivity growth?

	a.	Too much saving has led to the accumulation of capital in poor countries.
	b.	Poor countries have lower capital stocks.
	c.	The adoption of technology too quickly hurts the labor force in poor countries.
	d.	Primary education is universal in poor countries.

1 points

QUESTION 10

Invention is

	a.	the act of discovering new products or new ways of making products.
	b.	the collaboration of land, labor, and capital to bring to market goods and services.
	c.	the act of reducing the number of inputs to increase the amount of output.
	d.	the act of putting new ideas into effect.

1 points

QUESTION 11

In order for a country to achieve more consumer goods in the future, it must

	a.	devote more resources toward consumer goods today.
	b.	have a faster economic growth rate in the future.
	c.	devote more resources to consumer goods in the future.
	d.	allocate more resources toward investment today.

1 points

QUESTION 12

Imitation, rather than innovation, is a way for poorer countries to achieve growth.

True

False

1 points

QUESTION 13

Private sector investment is usually done through borrowing. The economic variable that influences the level of investment is the

	a.	the real interest rate.
	b.	per capita GDP.
	c.	inflation rate.
	d.	employment rate.

1 points

QUESTION 14

More consumption rather than investment leads to stagnant growth in developing countries.

True

False

1 points

QUESTION 15

Improvements in the level of technology will generally shift the production function downward.

True

False

1 points

QUESTION 16

The school of engineering at a modern university would be a supporter of the new

	a.	growth theory.
	b.	monetary theory.
	c.	consumption theory.
	d.	construction theory.

1 points

QUESTION 17

Human capital differs from physical capital in that

	a.	human capital is tangible.
	b.	human capital is intangible.
	c.	human capital has no cost to acquire.
	d.	physical capital is intangible.

1 points

QUESTION 18

The United States has never suffered through periods of hyperinflation in its history.

True

False

1 points

QUESTION 19

According to the U.S. Bureau of Labor Statistics, the term "employed" includes all full time workers and part-time workers.

True

False

1 points

QUESTION 20

If borrowers and lenders expect a higher rate of inflation,

	a.	nominal interest rates should decrease.
	b.	nominal interest rates should increase.
	c.	real interest rates should increase.
	d.	nominal interest rates should remain constant.

1 points

QUESTION 21

Economists feel that taxing nominal capital gains imposes costs on the economy due to

	a.	increased investment.
	b.	increased consumption.
	c.	reduced investment.
	d.	reduced consumption.

1 points

QUESTION 22

Someone unemployed for a long period of time due to technological change would be described as structurally unemployed.

True

False

1 points

QUESTION 23

As more firms are attracted to an industry, the supply curve can be expected to shift to the right.

True

False

1 points

QUESTION 24

The unemployment of some groups, such as low-skill workers, may increase as a result of the imposition of a minimum wage.

True

False

1 points

QUESTION 25

A shift in the demand curve will occur when

	a.	the price of the good falls.
	b.	the price of a good rises.
	c.	suppliers place more goods on the market.
	d.	consumers want to buy more or less than before at a given price.

1 points

QUESTION 26

A severe freeze has damaged the Florida orange crop. The effect on the market for oranges will be a left shift of

	a.	demand, as consumers try to economize because of the shortage.
	b.	the supply curve and a right shift in the demand curve, and the outcome will be a higher price
	c.	both the supply and demand curves.
	d.	the supply curve.

1 points

QUESTION 27

Unemployment insurance benefits the macroeconomy by supporting purchasing power.

True

False

1 points

QUESTION 28

A decrease in the stock of capital may

	a.	increase labor productivity.
	b.	decrease skilled labor.
	c.	decrease potential GDP.
	d.	increase real GDP.

1 points

QUESTION 29

If part of the labor force is unemployed, the foregone goods and services are

	a.	are replaced by unemployment insurance.
	b.	lost until the unemployed find jobs.
	c.	are replaced by an equal amount of imports.
	d.	are lost forever.

1 points

QUESTION 30

Full employment implies which of the following is reduced to zero?

	a.	Frictional and structural unemployment only
	b.	Frictional unemployment only
	c.	Frictional, structural, and cyclical unemployment
	d.	Cyclical unemployment only

1 points

QUESTION 31

Consider the economic impact of Hurricane Florence in 2018. Which of the following statements is correct?

	a.	Spending toward reconstruction would lead to an increase in GDP.
	b.	Increased government spending on relief efforts in the United States would decrease GDP.
	c.	U.S. well-being improves the more reconstruction efforts are needed, following the decline in GDP.
	d.	Damaged buildings and looting would lead to a decrease in GDP.

1 points

QUESTION 32

Stabilization policy describes

	a.	policy that follows natural disasters.
	b.	government programs designed to prevent or shorten recessions and counteract inflation.
	c.	policy that removes price controls.
	d.	legislation that redistributes income.

1 points

QUESTION 33

The U.S. GDP includes

	a.	the exchange of four shirts for four skirts at a consignment store.
	b.	time spent studying for an exam.
	c.	increases in the divorce rate.
	d.	wine harvested and bottled in California.

1 points

QUESTION 34

A good produced in 2009 and held in inventory until it is sold in 2010 would be included in which measure of GDP?

	a.	In 2010 GDP
	b.	In 2009 GDP
	c.	In both 2009 and 2010 GDP
	d.	Half the value in 2009 and half the value in 2010

1 points

QUESTION 35

Figure 5-1

Figure 5-1 plots potential and real output for a hypothetical economy. Based on this graph, the recession occurred

	a.	after year 4.
	b.	between years 3 and 4.
	c.	between years 2 and 3.
	d.	between years 1 and 2.

1 points

QUESTION 36

Gross domestic product is calculated by adding together

	a.	the number of goods and services produced in the economy.
	b.	number of workers employed in national production.
	c.	money value of final goods and services.
	d.	all commodities but not services produced in the economy.

1 points

QUESTION 37

Which of the following is a true measure of national output?

	a.	GDP using base-year prices
	b.	GNP at market price
	c.	GDP in future dollars
	d.	Nominal GNP

1 points

QUESTION 38

While their respective subject matters differ greatly, both microeconomists and macroeconomists rely on the same basic tools; that is, both rely on

	a.	consumer protection laws and antitrust legislation.
	b.	government contracts to promote research and publications.
	c.	the economic theory of John Maynard Keynes.
	d.	demand and supply analysis.

1 points

QUESTION 39

Workers in the United States receive significantly higher compensation than almost all other western European nations.

True

False

1 points

QUESTION 40

Most American workers

	a.	are employed in the goods-producing sector.
	b.	are employed in the agricultural sector.
	c.	are employed in the service-producing sector.
	d.	are employed by government.

1 points

QUESTION 41

In the United States, all property is privately owned.

True

False

1 points

QUESTION 42

A recession can best be defined as a period of time in which

	a.	total unemployment falls.
	b.	the rate of inflation falls below zero.
	c.	total output of the economy rises very slowly.
	d.	total output of the economy falls.
	e.	total international trade fails to rise.

1 points

QUESTION 43

The percentage of the American workforce employed in the manufacturing sector has been steadily declining over the past 50 years.

True

False

1 points

QUESTION 44

Over the past several years and until recently, the United States has had lower unemployment rates than most European countries.

True

False

1 points

QUESTION 45

All industrialized countries have become "service economies." Which factor helps explain this shift?

	a.	Information age and laborsaving innovation in manufacturing
	b.	The lack of competition in the service sector
	c.	Trade unionism and failure of the manufacturing sector to grow
	d.	The decline in the number of workers possessing the required skills for industrial production

1 points

QUESTION 46

Imports from China represent ____ of total U.S. imports.

	a.	less than 20 percent
	b.	approximately 60 percent
	c.	approximately 40 percent
	d.	more than 80 percent

1 points

QUESTION 47

Assume that Figure 4-16 shows the supply of soda. An increase in the price of syrup used in the production of soda will shift supply from

	a.	S2to S3.
	b.	S2to S1.
	c.	S1to S2.
	d.	S1to S3.

1 points

QUESTION 48

A decrease in demand will have what effect on equilibrium price and quantity?

	a.	Both price and quantity will decrease.
	b.	Price will decrease; quantity will increase.
	c.	Both price and quantity will increase.
	d.	Price will increase; quantity will decrease.

1 points

QUESTION 49

Price controls usually enhance efficiency in the allocation of resource

QUESTION 50

An increase in demand will have what effect on equilibrium price and quantity?

	a.	Both price and quantity will decrease.
	b.	Both price and quantity will increase.
	c.	Price will decrease; quantity will increase.
	d.	Price will increase; quantity will decrease.