Question 1

The economizing problem faced by a society is:

Accepted Answer

A)  To achieve a more equitable distribution of income in the society 
B)  A consequence of the fact that productive resources are scarce relative to economic wants 
C)  To establish prices which are fair for both producers and consumers 
D)  That product prices often rise more rapidly than incomes of consumers 
A)  To achieve a more equitable distribution of income in the society 
B)  A consequence of the fact that productive resources are scarce relative to economic wants 
C)  To establish prices which are fair for both producers and consumers 
D)  That product prices often rise more rapidly than incomes of consumers

Question 2

Refer to the above production possibilities curves. Curve (a) is the initial curve for the economy, and the nation is initially producing combination P. A shift from curve (a) to curve (b) suggests that the economy can then increase its production of capital goods:

Accepted Answer

A)  Only if it reduces its production of consumer goods 
B)  So as to produce the combination L 
C)  And consumer goods simultaneously 
D)  But will have to hold constant its production of consumer goods 
A)  Only if it reduces its production of consumer goods 
B)  So as to produce the combination L 
C)  And consumer goods simultaneously 
D)  But will have to hold constant its production of consumer goods

Question 3

Economists would classify all of the following as "land," except:

Accepted Answer

A)  Two thousand acres of virgin forest 
B)  A hydroelectric dam 
C)  Crude oil reserves 
D)  Iron ore deposits 
A)  Two thousand acres of virgin forest 
B)  A hydroelectric dam 
C)  Crude oil reserves 
D)  Iron ore deposits

Question 4

The basic truth that underlies the study of economics is the fact that we all face:

Accepted Answer

A)  Death 
B)  Taxes 
C)  Risk 
D)  Scarcity 
A)  Death 
B)  Taxes 
C)  Risk 
D)  Scarcity

Question 5

In line (2) on the above graph, the variables x and y are:

Accepted Answer

A)  Nonlinearly related 
B)  Directly related 
C)  Not correlated 
D)  Inversely related 
A)  Nonlinearly related 
B)  Directly related 
C)  Not correlated 
D)  Inversely related

Question 6

Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of:

Accepted Answer

A)  Civilian goods to decrease 
B)  Both civilian goods and defense goods to decrease 
C)  Defense goods to decrease 
D)  Defense goods to increase 
A)  Civilian goods to decrease 
B)  Both civilian goods and defense goods to decrease 
C)  Defense goods to decrease 
D)  Defense goods to increase

Question 7

In a curved graph that is dome-shaped, the tangent line at it maximum or highest point has an infinite slope.

Accepted Answer

A) True 
 B)False

Question 8

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking the marginal:

Accepted Answer

A)  Benefit of studying is greater than the marginal cost of studying 
B)  Cost of going to the movies is less than the marginal benefit of going to the movies 
C)  Benefit of studying are greater than the marginal benefit of going to the movies 
D)  Cost of going to the movies is greater than the marginal cost of studying 
A)  Benefit of studying is greater than the marginal cost of studying 
B)  Cost of going to the movies is less than the marginal benefit of going to the movies 
C)  Benefit of studying are greater than the marginal benefit of going to the movies 
D)  Cost of going to the movies is greater than the marginal cost of studying

Question 9

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Accepted Answer

A)  An increase in unemployment 
B)  An increase in the amount of imports 
C)  An increase in the number of skilled immigrant workers 
D)  The destruction caused by bombing and warfare in a losing military conflict 
A)  An increase in unemployment 
B)  An increase in the amount of imports 
C)  An increase in the number of skilled immigrant workers 
D)  The destruction caused by bombing and warfare in a losing military conflict

Question 10

A budget line is a graph that shows the various combinations of two products that a:

Accepted Answer

A)  Consumer can buy with a given amount of money income 
B)  Business firm can produce with a given budget 
C)  Household can produce with a given amount of resources 
D)  Nation can trade with another nation 
A)  Consumer can buy with a given amount of money income 
B)  Business firm can produce with a given budget 
C)  Household can produce with a given amount of resources 
D)  Nation can trade with another nation

Question 11

Refer to the above production possibilities curves. Curve (a) is the initial curve for the economy. If the economy's production possibilities then shift to curve (b), then:

Accepted Answer

A)  Point N would still indicate a case of full production and full employment of resources 
B)  Point P would still indicate a case of full production and full employment of resources 
C)  Point N would indicate some unemployment or underemployment of resources 
D)  Point L would indicate some unemployment or underemployment of resources 
A)  Point N would still indicate a case of full production and full employment of resources 
B)  Point P would still indicate a case of full production and full employment of resources 
C)  Point N would indicate some unemployment or underemployment of resources 
D)  Point L would indicate some unemployment or underemployment of resources

Question 12

If a nation produces more consumer goods and less capital goods, then the nation will have:

Accepted Answer

A)  More consumption now, but less consumption later 
B)  Less consumption now, but more consumption later 
C)  More consumption now, with no effect on consumption later 
D)  Less consumption later, with no effect on consumption now 
A)  More consumption now, but less consumption later 
B)  Less consumption now, but more consumption later 
C)  More consumption now, with no effect on consumption later 
D)  Less consumption later, with no effect on consumption now

Question 13

Which question is an illustration of a microeconomic question?

Accepted Answer

A)  Is the volume of wine produced in one year dependent upon the price of wine? 
B)  Does government spending influence interest rates in the economy? 
C)  Is the purchasing power of the dollar higher or lower today than it was in 2008? 
D)  Which economic system is better for consumers and firms? 
A)  Is the volume of wine produced in one year dependent upon the price of wine? 
B)  Does government spending influence interest rates in the economy? 
C)  Is the purchasing power of the dollar higher or lower today than it was in 2008? 
D)  Which economic system is better for consumers and firms?

Question 14

If you knew that the vertical intercept for a straight line was 15, that the slope was -.5, and that the independent variable had a value of 8, the value of the dependent variable would be:

Accepted Answer

A)  8 
B)  9 
C)  10 
D)  11 
A)  8 
B)  9 
C)  10 
D)  11

Question 15

Which of the following is a positive economic statement?

Accepted Answer

A)  Government must maintain the current level of defense spending to keep the nation safe 
B)  The minimum wage should be increased to give people a decent wage 
C)  Americans should buy American products in order to boost the national economy 
D)  Stock prices rose to a new record last month for the fourth month in a row 
A)  Government must maintain the current level of defense spending to keep the nation safe 
B)  The minimum wage should be increased to give people a decent wage 
C)  Americans should buy American products in order to boost the national economy 
D)  Stock prices rose to a new record last month for the fourth month in a row

Question 16

Which of the following is the fallacy in the fallacy of composition?

Accepted Answer

A)  Whatever goes up must come down 
B)  Facts are more important than theories 
C)  What is true for the part is necessarily also true for the whole 
D)  If event B occurs after event A, event A must have caused event B 
A)  Whatever goes up must come down 
B)  Facts are more important than theories 
C)  What is true for the part is necessarily also true for the whole 
D)  If event B occurs after event A, event A must have caused event B

Question 17

A point or product-combination to the left of and inside a budget line:

Accepted Answer

A)  Is attainable, but a combination or point to the right of the line is unattainable 
B)  Is unattainable, but a combination or point to the right of the line is attainable 
C)  Costs more than a combination or point on the budget line 
D)  Costs more than a combination or point outside the budget line 
A)  Is attainable, but a combination or point to the right of the line is unattainable 
B)  Is unattainable, but a combination or point to the right of the line is attainable 
C)  Costs more than a combination or point on the budget line 
D)  Costs more than a combination or point outside the budget line

Question 18

Macroeconomics is concerned with the study of the nation-wide market for specific goods like oranges.

Accepted Answer

A) True 
 B)False

Question 19

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule:   Refer to the above table. A change from combination C to B means that:

Accepted Answer

A)  1 unit of steel is given up to get 75 units of wheat 
B)  2 units of steel are given up to get 75 units of wheat 
C)  1 unit of steel is given up to get 15 more units of wheat 
D)  2 units of steel are given up to get 15 more units of wheat 
A)  1 unit of steel is given up to get 75 units of wheat 
B)  2 units of steel are given up to get 75 units of wheat 
C)  1 unit of steel is given up to get 15 more units of wheat 
D)  2 units of steel are given up to get 15 more units of wheat

Question 20

Refer to the above graph. From the economists' perspective, which is the independent variable and which is the dependent variable?

Accepted Answer

A)  Price is the independent variable and quantity demanded is the dependent variable 
B)  Price is the dependent variable and quantity demanded is the independent variable 
C)  Both price and quantity demanded are independent variables 
D)  Both price and quantity demanded are dependent variables 
A)  Price is the independent variable and quantity demanded is the dependent variable 
B)  Price is the dependent variable and quantity demanded is the independent variable 
C)  Both price and quantity demanded are independent variables 
D)  Both price and quantity demanded are dependent variables

Exam 1: Limits, Alternatives, and Choices

The economizing problem faced by a society is:

Refer to the above production possibilities curves. Curve (a) is the initial curve for the economy, and the nation is initially producing combination P. A shift from curve (a) to curve (b) suggests that the economy can then increase its production of capital goods:

Economists would classify all of the following as "land," except:

The basic truth that underlies the study of economics is the fact that we all face:

In line (2) on the above graph, the variables x and y are:

Suppose that a nation can only make two products: defense goods and civilian goods. In a graph of the marginal benefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve will cause the optimal quantity of:

In a curved graph that is dome-shaped, the tangent line at it maximum or highest point has an infinite slope.

From an economic perspective, when a student decides to go to the movies instead of studying for a test, it indicates that in the student's thinking the marginal:

Which situation would most likely cause a nation's production possibilities curve to shift inward?

A budget line is a graph that shows the various combinations of two products that a:

Refer to the above production possibilities curves. Curve (a) is the initial curve for the economy. If the economy's production possibilities then shift to curve (b), then:

If a nation produces more consumer goods and less capital goods, then the nation will have:

Which question is an illustration of a microeconomic question?

If you knew that the vertical intercept for a straight line was 15, that the slope was -.5, and that the independent variable had a value of 8, the value of the dependent variable would be:

Which of the following is a positive economic statement?

Which of the following is the fallacy in the fallacy of composition?

A point or product-combination to the left of and inside a budget line:

Macroeconomics is concerned with the study of the nation-wide market for specific goods like oranges.

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. A change from combination C to B means that:

Refer to the above graph. From the economists' perspective, which is the independent variable and which is the dependent variable?

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

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

Filters