Question 1

Economic growth would best be represented by a

Accepted Answer

A) Shift outward of the production possibilities curve. 
B) Shift inward of the production possibilities curve. 
C) Movement from inside the production possibilities curve to a point on the production possibilities curve. 
D) Movement from the production possibilities curve to a point inside the production possibilities curve. 
A) Shift outward of the production possibilities curve. 
B) Shift inward of the production possibilities curve. 
C) Movement from inside the production possibilities curve to a point on the production possibilities curve. 
D) Movement from the production possibilities curve to a point inside the production possibilities curve.

Question 2

Which of the following is an assumption under which the production possibilities curve is drawn?

Accepted Answer

A) Total unemployment is zero. 
B) The supply of resources is fixed. 
C) The price level is changing. 
D) Technology is changing. 
A) Total unemployment is zero. 
B) The supply of resources is fixed. 
C) The price level is changing. 
D) Technology is changing.

Question 3

In Figure 1.9 the slope of the line is

Accepted Answer

A) Greater at point K than point L. 
B) Equal to zero at all points. 
C) The same at points J and K. 
D) Greater at point M than point L. 
A) Greater at point K than point L. 
B) Equal to zero at all points. 
C) The same at points J and K. 
D) Greater at point M than point L.

Question 4

In terms of the production possibilities curve,inefficiency is represented by

Accepted Answer

A) All points on the curve. 
B) All points outside the curve. 
C) All points inside the curve. 
D) A rightward shift of the curve. 
A) All points on the curve. 
B) All points outside the curve. 
C) All points inside the curve. 
D) A rightward shift of the curve.

Question 5

Explain the concept of inefficiency in terms of a production possibilities curve.

Accepted Answer

A production possibilities curve shows p

Question 6

Output combinations that lie inside the production possibilities curve are characterized by efficient use of resources.

Accepted Answer

A) True 
 B)False

Question 7

A movement from point C to point A in Figure 1.4 results in

Accepted Answer

A) More efficient production. 
B) Permanent unemployment of workers producing plasma televisions. 
C) A reallocation of resources from smartphone production to television production. 
D) A reallocation of resources from television production to smartphone production. 
A) More efficient production. 
B) Permanent unemployment of workers producing plasma televisions. 
C) A reallocation of resources from smartphone production to television production. 
D) A reallocation of resources from television production to smartphone production.

Question 8

Which of the following may be used in an attempt to correct market failure?

Accepted Answer

A) The market mechanism. 
B) Laws and regulations. 
C) Laissez faire price policies. 
D) Government failure. 
A) The market mechanism. 
B) Laws and regulations. 
C) Laissez faire price policies. 
D) Government failure.

Question 9

The market mechanism

Accepted Answer

A) Is not a very efficient means of communicating consumer demand to the producers of goods and services. 
B) Works through central planning by government. 
C) Eliminates market failures created by government. 
D) Works because prices serve as a means of communication between consumers and producers. 
A) Is not a very efficient means of communicating consumer demand to the producers of goods and services. 
B) Works through central planning by government. 
C) Eliminates market failures created by government. 
D) Works because prices serve as a means of communication between consumers and producers.

Question 10

According to the law of increasing opportunity costs,

Accepted Answer

A) The more one is willing to pay for resources;the smaller will be the possible level of production. 
B) Increasing the production of a particular good will cause the price of the good to remain constant. 
C) In order to produce additional units of a particular good,it is necessary for society to sacrifice increasingly larger amounts of alternative goods. 
D) None of the choices are correct. 
A) The more one is willing to pay for resources;the smaller will be the possible level of production. 
B) Increasing the production of a particular good will cause the price of the good to remain constant. 
C) In order to produce additional units of a particular good,it is necessary for society to sacrifice increasingly larger amounts of alternative goods. 
D) None of the choices are correct.

Question 11

Which economist argued that free markets unleashed the "animal spirits" of entrepreneurs,propelling innovation,technology,and growth?

Accepted Answer

A) Lord Kelvin. 
B) Kenneth Olsen. 
C) Irving Fisher. 
D) John Maynard Keynes. 
A) Lord Kelvin. 
B) Kenneth Olsen. 
C) Irving Fisher. 
D) John Maynard Keynes.

Question 12

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S.capacity,ceteris paribus. Table 1.2
Production Possibilities for Bombers
$$\begin{array} { | l | c | c | c | c | } 
\hline \text { Combination } & \begin{array} { c } 
\text { Number of B- } \
1 \text { Bombers }
\end{array} & \begin{array} { c } 
\text { Opportunity } \
\text { cost(Foregone } \
\text { Stealth) }
\end{array} & \begin{array} { c } 
\text { Number of } \
\text { Stealth Bombers }
\end{array} & \begin{array} { c } 
\text { Opportunity cost } \
\text { (Foregone B-1) }
\end{array} \
\hline \text { A } & 20 & \mathrm { NA } & 195 & \
\hline \mathrm { B } & 35 & & 180 & \
\hline \mathrm { C } & 45 & & 150 & \
\hline \mathrm { D } & 50 & & 100 & \text { NA } \
\hline
\end{array}$$ On the basis of Table 1.2,the law of increasing opportunity costs applies to

Accepted Answer

A) Both B-1 bombers and Stealth bombers. 
B) B-1 bombers. 
C) Stealth bombers but not to B-1 bombers. 
D) Neither bomber. 
A) Both B-1 bombers and Stealth bombers. 
B) B-1 bombers. 
C) Stealth bombers but not to B-1 bombers. 
D) Neither bomber.

Exam 1: Economics: the Core Issues

Economic growth would best be represented by a

Which of the following is an assumption under which the production possibilities curve is drawn?

In Figure 1.9 the slope of the line is

In terms of the production possibilities curve,inefficiency is represented by

Explain the concept of inefficiency in terms of a production possibilities curve.

Output combinations that lie inside the production possibilities curve are characterized by efficient use of resources.

A movement from point C to point A in Figure 1.4 results in

Which of the following may be used in an attempt to correct market failure?

The market mechanism

According to the law of increasing opportunity costs,

Which economist argued that free markets unleashed the "animal spirits" of entrepreneurs,propelling innovation,technology,and growth?

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

Filters