Econ 2 Midterm Practice

Based on the following data, GDP would equal ___ while Net National Product equals ___ In Billions $20 Government Purchases $5 Exports $10 Imports $5 Depreciation $25 Investments $70 Consumption $15 Domestic US businesses production abroad $6 Foreign businesses production in US a) $110 billion; $114 billion b) $130 billion; $121 billion c) $130 billion; $139 billion d) $110 billion; $101 billion

a) $110 billion; $114 billion

Alex has a budget of $100 a month for movie tickets and restaurant meals. A movie ticket will cost $10 and a restaurant meal costs $20. Which of the following combinations is part of Alex's budget constraint? a) 2 movie tickets and 1 restaurant meal b) 2 movie tickets and 4 restaurant meals c) 2 movie tickets and 5 restaurant meals d) 4 movie tickets and 4 restaurant meals

a) 2 movie tickets and 4 restaurant meals

Based on the information in the table below, calculate the unemployment rate: Total adult population over the age of 16: 83 million Total in the labor force: 63 million Total Employed: 60 million Total Unemployed: 3 million Total out of the labor force: 20 million a) 4.76% b) 31.7% c) 3.61% d) 75.9%

a) 4.76% hint:(Unemployed/Total labor force) x 100

The GDP deflator is... a) A price index used to remove the distorting effect of inflation from Nominal GDP. b) A price index used to remove the distorting effect of inflation from Real GDP. c) The inflation rate used to adjust Nominal GDP. d) The difference between Nominal and Real GDP.

a) A price index used to remove the distorting effect of inflation from Nominal GDP.

How can a nation use opportunity cost to achieve trade benefits? a) By producing a product where it has the lowest opportunity cost and trading for products where it doesn't have comparative advantage b) By improving production so that it has the lowest opportunity cost in all products c) By analyzing the opportunity costs of potential trading partners and then trading only with those who have the same opportunity cost for producing the same good d) By producing a product where it has the highest opportunity cost and then trading for any product where it has the absolute advantage in production.

a) By producing a product where it has the lowest opportunity cost and trading for products where it doesn't have comparative advantage

What is the relationship between production costs and comparative advantage? a) Comparative advantage considers, "How much am I giving up to produce this good in this country?" b) Comparative advantage identifies the good for which the producer's absolute advantage is relatively smaller. c) Comparative advantage identifies where the producer's absolute productivity disadvantage is relatively larger. d) Comparative advantage happens when the production costs for both trading partners are the same.

a) Comparative advantage considers, "How much am I giving up to produce this good in this country?"

What is the primary argument supporting protectionism? a) Free trade can lead to job loss and lower wages. b) Protectionism is a way to reduce inflation. c) Protectionism drives innovation because nations need to develop or improve their comparative advantage for a good. d) Free trade enables political adversaries to benefit.

a) Free trade can lead to job loss and lower wages.

Which of the following would cause the aggregate supply curve to increase... a) Throughout the economy, workers are using better equipment and output per hour is rising. b) Consumers are more confident and spending more than before. c) The government has reduced its spending by more than 10% over the last 2 years d) Energy prices such as gas and electricity have increased rapidly throughout the country.

a) Throughout the economy, workers are using better equipment and output per hour is rising.

If the Consumer Price Index was 155 in one year and 165 in the next year, then the rate of inflation from one year to the next was approximately: a) 10% b) 6.5% c) 6.1% d) -6.5%

b) 6.5% hint: (165-155)/155 X100

Miriam is actively searching for a new job after she voluntarily quit her job. Miriam is now considered: a) Cyclically unemployed b) Frictionally unemployed c) Structurally unemployed d) Not eligible for future employment

b) Frictionally unemployed

Which of the following elements demonstrate the degree of globalization? a) Large underground economies. b) High levels of trade and exchange between countries. c) A low export to Gross Domestic Product ratio for a country. d) Rapidly growing Gross Domestic Product for several countries.

b) High levels of trade and exchange between countries.

What is the relationship between economies of scale and intra-industry trade? a) As average total cost increases, intra-industry trade increases b) Intra-industry trade brings competition and diverse products to markets where economies of scale would otherwise promote fewer firms and fewer product options c) Intra-industry trade reduces competition and product variety in markets where economies of scale would otherwise promote competition and diverse products. d) As average total cost decreases, intra-industry trade decreases.

b) Intra-industry trade brings competition and diverse products to markets where economies of scale would otherwise promote fewer firms and fewer product options

A normative statement reflects opinions or beliefs, while a positive statement... a) Reflects only positive opinions b) Is based on facts c) Cannot be tested d) Is always true

b) Is based on facts

Which of the following was a way for the Bureau of Labor Statistics to reduce the quality/new good bias in its calculation of the CPI? a) Allow for some substitution amongst products. b) Update the list of products included in the CPI more often and rapidly. c) Remove energy and food prices. d) Automatically reduce the inflation by 0.5% to account for quality/new good bias.

b) Update the list of products included in the CPI more often and rapidly.

The long run aggregate supply curve is... a) Upward sloping at the potential GDP level b) Vertical at the potential GDP level c) Downward sloping like the aggregate demand curve d) Above the short run aggregate supply curve

b) Vertical at the potential GDP level

Assume that in the year 2010, the US Nominal GDP was $15 trillion, while the GDP deflator was 200. Calculate the US Real GDP for 2010. a) $0.75 trillion b) $300 trillion c) $7.5 trillion d) $30 trillion

c) $7.5 trillion

Henrique is a baseball fan and attends several games per season. His expenses per season are listed in the table below: Year 1 5 Baseball Tickets: $500 Jersey: $100 Food: $150 Transport: $50 Year 2 5 Baseball Tickets: $600 Jersey: $120 Food: $150 Transport: $80 Calculate the inflation rate for Henrique's baseball season between year 1 and 2. a) 0.18% b) 1.6% c) 18.5% d) 15.8%

c) 18.5%

How does protectionism impact the job market? a) Workers in protected industries see an increase in jobs and wages while workers in non-protected industries see job and wage increases. b) Older workers see job gains while younger workers see job gains. c) Jobs will flow from industries without import protections to those with import protections. d) Tech jobs increase while construction jobs decrease.

c) Jobs will flow from industries without import protections to those with import protections.

The Consumer Price Index... a) Measures the change in all prices of final products in the macroeconomy b) Measures the change in energy and food prices in the macroeconomy c) Measures the change in the cost of living for a typical US household d) Measures the change in all inputs of production in the macroeconomy

c) Measures the change in the cost of living for a typical US household

If the state of Texas has a lower opportunity cost for producing beef compared to Alaska, then... a) Texas has an absolute advantage in beef and should share expertise with Alaska so they can develop an absolute advantage as well. b) Texas has a comparative advantage in beef and should just produce beef for itself and not export to other states like Alaska. c) Texas has a comparative advantage in beef, and Alaska should purchase beef from Texas. d) Texas has an absolute advantage in beef, and Alaska should purchase beef from Texas.

c) Texas has a comparative advantage in beef, and Alaska should purchase beef from Texas.

Assume the real GDP of Brazil in 2020 was R 6 billion (Real). If the exchange rate was 1 Real = $0.25, calculate the real GDP of Brazil in US dollars in 2020. a) $2.4 billion b) $24 billion c) $4 billion d) $1.5 billion

d) $1.5 billion

Britney is a baseball fan and attends several games per season. Her expenses per season are listed in the table below: Year 1 5 Baseball Tickets: $500 Jersey: $120 Food: $150 Transport: $60 Year 2 5 Baseball Tickets: $560 Jersey: $150 Food: $160 Transport: $70 Assuming that year 1 is the base year, calculate the price index for year 1 and for year 2. a) 100, 88 b) 88, 100 c) 88, 113 d) 100, 113

d) 100, 113

Workers at a car-manufacturing plant in Detroit, Michigan are laid off because of a recession in the economy. The workers' resulting unemployment can be described as: a) Structural b) Frictional c) Seasonal d) Cyclical

d) Cyclical

Based on the information in the table below, calculate the labor force participation rate, and the percentage or workers out of the labor force: Total adult population over the age of 16: 83 million Total in the labor force: 63 million Total Employed: 60 million Total Unemployed: 3 million Total out of the labor force: 20 million a) Participation rate: 24.1%, Out of the labor force:75.9% b) Participation rate: 5% ,Out of the labor force: 15% c) Participation rate: 24.1%, Out of the labor force: 92.5% d) Participation rate: 75.9%; Out of the labor force: 24.1%

d) Participation rate: 75.9%; Out of the labor force: 24.1%

Various international crises and issues periodically raise the price of oil imports, which can send ripple effects throughout the economy. While it might not be the producer that other countries are, the U.S. has vast supplies of oil. What is a likely reason it still imports oil despite the impact of these international influences on prices? a) The U.S.'s environmental standards are too high to produce oil domestically. b) Importing oil allows the U.S. to focus on developing other industries. c) The U.S. is trying to prop up its political partners by importing their oil. d) The opportunity costs of producing all oil products domestically must still be higher than importing.

d) The opportunity costs of producing all oil products domestically must still be higher than importing.

Which of the following statements is TRUE? a) A budget constraint shows the limits on an individual's consumption, while a production possibility frontier shows the limits on an economy's production. b) A budget constraint shows the limits on an individual's consumption, while a production possibility frontier shows the limits on a business' consumption or expenses. c) A budget constraint is a straight line, while a production possibility frontier has a constant slope d) A budget constraint illustrates increasing opportunity cost, while a production possibility frontier illustrates constant opportunity cost

a) A budget constraint shows the limits on an individual's consumption, while a production possibility frontier shows the limits on an economy's production.

Which of the following examples represents the relationship between division of labor and production? a) A nurse takes patients' vital signs while the doctor focuses on diagnosis so that more patients can receive care. b) A hospital hires more qualified nurses to ensure better quality of care for patients. c) A primary care office hires more doctors to ensure that more patients receive care. d) A company assigns different parts of the production process to various workers, which complicates the process and results in waste.

a) A nurse takes patients' vital signs while the doctor focuses on diagnosis so that more patients can receive care.

Which situation describes when mutually beneficial trade occurs? a) Country A has a comparative advantage in producing strawberries. Country B has a comparative advantage in producing kiwis. Country A increases production of strawberries, and Country B increases production of kiwis. When Country A trades with Country B to obtain kiwis, and when Country B trades with Country A to obtain strawberries, both countries can benefit. b) Country A has a comparative advantage in producing strawberries. Country B has a comparative advantage in producing kiwis. Mutually beneficial trade is not possible because in any transaction, one party wins and the other party loses. c) Country A has a comparative advantage in producing strawberries. Country B has a comparative advantage in producing kiwis. Country A increases production of strawberries, and Country B decreases production of kiwis. When Country A trades with Country B to obtain kiwis, and when Country B trades with Country A to obtain strawberries, both countries can benefit. d) Country A has a comparative advantage in producing strawberries. Country B has a comparative advantage in producing kiwis. Neither country wants any of the produce they have a comparative advantage in, so both nations can benefit from trade.

a) Country A has a comparative advantage in producing strawberries. Country B has a comparative advantage in producing kiwis. Country A increases production of strawberries, and Country B increases production of kiwis. When Country A trades with Country B to obtain kiwis, and when Country B trades with Country A to obtain strawberries, both countries can benefit.

Which of the following countries would be more likely to experience strong economic growth, other things equal? a) Country ABC has an extensive set of business laws and property rights laws which promote trust in economic activity. b) Country GHI enforces private property rights only for some groups in society. c) Country DEF has common property laws and economic activity is regulated by a national council. d) Country JKL's government has the right to take away property from individuals to distribute to government officials as they are better suited to have successful businesses.

a) Country ABC has an extensive set of business laws and property rights laws which promote trust in economic activity.

In 2010, the country of Utopia experienced the highest contraction of their economy at 10% in the previous 20 years before a new expansion phase. In 2010, the economy of Utopia... a) Had reached a trough. b) Was in a recovery phase. c) Was in an expansion phase. d) Had reached a peak.

a) Had reached a trough.

Which of the following statements is NOT true? a) In a two-good market, a country can only have absolute advantage in one good. b) Evaluating opportunity costs helps to determine comparative advantage. c) Countries that focus on producing goods for which they have a comparative advantage specialize. d) Trade is driven by comparative advantage.

a) In a two-good market, a country can only have absolute advantage in one good.

Based on Say's Law... a) In the long run, the production and sales of a $10 product generates $10 of income for someone and $10 of demand. b) In the short run, the demand for a $10 product generates the supply of a $10 product. c) In the long run, the demand for a $10 product generates the supply of a $10 product. d) In the short run, the production and sales of a $10 product generates $10 income for someone and $10 of demand.

a) In the long run, the production and sales of a $10 product generates $10 of income for someone and $10 of demand.

Someone criticizes the government for increasing interest rates but approving the increase in government spending. They are criticizing the government's ____policy and praising the government ___ policy. a) Monetary, Fiscal b) Microeconomic, Macroeconomic c) Macroeconomic, Microeconomic d) Fiscal, Monetary

a) Monetary, Fiscal

Employees at a toy-manufacturing factory are let go because robots have been installed to replace humans. What type of unemployment faces the laid-off workers? a) Structural b) Frictional c) Cyclical d) Seasonal

a) Structural

When most workers are classified as not being in the labor force, when in reality they are actively searching for work, then the unemployment rate will be? a) Neither understated nor overstated b) Understated c) Overstated d) Either understated or overstated

b) Understated

What happens to the equilibrium price and quantity when a country sets a low or medium tariff or import quota? a) The equilibrium price and quantity will be somewhere between those that prevail with no trade and those with completely free trade. b) The equilibrium price and quantity will be the same as with no trade. c) The equilibrium price and quantity will be lower than with no trade. d) The equilibrium price will be lower, and the quantity will be higher than the case with no trade.

a) The equilibrium price and quantity will be somewhere between those that prevail with no trade and those with completely free trade.

If Argentina imports manufacturing parts from Guatemala, and Guatemala imports delivery trucks from Argentina, how could you best describe the pattern of trade? a) The opportunity cost of producing manufacturing parts in Argentina is higher than it is in Guatemala. b) Guatemala must have an absolute advantage in producing manufacturing parts. c) The opportunity cost of producing delivery trucks is higher in Argentina than it is in Guatemala. d) Argentina is protecting its delivery truck production industry.

a) The opportunity cost of producing manufacturing parts in Argentina is higher than it is in Guatemala.

What is an argument expressed to counter infant industry rationale for protectionism? a) The protectionism intended to be short-term often extends further than planned. b) The industry typically fails to be worth investing in, and thousands of jobs are lost. c) Trying to create a comparative advantage is typically less successful than investing in industries that already have a comparative advantage. d) Government intervention in international trade is rarely successful.

a) The protectionism intended to be short-term often extends further than planned.

According to Keynes' Law... a) The total demand for products determine the level of gross domestic product and may not equal the supply capacity of the economy in the short run. b) The total supply of products determines the level of gross domestic product and the level of demand in the economy in the long run. c) The total demand always equals the total supply capacity in the short run. d) The total demand tends to rise above the total supply capacity in the short run which leads to recessions

a) The total demand for products determine the level of gross domestic product and may not equal the supply capacity of the economy in the short run.

Select the statement below which highlights the role of real GDP: "The growth in real GDP has been much lower than expected over the last few years and... a) Unemployment has been rising as a result creating hardship for many in the country. b) The government needs to adjust how GDP is being measured c) The country is currently in a mild but lasting recession. d) Inflation is making the growth numbers more optimistic.

a) Unemployment has been rising as a result creating hardship for many in the country.

Which of the following changes would increase labor productivity? a) Workers in country X go through extensive technical training in most manufacturing sectors. b) Workers in country Z use older equipment and computers to reduce cost. c) Country W reduces the schooling and training required for engineers. d) Workers in Country Y work in smaller family businesses without large scale equipment.

a) Workers in country X go through extensive technical training in most manufacturing sectors.

How might international trade impact the labor demand curve and wages. a) Workers in industries impacted by imported products will see the demand curve shift left and wages decrease. b) Workers in industries impacted by imported products will see the demand curve shift right and wages decrease. c) Workers in industries that export products will see the demand curve shift right and wages increase. d) Workers in industries that export products will see the demand curve shift left and wages decrease.

a) Workers in industries impacted by imported products will see the demand curve shift left and wages decrease.

A good economic theory .... a) is a detailed representation of reality used to explain past economic events. b) captures the essence of the economic concepts and facilitates their understanding. c) Must contain a complete representation of real economic events to be useful. d) A set of mathematical equations representing economic behavior.

b) captures the essence of the economic concepts and facilitates their understanding.

Country A has a natural climate that is perfect for growing strawberries - long sunny seasons and plenty of rich, well drained soil. Country A also has a big labor force with agriculture knowledge and can produce 80,000 baskets of strawberries in one growing season. By contrast, Country B's climate is less well-appointed for strawberries - a shorter summer season with large areas of red clay. They also have a smaller population trained in agriculture. Country B can only produce 30,0000 baskets of strawberries in one growing season. In this scenario and with this information, Country A has a) Comparative advantage for producing strawberries b) Absolute advantage for producing strawberries c) The lowest synthetic advantage for producing strawberries d) Elastic advantage for producing strawberries

b) Absolute advantage for producing strawberries

Which of the following statements best describe how economists calculate GDP? a) Economists at the Congressional Budget Office calculate GDP for a given year by adjusting the previous year's GDP with inflation. b) Economists at the Bureau of Economic Analysis pull together data on sales, imports, exports, government purchase and investments from various government sources every 3 months. c) Economists at the Bureau of Labor Statistics collect data from surveys sent to consumers, private firms and government agencies and add them up every 3 months. d) Economists at the Census bureau collect data from surveys sent to consumers, private firms and government agencies and add them up on a yearly basis.

b) Economists at the Bureau of Economic Analysis pull together data on sales, imports, exports, government purchase and investments from various government sources every 3 months.

How do economists define unemployed workers? a) Not currently working b) Not currently working but actively searching for work c) Although currently working, they are not happy with their current job d) Working on contract for a limited time

b) Not currently working but actively searching for work

Achieving economic growth over a long period of time and raising standard of living, can be done through a) An average of 5% growth per year over many years b) Small consistent yearly growth over a long period of time c) A minimum of 10% growth every year d) A large and sustained growth in population over many years

b) Small consistent yearly growth over a long period of time

An auto company decided to relocate its offices from Huntsville, Alabama to Orlando, Florida. The human resources manager of the auto company refuses to relocate to Orlando due to family obligations. While she is searching for a new job, the manager will be considered: a) Not fit for consideration for any human resource job b) Structurally unemployed c) Frictionally unemployed d) Cyclically unemployed

b) Structurally unemployed

Which of the following is TRUE about tariffs? a) Tariffs cause imported product prices to fall. b) Tariffs increase the price of imported goods, which decreases demand. c) Tariffs create strong relationships between trading partners. d) Tariffs cause demand for imported products to rise.

b) Tariffs increase the price of imported goods, which decreases demand.

Productivity is measured as a) An increase in the GDP of a nation. b) The dollar value of a worker's hour of work. c) The change in total production over time. d) The number of hours of work per month per worker.

b) The dollar value of a worker's hour of work.

Which of the following statements describes microeconomics? a) Inflation in the US increased by 5% in May 2021. b) The price of beef increased by 15% last month due to a cyber attack on a major beef processing firm. c) The size of the U.S. economy shrunk by 7% in 2020 due to the COVID crisis. d) The federal government lowered corporate tax rates in 2019.

b) The price of beef increased by 15% last month due to a cyber attack on a major beef processing firm.

The table below contains the price indexes for the macroeconomy for several years. Price Index 2010 Base year: 100 2011: 105 2012: 130 2013: 145 2014: 140 Calculate the inflation that took place in 2012 a) 25% b) 19.2% c) 23.8% d) 80.8%

c) 23.8%

Which of the following scenarios would result in a decrease in Aggregate Demand? a) The congress passes a new income tax cut. b) A rise in imports from Europe c) A decline in investors confidence causes investment to fall. d) Technology improvements lead to productivity gains

c) A decline in investors confidence causes investment to fall.

According to the circular flow diagram, households... a) Are buyers in the labor market and in the goods and services market as well. b) Are sellers in both the labor market and in the goods and services market. c) Are sellers in the labor market and buyers in the goods and services market. d) Are sellers in the goods and services market and buyers in the market for labor.

c) Are sellers in the labor market and buyers in the goods and services market.

Which of the following equation represents GDP measured by the components of demand? a) Durable Goods + Nondurable goods + Services + Structures + Change in inventories = GDP b) Consumption + Government Spending + Imports + Investment = GDP c) Consumption + Government Spending + Trade Balance + Investment = GDP d) Durable Goods + Services + Government Spending + Trade Balance = GDP

c) Consumption + Government Spending + Trade Balance + Investment = GDP

Which of the following is NOT true about intra-industry trading? a) With intra-industry trading, countries can specialize in unique processes and skills b) Intra-industry trading can keep costs low collectively, while giving consumers lots of options to choose from c) In intra-industry trading, firms can often control the entire value chain for their product d) With intra-industry trading, comparative advantage is not fixed as taking advantage of economies of scale plays a larger role in productivity than geography or education levels

c) In intra-industry trading, firms can often control the entire value chain for their product

Why don't countries specialize in the production of just a few goods for which they have a comparative advantage? a) Doing so would limit innovation in other industries. b) Doing so would limit innovation in the core industries, because there would be little incentive for it. c) In most cases, increasing opportunity costs would accompany the continually increasing production of a product specialist. d) In most cases, resource drains would accompany the continually increasing production of a product specialist.

c) In most cases, increasing opportunity costs would accompany the continually increasing production of a product specialist.

The rate of inflation in Zimbabwe rose in 2018 from 10.6% to 577.21% in 2020. What was the positive effect of this unexpected inflation on the residents of the country? a) None because everybody is hurt by inflation b) It helped creditors c) It helped debtors d) Helped those people on fixed incomes

c) It helped debtors

If discouraged workers are included in the determination of the unemployment rate, what effect will it have on the computed rate? a) It will lower it because it will reduce the number of unemployed. b) There will be no impact. c) It will raise it because there are always discouraged workers. d) There is no relationship between discouraged workers and the unemployment rate determination.

c) It will raise it because there are always discouraged workers.

Assuming that the Consumer Price Index increases from 100 to 120... a) More money would be needed to buy the same amount of goods, implying that the value of money increases b) Less money would be needed to buy the same amount of goods, implying that the value of money increases c) More money would be needed to buy the same amount of goods, implying that the value of money drops d) Less money would be needed to buy the same amount of goods, implying that the value of money drops

c) More money would be needed to buy the same amount of goods, implying that the value of money drops

Protectionism has three main forms: tariffs, import quotas, and... a) Negative externality enforcement b) Border intervention c) Non-Tariff barriers d) Currency manipulation

c) Non-Tariff barriers

The government of the country Excel provides a large number of grants for scientists to research new technologies and other processes. This action would a) Increase productivity through capital deepening. b) Reduce productivity as research is less productive than the addition of capital. c) Promote economic growth through technological advances. d) Increase human capital and economic growth.

c) Promote economic growth through technological advances.

Which statement best describes the difference between Nominal and Real GDP? a) Nominal GDP is calculated using current market prices, while Real GDP is calculated using the prices of the previous year. b) Real GDP is calculated using current market prices, while Nominal GDP is calculated using the average prices of the last 5 years. c) Real GDP is Nominal GDP which has been adjusted to remove the distorting effects of inflation. d) Nominal GDP is Real GDP that has been adjusted to remove the distorting effects of inflation.

c) Real GDP is Nominal GDP which has been adjusted to remove the distorting effects of inflation.

Economic growth accounting studies show that a) Improvements in physical capital are more important than improvements in human capital b) Capital deepening is the most important factor in economic growth. c) Technology is the most important component of economic growth d) Population growth is the most important source of growth

c) Technology is the most important component of economic growth

Which measures the changes in the prices of a "market basket" of some 100 goods produced by typical manufacturers? a) The GDP price index b) The International Pricing Index c) The Producer Price Index d) The Consumer Price Index

c) The Producer Price Index

Which of the following statements best describes the aggregate supply curve? a) The aggregate supply curve represents the relationship between the price level and the potential output or GDP in the macroeconomy. b) The aggregate supply curve represents the relationship between the inflation rate and the total output or real GDP in the macroeconomy. c) The aggregate supply curve represents the relationship between the price level and the total output or real GDP in the macroeconomy. d) The aggregate supply curve represents the relationship between the inflation rate and the total demand or real GDP in the macroeconomy.

c) The aggregate supply curve represents the relationship between the price level and the total output or real GDP in the macroeconomy.

Country A specializes in producing kiwis. Country B specializes in producing oranges. As a result, Country A can consume more kiwis and oranges than it could have if it had tried to grow kiwis oranges itself and had decided not to trade. This illustrates the concept of: a) Absolute advantage b) The value chain c) The gains of trade d) Supply & demand

c) The gains of trade

Capital deepening refers to a) The improvements in the education system b) A larger infrastructure and communication network c) The increase in quantity and quality of capital per worker d) The quantity of physical capital with better technology available in the economy

c) The increase in quantity and quality of capital per worker

Martha spends 5 hours of free time exercising and playing music per day. The table below represents the level of utility she receives from the various combinations of exercise and music activities. For instance, if she only plays music, her total utility from exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are arbitrary and designed to quantify the benefits received from various actions. Utility from Exercise 0 utils from 0 hours of exercise 25 utils for 1 hours of exercise 40, 45, 50 Utility from music 50 utils from 5 hours of music 45 utils from 4 hours of music 35, 20, 0 The utility patterns in the table illustrate the law of marginal diminishing utility because ... a) The total utility Martha receives from music decreases b) The total utility Martha receives from exercise decreases c) The increase in utility for each additional hour Martha exercises falls d) Martha receives the most utility from a combination of music playing and exercise, any other combination shows diminishing total utility

c) The increase in utility for each additional hour Martha exercises falls

Modern economics growth was made possible by a) A greater supply of labor for agricultural activities in Western Europe b) Technological advances in all areas of the world in the 1800's c) The technological advances of the industrial revolution in the 1800's d) Governments' promotion of equality amongst the population in Western Europe

c) The technological advances of the industrial revolution in the 1800's

Scarcity is a problem because... a) Unemployment exists, and therefore some people do not have enough resources to meet their basic needs. b) Not everyone has the same amount of resources, such as land and labor. c) There are not enough resources to produce all the goods and services people want to purchase. d) There are only small quantities of resources available on earth.

c) There are not enough resources to produce all the goods and services people want to purchase.

If you are hired by an organization, you would be least hurt by inflation if a) The government increases social security retirement payments in anticipation of expected inflation b) You increase savings in your bank account in anticipation of expected rise in inflation c) Your employer has a cost-of-living adjustment clause in the employment contract d) If your employer provides fixed annual increases in salaries and benefits in the employment contract

c) Your employer has a cost-of-living adjustment clause in the employment contract

Martha spends 5 hours of free time exercising and playing music per day. The table below represents the level of utility she receives from the various combinations of exercise and music activities. For instance, if she only plays music, her total utility from exercise will be 0, and the utility from music will be 50. If she exercises for 1 hour, she will receive a level of utility of 25. Utility is measured in 'utils'; those numbers are arbitrary and designed to quantify the benefits received from various actions. Utility from Exercise 0 utils from 0 hours of exercise 25 utils for 1 hours of exercise 40, 45, 50 Utility from music 50 utils from 5 hours of music 45 utils from 4 hours of music 35, 20, 0 Marginal analysis will help Martha in her decision making regarding how to spend her free time because ... a) She will be able to find the combination of music and exercise which gives her the most total utility b) She will realize which activity is more important to her. c) She can compare the gains in utility from exercising to the loss in utility from music to find the optimum combination. d) All answers are correct.

d) All answers are correct.

Based on a country's aggregate production function, a) All components of the aggregate production function have to increase for the aggregate production function to increase. b) Population or workforce is the most important component of the aggregate production function. c) Only improvements in technology increase the aggregate production function. d) An increase in human capital and physical capital would also increase the aggregate production function.

d) An increase in human capital and physical capital would also increase the aggregate production function.

Based on the GDP information in the table below for 2 countries: GDP per capita in 2020 Country A: $30,000 Country B: $25,000 GDP per capita in 2021 Country A: $32,000 Country B: $30,000 a) Country B has a higher GDP in 2021 than country A. b) Country A has improved their standard of living in 2021 more than country B. c) Countries A and B have improved their standard of living in 2021, but A's living standards have lowered compared to B. d) Countries A and B have improved their standard of living in 2021 but A has higher standards of living than B.

d) Countries A and B have improved their standard of living in 2021 but A has higher standards of living than B.

The circular flow diagram describes... a) The flow of money from the market for goods and services to the market for inputs of factors of production. b) The flow of money and goods and services between households and the government through the market for goods and services. c) How firms control the activities in the labor market in order to ensure profit in the goods and services market. d) How firms and households carry out economic activities through the market for input or factors of production and the market for goods and services.

d) How firms and households carry out economic activities through the market for input or factors of production and the market for goods and services.

The model of aggregate demand/aggregate supply... a) Identifies the potential GDP and price level as well as the gap between the price level and the inflation b) Identifies the equilibrium GDP the economy will reach in the long run c) Identifies the equilibrium quantity and price for consumer goods d) Identifies the equilibrium GDP and price level as well as the gap between the equilibrium GDP and the potential GDP

d) Identifies the equilibrium GDP and price level as well as the gap between the equilibrium GDP and the potential GDP

An economy will achieve productive efficiency when it ___ and will achieve productive efficiency when it ___. a) Is maximizing production and could not increase production of both goods at the same time; is producing an equal amount of both goods. b) Is producing beyond the production possibility frontier; is producing inside the production possibility frontier. c) Is producing the combination of goods and services that most benefit the people in the economy; Is maximizing production and could not increase production of both goods at the same time. d) Is maximizing production and could not increase production of both goods at the same time; is producing the combination of goods and services that most benefit the people in the economy.

d) Is maximizing production and could not increase production of both goods at the same time; is producing the combination of goods and services that most benefit the people in the economy.

In the country of Azard, businesses use new smart cell phones to speed up many tasks such as sales recording, inventory checks, purchase orders etc. Which components of growth are recorded here? a) Human capital and technology b) Human and physical capital c) Technology only d) Physical capital and technology

d) Physical capital and technology

In market economies, most decisions are made by ___, while in command economies, most economic decisions are made by ___. a) The government; households and firms b) Families, private businesses c) Households; local leaders d) Private citizens and firms; the government

d) Private citizens and firms; the government

What is a benefit of reducing barriers to international trade? a) Increasing tariffs yields greater domestic profits. b) It supports domestic production c) It creates an obstacle to economies of scale, increasing profit d) The specialization it promotes leads to greater worker productivity

d) The specialization it promotes leads to greater worker productivity

If the price level increases in the economy, a) The aggregate demand will fall and shift to the left. b) The total spending in the economy will rise. c) The aggregate supply will fall and shift to the left. d) The total spending in the economy will fall.

d) The total spending in the economy will fall.

Gross Domestic Product represents... a) The ratio of exports relative to the total production in a country b) The degree of globalization c) The sum of imports and exports of a country d) The value of the total production in a country

d) The value of the total production in a country

The long-term trend in barriers to trade can be characterized as follows: a) Trade barriers have generally increased, and means of trade have generally been increased. b) The long-term trend has been the steady increase in tariffs and import quotas. c) The number of claims brought to the WTO dispute resolution department has skyrocketed. d) Trade barriers have generally been reduced, and means of trade have generally been increased.

d) Trade barriers have generally been reduced, and means of trade have generally been increased.

If you work part-time when you would like to work full time, or have a full-time job that doesn't utilize all your skills and talents, then you are counted as: a) Frictionally unemployed b) Structurally unemployed c) A discouraged worker d) Underemployed

d) Underemployed