Ch. 2 Macroeconomics

In economics, investment describes spending:

That pays for the production and accumulation of capital goods

For economists, ________ goods are those goods used to produce final consumer goods and services.

Capital

Which of the following illustrates the attainable combination of two goods that can be produced given a specific set of resources? 1. Production possibilites curve (frontier) 2. Budget line 3. Budget constraint 4. Demand and supply curve model 5. Opportunity cost

1

Capital goods differ from consumer goods in that: 1. Consumer goods satisfy wants directly 2. Capital goods satisfy consumer wants indirectly through the production of consumer goods 3. Capital goods or money enable the purchase of consumer goods 4. Consumer goods satisfy wants indirectly

1 & 2

Select all choices from the following that would be considered land to an economist: 1. Forests 2. Arable land 3. Sunlight 4. Water 5. Oil and mineral deposits 6. Factories

1,2,3,4 & 5

The factors of production include: 1. Capital 2. Land (natural resources) 3. Currency and coins 4. Labor 5. Entrepreneurship 6. Knowledge

1,2,4 & 5

A nation's production possibilities curve (frontier) can shift outward: 1. Through the use of improved production techniques 2. With a decrease in the unemployment rate 3. With an increase in the quality and quantity of resources 4. As a result of specialization and trade

1,3 & 4

An Entrepreneur: 1. Takes the risk of earning profits or suffering losses from owning an enterprise 2. Is employed by a large company 3. Innovates 4. Makes strategic business decisions that set the course of an enterprise 5. Looks for the latest new products to buy and use

1,3 & 4

Combinations of goods that fall beyond the production possibilities curve: 1. Require economic growth 2. Are inefficiently produced 3. Would require resources that are not currently available 4. Currently are unattainable 5. Are efficiently produced 6. Are attainable

1,3 & 4

Combinations of output that fall inside the production possibilities curve represent: 1. Inefficient use of resources 2. Proper output in an economy 3. Goods that are attainable 4. Efficiently produced goods 5. Goods that are unattainable 6. Less total output in an economy

1,3 & 6

Combination of goods that fall on the production possibilities curve: 1. Represent economic growth 2. Utilize all of an economy's resources 3. Are unattainable 4. Are efficiently produced 5. Are inefficiently produced 6. Are attainable

2,4 & 6

Which of the following best represents the relationship between a capital good and a consumer good or service? 1. A caterpillar earth-moving front loader and its operator 2. A brand new Dell computer and printer 3. A commercial baking oven and loaves of bread 4. A crane and a skyscraper

3

What does each point on a production possibilities curve represent? 1. The output of many products 2. An attainable combination of goods that can be produced given unlimited resources 3. Efficiency in production 4. Inefficiency in production 5. The maximum output of many products 6. The maximum potential output of two or more products

3 & 6

Which of the following consists of the physical and mental activities that people contribute to the production of goods and services? 1. Employment 2. Capital 3. Investment 4. Labor

4

Points _________ the production possibilities curve are attainable so long as the economy uses all of its available resources

Along

_________ goods satisfy wants directly, whereas _________ goods do so indirectly

Consumer & capital

T or F: Economists classify the factors of production into land, labor, money and entrepreneurial ability.

F

In addition to entrepreneurship, the factor of production (resource) defined as _______ consists of the physical actions and mental activities that people contribute to the production of goods and services

Labor

From an economic standpoint, ________ includes all natural resources used in the production process

Land

Economists do not include money as a factor in production because:

Money is a medium of exchange rather than an input to the production of goods and services

To economists, land includes all __________, or gifts of nature, used in the production process

Natural resources

Each point on the production possibilities curve represents some _________ of two or more products.

Output combination

Points lying ________ the production possibilities curve would represent a greater, but unachievable level of output than that at any point on the curve

Outside

Specialization about an individual or firm using available resources to:

Produce one or only a few goods and services

The law of increasing opportunity costs is driven by:

Resources that are not equally productive in the production of different goods or interchangeable

The law of increasing opportunity costs states that as production of a particular good_________, the opportunity cost of producing an additional unit _________.

Rises & rises

Which points or combinations of produced goods on a production possibilities curve are not attainable with the current level of resources?

Those lying beyond the curve

Factories, storage, transportation and distribution facilities, as well as tools and machinery are all examples of physical ________ goods.

capital

Arable land, water, machinery and a professional baseball player are all considered scarce economic _________ to production

resources