Question 1

Which of the following is a positive statement?

Accepted Answer

A) The rate of unemployment should be 4%. 
B) A high rate of economic growth should be a more important economic goal than a low rate of inflation. 
C) The federal government spends half of its budget on national defense. 
D) Everyone in the country should be covered by national health insurance. 
A) The rate of unemployment should be 4%. 
B) A high rate of economic growth should be a more important economic goal than a low rate of inflation. 
C) The federal government spends half of its budget on national defense. 
D) Everyone in the country should be covered by national health insurance.

Question 2

The principle of comparative advantage suggests that if New York and Florida exchange taxi parts for oranges, each state will be made worse off.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions :
Figure: Comparative Advantage
Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods.  
-(Figure: Comparative Advantage) Look at the figure Comparative Advantage. Eastland has a comparative advantage in producing:

Accepted Answer

A) oranges only. 
B) peaches only. 
C) both oranges and peaches. 
D) neither oranges nor peaches. 
A) oranges only. 
B) peaches only. 
C) both oranges and peaches. 
D) neither oranges nor peaches.

Question 4

Which of the following is sold in the product market?

Accepted Answer

A) footballs 
B) labor 
C) physical capital 
D) human capital 
A) footballs 
B) labor 
C) physical capital 
D) human capital

Question 5

In the simplest circular-flow model, households supply _____ and demand _____.

Accepted Answer

A) capital; barter 
B) wages and income; capital markets 
C) factors of production; goods and services 
D) firms; markets 
A) capital; barter 
B) wages and income; capital markets 
C) factors of production; goods and services 
D) firms; markets

Question 6

"Steel tariffs will prevent job losses in the steel industry" is a positive statement.

Accepted Answer

A) True 
 B)False

Question 7

The circular-flow diagram shows how:

Accepted Answer

A) banks receive deposits and create money. 
B) money, goods and services, and factors of production flow through the economy. 
C) the various levels of government allocate tax revenues to meet the needs of society. 
D) the work force is educated and trained to increase labor productivity. 
A) banks receive deposits and create money. 
B) money, goods and services, and factors of production flow through the economy. 
C) the various levels of government allocate tax revenues to meet the needs of society. 
D) the work force is educated and trained to increase labor productivity.

Question 8

Use the following to answer questions :  
-(Figure: Wine and Wheat) Look at the figure Wine and Wheat. The opportunity cost of moving from producing ONLY wheat to producing ONLY wine is _____ tons of wheat.

Accepted Answer

A) 3 
B) 6 
C) 9 
D) 15 
A) 3 
B) 6 
C) 9 
D) 15

Question 9

If Brazil gives up three automobiles for each ton of coffee it produces, while Peru gives up seven automobiles for each ton of coffee it produces, then Brazil has a comparative advantage in _____ production and should specialize in _____.

Accepted Answer

A) automobile; coffee 
B) coffee; automobiles 
C) coffee; coffee 
D) automobile; automobiles 
A) automobile; coffee 
B) coffee; automobiles 
C) coffee; coffee 
D) automobile; automobiles

Question 10

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good:

Accepted Answer

A) is always constant. 
B) is measured in dollar terms. 
C) is measured by the amount of the other good that must be given up. 
D) usually decreases. 
A) is always constant. 
B) is measured in dollar terms. 
C) is measured by the amount of the other good that must be given up. 
D) usually decreases.

Question 11

A mortgage-backed security is an asset that:

Accepted Answer

A) only homeowners are allowed to purchase. 
B) provides earnings to its owner based on payments made by people on their home loans. 
C) the Federal Reserve uses to implement monetary policy. 
D) is an important part of the circular-flow diagram. 
A) only homeowners are allowed to purchase. 
B) provides earnings to its owner based on payments made by people on their home loans. 
C) the Federal Reserve uses to implement monetary policy. 
D) is an important part of the circular-flow diagram.

Question 12

Use the following to answer questions :  
-(Table: Trade-off of Study Time and Leisure Time) Look at the table Trade-off of Study Time and Leisure Time. A student sleeps 8 hours per day and divides the remaining time between study time and leisure time. The table shows the combinations of study and leisure time that can be produced in the 16 waking hours of each day. Suppose the student completes a speed-reading course that allows him to do the same amount of studying in half as many hours. His opportunity cost:

Accepted Answer

A) of leisure has increased. 
B) of studying has increased. 
C) of leisure has decreased. 
D) has not changed. 
A) of leisure has increased. 
B) of studying has increased. 
C) of leisure has decreased. 
D) has not changed.

Question 13

Use the following to answer questions :  
-(Table: Bongos and Frisbees) Look at the table Bongos and Frisbees. Bill and Mickey make bongos and Frisbees. Who should specialize in the production of bongos?

Accepted Answer

A) Bill 
B) Mickey 
C) both 
D) neither 
A) Bill 
B) Mickey 
C) both 
D) neither

Question 14

Which of the following statements is TRUE?

Accepted Answer

A) Very talented people may have a comparative advantage in everything they do. 
B) Very untalented people have a comparative advantage in something they do. 
C) Very talented people may have a low opportunity cost in most things they do. 
D) Very untalented people may have a high opportunity cost in most things they do. 
A) Very talented people may have a comparative advantage in everything they do. 
B) Very untalented people have a comparative advantage in something they do. 
C) Very talented people may have a low opportunity cost in most things they do. 
D) Very untalented people may have a high opportunity cost in most things they do.

Question 15

Use the following to answer questions:
Figure: Tom's Production Possibilities  
-(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. Which point or points represent(s) a feasible combination of coconuts and fish?

Accepted Answer

A) A only 
B) A and B 
C) A, B, and C 
D) D only 
A) A only 
B) A and B 
C) A, B, and C 
D) D only

Question 16

Smallville has a linear production possibility frontier in the production of good X and good Y. It can produce 6 of X per hour or 8 of Y per hour. Suppose it has 240 hours of labor and divides labor hours equally between production of good X and good Y. What is the MAXIMUM amount of good Y it can produce?

Accepted Answer

A) 960 
B) 30 
C) 14 
D) 6 
A) 960 
B) 30 
C) 14 
D) 6

Question 17

Use the following to answer questions :  
-(Table: Trade-off of Study Time and Leisure Time) Look at the table Trade-off of Study Time and Leisure Time. A student sleeps 8 hours per day and divides the remaining time between study and leisure time. Suppose this student is studying 4 hours and spending 10 hours doing leisure activities. This point is:

Accepted Answer

A) outside the production possibility frontier. 
B) inside the production possibility frontier. 
C) on the production possibility frontier. 
D) both efficient and feasible. 
A) outside the production possibility frontier. 
B) inside the production possibility frontier. 
C) on the production possibility frontier. 
D) both efficient and feasible.

Question 18

In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier?

Accepted Answer

A) It shifts his production possibility frontier out. 
B) It shifts his production possibility frontier in. 
C) He will be less efficient. 
D) He will not be able to produce as much as before. 
A) It shifts his production possibility frontier out. 
B) It shifts his production possibility frontier in. 
C) He will be less efficient. 
D) He will not be able to produce as much as before.

Question 19

In the circular-flow diagram households buy _____ in the _____ market.

Accepted Answer

A) goods and services; product 
B) goods and services; factor 
C) resources; factor 
D) resources; product 
A) goods and services; product 
B) goods and services; factor 
C) resources; factor 
D) resources; product

Which of the following is a positive statement?

The principle of comparative advantage suggests that if New York and Florida exchange taxi parts for oranges, each state will be made worse off.

Which of the following is sold in the product market?

In the simplest circular-flow model, households supply _ and demand _.

"Steel tariffs will prevent job losses in the steel industry" is a positive statement.

The circular-flow diagram shows how:

Use the following to answer questions : -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. The opportunity cost of moving from producing ONLY wheat to producing ONLY wine is _____ tons of wheat.

If Brazil gives up three automobiles for each ton of coffee it produces, while Peru gives up seven automobiles for each ton of coffee it produces, then Brazil has a comparative advantage in _ production and should specialize in _.

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good:

A mortgage-backed security is an asset that:

Use the following to answer questions : -(Table: Bongos and Frisbees) Look at the table Bongos and Frisbees. Bill and Mickey make bongos and Frisbees. Who should specialize in the production of bongos?

Which of the following statements is TRUE?

Use the following to answer questions: Figure: Tom's Production Possibilities -(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. Which point or points represent(s) a feasible combination of coconuts and fish?

In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier?

In the circular-flow diagram households buy _ in the _ market.

First Principles

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 2: Economic Models

Which of the following is a positive statement?

The principle of comparative advantage suggests that if New York and Florida exchange taxi parts for oranges, each state will be made worse off.

Which of the following is sold in the product market?

In the simplest circular-flow model, households supply _____ and demand _____.

"Steel tariffs will prevent job losses in the steel industry" is a positive statement.

The circular-flow diagram shows how:

Use the following to answer questions : -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. The opportunity cost of moving from producing ONLY wheat to producing ONLY wine is _____ tons of wheat.

If Brazil gives up three automobiles for each ton of coffee it produces, while Peru gives up seven automobiles for each ton of coffee it produces, then Brazil has a comparative advantage in _____ production and should specialize in _____.

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good:

A mortgage-backed security is an asset that:

Use the following to answer questions : -(Table: Bongos and Frisbees) Look at the table Bongos and Frisbees. Bill and Mickey make bongos and Frisbees. Who should specialize in the production of bongos?

Which of the following statements is TRUE?

Use the following to answer questions: Figure: Tom's Production Possibilities -(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. Which point or points represent(s) a feasible combination of coconuts and fish?

In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier?

In the circular-flow diagram households buy _____ in the _____ market.

First Principles

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

In the simplest circular-flow model, households supply _ and demand _.

If Brazil gives up three automobiles for each ton of coffee it produces, while Peru gives up seven automobiles for each ton of coffee it produces, then Brazil has a comparative advantage in _ production and should specialize in _.

In the circular-flow diagram households buy _ in the _ market.