econ, Econ test (mod 1-4) multiple choice

Use the graph to determine which country has a comparative advantage in producing each good.

A. Country A (wheat) Country B (textiles)

Use the graph to determine which country has an absolute advantage in producing each good.

A. Country A (wheat) Country B (textiles)

Which point(s) on the graph represent efficiency in production? a. BandC b. AandD c. A,B,C,andD d. A,B,C,D,andE e. A,B,C,D,E,andF

C. A,B,C and D

Which of the following is the most likely result of inflation? a. falling employment b. a dollar will buy more than it did before c. people are discouraged from holding cash d. price stability e. low aggregate output per capita

C. People are discouraged from holding cash

In a market economy, most choices about production and consumption are made by which of the following?

Many individuals and firms

For country A, the opportunity cost of a bushel of wheat is a. 1 ⁄2 units of textiles b. 2 ⁄3 units of textiles c. 1 1 ⁄3 units of textiles d. 1 1 ⁄2 units of textiles e. 2 units of textiles

A. 1/2 units of textiles

This production possibilities curve shows the trade-off between consumer goods and capital goods. Since capital goods are a resource, an increase in the production of capital goods today will increase the economy's production possibilities in the future. Therefore, all other things equal (ceteris paribus), producing at which point today will result in the largest outward shift of the PPC in the future? a. A b. B c. C d. D e. E

A. A

Which of the following questions is studied in microeconomics? a. Should I go to college or get a job after I graduate? b. What government policies should be adopted to promote employment in the economy? c. How many people are employed in the economy this year? d. Has the overall level of prices in the economy increased or decreased this year? e. What determines the overall salary levels paid to workers in a given year?

A. Should I go to college or get a job after I graduate?

During the recession phase of a business cycle, which of the followingislikelytoincrease? a. the unemployment rate b. the price level c. economic growth rates d. the labor force e. wages

A. The unemployment rate

The other things equal assumption allows economists to a. avoidmakingassumptionsaboutreality. b. focusontheeffectsofonlyonechangeatatime. c. oversimplify. d. allownothingtochangeintheirmodel. e. reflectallaspectsoftherealworldintheirmodel.

B. Focus in the effects of only one change at a time

Which of the following statements is/are normative? I. The price of gasoline is rising. II. The price of gasoline is too high. III.Gas prices are expected to fall in the near future. a. I only b. II only c. III only d. I and III only e. I, II, and III

B. II only

Suppose that you prefer reading a book you already own to watching TV and that you prefer watching TV to listening to music. If these are your only three choices, what is the opportunity cost of reading? a. watching TV and listening to music b. watching TV c. listening to music d. sleeping e. the price of the book

B. Watching TV

An increase in unemployment could be represented by a movement from point a. D to point C. b. B to point A. c. C to point F. d. B to point E. e. E to point B.

D. B to point E

If the two countries specialize and trade, which of the choices below describes the countries' imports?

D. Country B (wheat) Country A (textiles)

The labor force is made up of everyone who is a. employed. b. old enough to work. c. actively seeking work. d. employed or unemployed. e. employed or capable of working.

D. Employed or unemployed

Which of the following is an example of a resource? I. petroleum II. a factory III. a cheeseburger dinner a. I only b. II only c. III only d. I and II only e. I, II, and III

D. I and II only

Which of the following situations represent(s) resource scarcity? I. Rapidly growing economies experience increasing levels of water pollution. II. There is a finite amount of petroleum in the physical environment. III. Cassette tapes are no longer being produced. a. I only b. II only c. III only d. I and II only e. I, II, and III

D. I and II only

For this economy, an increase in the quantity of capital goods produced without a corresponding decrease in the quantity of consumer goods produced a. cannot happen because there is always an opportunity cost. b. is represented by a movement from point E to point A. c. is represented by a movement from point C to point B. d. is represented by a movement from point E to point B. e. is only possible with an increase in resources or technology.

D. Is represented by a movement from point E to point B

Which of the following might allow this economy to move from point B to point F? a. more workers b. discovery of new resources c. building new factories d. technological advances e. all of the above

E. All of the above

A sustained increase in aggregate output over several decades represents a. an expansion. b. a recovery c. a recession. d. a depression. e. economic growth..

E. Economic growth

Falling output in an economy is consistent with which of the following? a. a recession b. an expansion c. a recovery d. falling unemployment e. long-term economic growth

a. a recession

Which of the following is a normative statement? a. The unemployment rate is expected to rise. b. Individuals purchase more of a good when the price rises. c. The government should increase the minimum wage. d. An increase in the tax rate on wage earnings reduces the incentive to work. e. Public education generates greater benefits than costs.

c. the government should increase the minimum wage

Which of the following situations is explained by increasing opportunity costs? a. More people go to college when the job market is good. b. More people do their own home repairs when hourly wages fall. c. There are more parks in crowded cities than in suburban areas. d. Convenience stores cater to busy people. e. People with higher wages are more likely to mow their own lawns.

d convenience stores cater to busy people

comparative advantage explains which of the following a a country's ability to produce more of a particular good or service b when production is considered efficient c why the production possibilities curve is bowed outward d the source of gains from trade e why the production possibilities curve shifts outward

d the source of gains from trade

Which of the following is a goal for the macroeconomy? a. declining labor force b. inflation c. deflation d. rising aggregate output e. rising unemployment rate

d. rising aggregate output

You can either go to a movie or study for an exam. Which of the following is an opportunity cost of studying for the exam? a. a higher grade on the exam b. the price of a movie ticket c. the cost of paper, pens, books, and other study materials d. the enjoyment from seeing the movie e. the sense of achievement from learning

d. the enjoyment from seeing the movie

Which of the following is a basic source of economic growth in the production possibilities model a specialization b efficiency c opportunity cost d trade-offs e improved technology

e improved technology

Which of the following pairs indicates a category of resources and an example of that resource? CategoryExample a. Money investment b. capital money c. capital minerals d. land factory e. land timber

e. Land timber