Question 1

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

Accepted Answer

A)  It would shift the curve to the right 
B)  It would shift the curve to the left 
C)  It would not shift the curve; it would be represented by a movement from a point inside the curve toward a point on the curve 
D)  It would not shift the curve; it would be represented by a movement from a point on the curve to a point outside the curve 
A)  It would shift the curve to the right 
B)  It would shift the curve to the left 
C)  It would not shift the curve; it would be represented by a movement from a point inside the curve toward a point on the curve 
D)  It would not shift the curve; it would be represented by a movement from a point on the curve to a point outside the curve

Question 2

The graph above shows the production possibilities curve for an economy producing two goods, X and Y. All of the following may allow the economy to produce combination D in the future, except?

Accepted Answer

A)  Lower unemployment 
B)  Increasing labor supply 
C)  Economic growth 
D)  Technological advances 
A)  Lower unemployment 
B)  Increasing labor supply 
C)  Economic growth 
D)  Technological advances

Question 3

On a production possibilities curve, the single optimal or best combination of output for any society:

Accepted Answer

A)  Is at a point near the top of the curve 
B)  Is at the precise midpoint of the curve 
C)  Is at a point near the bottom of the curve 
D)  Depends upon the preferences of society 
A)  Is at a point near the top of the curve 
B)  Is at the precise midpoint of the curve 
C)  Is at a point near the bottom of the curve 
D)  Depends upon the preferences of society

Question 4

In a graph with "crop yield" on the vertical axis and "rainfall" on the horizontal axis, the vertical intercept refers to the:

Accepted Answer

A)  Steepness or flatness of the graph 
B)  Amount of rainfall when "crop yield" is zero 
C)  Amount of crop yield when "rainfall" is zero 
D)  Total crop yield during a given period of time 
A)  Steepness or flatness of the graph 
B)  Amount of rainfall when "crop yield" is zero 
C)  Amount of crop yield when "rainfall" is zero 
D)  Total crop yield during a given period of time

Question 5

If the production possibilities curve is a straight line, then:

Accepted Answer

A)  The opportunity cost of producing one good is zero 
B)  The law of increasing opportunity costs does not apply 
C)  The society can produce more of both goods simultaneously 
D)  The society is capable of producing only one of the goods and not the other 
A)  The opportunity cost of producing one good is zero 
B)  The law of increasing opportunity costs does not apply 
C)  The society can produce more of both goods simultaneously 
D)  The society is capable of producing only one of the goods and not the other

Question 6

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities:   Refer to the above table. The marginal opportunity cost of the fourth unit of tanks is:

Accepted Answer

A)  4 units of tanks 
B)  300 units of autos 
C)  350 units of autos 
D)  1000 units of autos 
A)  4 units of tanks 
B)  300 units of autos 
C)  350 units of autos 
D)  1000 units of autos

Question 7

As a consequence of the problem of scarcity:

Accepted Answer

A)  There is never enough of anything 
B)  Individuals have to make choices from among alternatives 
C)  Only some people can "have it all" 
D)  Things which are plentiful have relatively high prices 
A)  There is never enough of anything 
B)  Individuals have to make choices from among alternatives 
C)  Only some people can "have it all" 
D)  Things which are plentiful have relatively high prices

Question 8

The slope of a graph measures the rate of change in one variable as the other variable changes.

Accepted Answer

A) True 
 B)False

Question 9

Variables X and Z in the above table are:

Accepted Answer

A)  Positively related 
B)  Negatively related 
C)  Independent 
D)  Nonlinearly related 
A)  Positively related 
B)  Negatively related 
C)  Independent 
D)  Nonlinearly related

Question 10

If society has over-allocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs.

Accepted Answer

A) True 
 B)False

Question 11

An increase in the labor supply due to immigration would shift the production possibilities curve to the left.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is one of the simplifying assumptions made in constructing a production possibilities curve?

Accepted Answer

A)  The state of technology is constantly changing 
B)  A wide variety of products are produced 
C)  Resources are fully employed and are used in least-cost methods of production 
D)  Quantities of available resources in the economy vary from one point to another 
A)  The state of technology is constantly changing 
B)  A wide variety of products are produced 
C)  Resources are fully employed and are used in least-cost methods of production 
D)  Quantities of available resources in the economy vary from one point to another

Question 13

If two variables are completely unrelated to each other, then graphing these two variables will yield a line that is:

Accepted Answer

A)  Always vertical 
B)  Always horizontal 
C)  Not a line, but only a single point 
D)  Either vertical or horizontal 
A)  Always vertical 
B)  Always horizontal 
C)  Not a line, but only a single point 
D)  Either vertical or horizontal

Question 14

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the:

Accepted Answer

A)  Manager 
B)  Entrepreneur 
C)  Stockbroker 
D)  Banker 
A)  Manager 
B)  Entrepreneur 
C)  Stockbroker 
D)  Banker

Question 15

Refer to the above graph. Which curve shows a direct relationship between price and quantity?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 16

Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the:

Accepted Answer

A)  Intercept on the Y axis of the budget line 
B)  Intercept on the X axis of the budget line 
C)  Size of the shift in the budget line 
D)  Slope of the budget line 
A)  Intercept on the Y axis of the budget line 
B)  Intercept on the X axis of the budget line 
C)  Size of the shift in the budget line 
D)  Slope of the budget line

Question 17

The question below are based on the following four sets of data-pairs: (1) A and B, (2) C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column.   The vertical intercept is 12 in which of the above data sets?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 18

Which pitfall to sound economic reasoning is reflected in a person's view that "pharmaceutical and oil companies are price-gouging the consumers"?

Accepted Answer

A)  Faulty definition 
B)  Post hoc fallacy 
C)  Loaded terminology 
D)  Confusing correlation and causation 
A)  Faulty definition 
B)  Post hoc fallacy 
C)  Loaded terminology 
D)  Confusing correlation and causation

Question 19

The scientific method does not apply to economics because economics studies human behavior which cannot be generalized.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following exemplifies a microeconomic question?

Accepted Answer

A)  What is the current national rate of unemployment? 
B)  Is the economy experiencing a decline in the rate of inflation? 
C)  Will a new type of electronic reader or tablet increase the number of buyers? 
D)  Is the aggregate output in the economy greater this year than last year? 
A)  What is the current national rate of unemployment? 
B)  Is the economy experiencing a decline in the rate of inflation? 
C)  Will a new type of electronic reader or tablet increase the number of buyers? 
D)  Is the aggregate output in the economy greater this year than last year?

Exam 1: Limits, Alternatives, and Choices

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

The graph above shows the production possibilities curve for an economy producing two goods, X and Y. All of the following may allow the economy to produce combination D in the future, except?

On a production possibilities curve, the single optimal or best combination of output for any society:

In a graph with "crop yield" on the vertical axis and "rainfall" on the horizontal axis, the vertical intercept refers to the:

If the production possibilities curve is a straight line, then:

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. The marginal opportunity cost of the fourth unit of tanks is:

As a consequence of the problem of scarcity:

The slope of a graph measures the rate of change in one variable as the other variable changes.

Variables X and Z in the above table are:

If society has over-allocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs.

An increase in the labor supply due to immigration would shift the production possibilities curve to the left.

Which of the following is one of the simplifying assumptions made in constructing a production possibilities curve?

If two variables are completely unrelated to each other, then graphing these two variables will yield a line that is:

The individual who brings together economic resources and assumes the risk of business ventures in a capitalist economy is called the:

Refer to the above graph. Which curve shows a direct relationship between price and quantity?

Suppose that a consumer purchases just two goods, X and Y. The ratio of the price of good X to the price of good Y is the:

The question below are based on the following four sets of data-pairs: (1) A and B, (2) C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column. The vertical intercept is 12 in which of the above data sets?

Which pitfall to sound economic reasoning is reflected in a person's view that "pharmaceutical and oil companies are price-gouging the consumers"?

The scientific method does not apply to economics because economics studies human behavior which cannot be generalized.

Which of the following exemplifies a microeconomic question?

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

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