Question 1

If a nation restricts trade with other nations, then the most likely effect is

Accepted Answer

A) lower prices of goods and services in the nation. 
B) increased specialization of production. 
C) expanded economic wealth of the nation. 
D) consumers in the nation are made worse off. 
A) lower prices of goods and services in the nation. 
B) increased specialization of production. 
C) expanded economic wealth of the nation. 
D) consumers in the nation are made worse off.

Question 2

An economic system in which money is not used as a medium of exchange is a

Accepted Answer

A) planned economy. 
B) market economy. 
C) mixed economy. 
D) barter economy. 
A) planned economy. 
B) market economy. 
C) mixed economy. 
D) barter economy.

Question 3

In the resource market,

Accepted Answer

A) businesses borrow financial capital from households. 
B) businesses sell services to households. 
C) households sell resources to businesses. 
D) firms sell raw materials to households. 
A) businesses borrow financial capital from households. 
B) businesses sell services to households. 
C) households sell resources to businesses. 
D) firms sell raw materials to households.

Question 4

(Last Word) According to economist Donald Boudreaux, the world's tens of billions of individual resources get arranged productively

Accepted Answer

A) because government has become highly effective at central planning. 
B) because private property encourages people to consider the alternative uses of their resources and select those that provide the most rewards. 
C) because people tend to be creative and orderly. 
D) through random trial and error. 
A) because government has become highly effective at central planning. 
B) because private property encourages people to consider the alternative uses of their resources and select those that provide the most rewards. 
C) because people tend to be creative and orderly. 
D) through random trial and error.

Question 5

(Consider This) In 1975, McDonald's introduced its Egg McMuffin breakfast sandwich, which remains popular and profitable today.This longevity illustrates the idea of

Accepted Answer

A) opportunity cost. 
B) upsloping supply. 
C) consumer sovereignty. 
D) specialization. 
A) opportunity cost. 
B) upsloping supply. 
C) consumer sovereignty. 
D) specialization.

Question 6

The main characteristics of a modern market system include all of the following except

Accepted Answer

A) entrepreneurs are free to obtain and use resources to produce goods and services. 
B) consumers are free to buy goods and services that their budgets allow. 
C) economic power is diffused by competition among economic units. 
D) government is restricted to national defense and does not intervene at all in various markets. 
A) entrepreneurs are free to obtain and use resources to produce goods and services. 
B) consumers are free to buy goods and services that their budgets allow. 
C) economic power is diffused by competition among economic units. 
D) government is restricted to national defense and does not intervene at all in various markets.

Question 7

In the circular flow model of the market system, business firms' major role is to

Accepted Answer

A) buy products and resources. 
B) sell products and resources. 
C) buy products and sell resources. 
D) sell products and buy resources.Difficulty: 02 Medium 
A) buy products and resources. 
B) sell products and resources. 
C) buy products and sell resources. 
D) sell products and buy resources.Difficulty: 02 Medium

Question 8

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

Accepted Answer

A) derived demand. 
B) consumer sovereignty. 
C) the invisible hand. 
D) market failure. 
A) derived demand. 
B) consumer sovereignty. 
C) the invisible hand. 
D) market failure.

Question 9

The market system's answer to the fundamental question "How will the system accommodate change?" is essentially

Accepted Answer

A) "Through government leadership and direction." 
B) "Through the guiding function of prices and the incentive function of profits." 
C) "Through training and retraining programs." 
D) "Through trial and error." 
A) "Through government leadership and direction." 
B) "Through the guiding function of prices and the incentive function of profits." 
C) "Through training and retraining programs." 
D) "Through trial and error."

Question 10

A characteristic of the market system is

Accepted Answer

A) extensive use of direct or manual methods of production. 
B) a focus on labor, as opposed to capital resources. 
C) reliance on the use of capital goods in indirect modes of production. 
D) avoidance of producing goods that do not satisfy consumer wants directly. 
A) extensive use of direct or manual methods of production. 
B) a focus on labor, as opposed to capital resources. 
C) reliance on the use of capital goods in indirect modes of production. 
D) avoidance of producing goods that do not satisfy consumer wants directly.

Question 11

Market economies use capital goods because they improve productive efficiency.

Accepted Answer

A) True 
 B)False

Question 12

Economic systems differ from one another based on who owns the factors of production and

Accepted Answer

A) how many resources are available in the economy and where they are located. 
B) how economic activities are coordinated and directed. 
C) what kinds of products are produced in the economy and how they are sold. 
D) how big the population is and the makeup of the population. 
A) how many resources are available in the economy and where they are located. 
B) how economic activities are coordinated and directed. 
C) what kinds of products are produced in the economy and how they are sold. 
D) how big the population is and the makeup of the population.

Question 13

In the circular flow model of the market system, households' major role is to

Accepted Answer

A) buy both products and resources. 
B) sell both products and resources. 
C) buy products and sell resources. 
D) sell products and buy resources. 
A) buy both products and resources. 
B) sell both products and resources. 
C) buy products and sell resources. 
D) sell products and buy resources.

Question 14

In a market system, as one industry expands while another contracts, resources will flow

Accepted Answer

A) away from the expanding industry toward the contracting one. 
B) across industries, driven by the changes in resource prices paid by firms. 
C) toward the industry where the product demand is declining. 
D) because resource allocation will have to equalize between the two industries.Difficulty: 02 Medium 
A) away from the expanding industry toward the contracting one. 
B) across industries, driven by the changes in resource prices paid by firms. 
C) toward the industry where the product demand is declining. 
D) because resource allocation will have to equalize between the two industries.Difficulty: 02 Medium

Question 15

Copyrights and trademarks are examples of

Accepted Answer

A) capital goods. 
B) human capital. 
C) property rights. 
D) public goods. 
A) capital goods. 
B) human capital. 
C) property rights. 
D) public goods.

Question 16

Specialization is beneficial

Accepted Answer

A) at the individual firm level, but not at the national and international levels. 
B) at the individual, regional, and even international levels. 
C) only if there are differences in the abilities of resources. 
D) only as long as money and capital goods are employed. 
A) at the individual firm level, but not at the national and international levels. 
B) at the individual, regional, and even international levels. 
C) only if there are differences in the abilities of resources. 
D) only as long as money and capital goods are employed.

Question 17

Specialization in production is economically beneficial primarily because it

Accepted Answer

A) allows everyone to have a job that he or she likes. 
B) permits the production of a larger output with fixed amounts of resources. 
C) facilitates trade by bartering. 
D) guarantees full employment. 
A) allows everyone to have a job that he or she likes. 
B) permits the production of a larger output with fixed amounts of resources. 
C) facilitates trade by bartering. 
D) guarantees full employment.

Question 18

One of the most important economic resources is money.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that an individual sees a tremendous opportunity to produce and sell a new product but dismisses the idea because there is no way to exploit this opportunity for personal gain.This situation best identifies the

Accepted Answer

A) coordination problem under communist central planning. 
B) self-sufficiency dilemma under communism. 
C) asymmetric information problem under communism. 
D) incentive problem under communist central planning. 
A) coordination problem under communist central planning. 
B) self-sufficiency dilemma under communism. 
C) asymmetric information problem under communism. 
D) incentive problem under communist central planning.

Question 20

An increase in the demand for a product and a reduction in its costs of production would

Accepted Answer

A) decrease the profits of producers. 
B) encourage firms to leave an industry. 
C) encourage firms to enter an industry. 
D) cause a shortage of the product. 
A) decrease the profits of producers. 
B) encourage firms to leave an industry. 
C) encourage firms to enter an industry. 
D) cause a shortage of the product.

Exam 2: The Market System and the Circular Flow

If a nation restricts trade with other nations, then the most likely effect is

An economic system in which money is not used as a medium of exchange is a

In the resource market,

(Last Word) According to economist Donald Boudreaux, the world's tens of billions of individual resources get arranged productively

(Consider This) In 1975, McDonald's introduced its Egg McMuffin breakfast sandwich, which remains popular and profitable today.This longevity illustrates the idea of

The main characteristics of a modern market system include all of the following except

In the circular flow model of the market system, business firms' major role is to

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

The market system's answer to the fundamental question "How will the system accommodate change?" is essentially

A characteristic of the market system is

Market economies use capital goods because they improve productive efficiency.

Economic systems differ from one another based on who owns the factors of production and

In the circular flow model of the market system, households' major role is to

In a market system, as one industry expands while another contracts, resources will flow

Copyrights and trademarks are examples of

Specialization is beneficial

Specialization in production is economically beneficial primarily because it

One of the most important economic resources is money.

Suppose that an individual sees a tremendous opportunity to produce and sell a new product but dismisses the idea because there is no way to exploit this opportunity for personal gain.This situation best identifies the

An increase in the demand for a product and a reduction in its costs of production would

Limits, Alternatives, and Choices

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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