Economics quiz
Two major virtues of the market system or that it
Allocates resources efficiently and allows economic freedom
The socially optimal amount of pollution abatement occurs where society's marginal
Benefit of abatement equals it's marginal cost of abatement
A firms supply curve is upsloping because
Beyond some point the production cost of additional units of Output will rise
Consumer Sovereignty means that
Buyers determine what will be produced based on the dollar votes for the goods and services offered by sellers
The rationing function of prices refers to the
Capacity of a competitive market to equalize quantity demanded and quantity supplied
Friends are motivated to minimize production cost because
Competitive pressures in the market will drive out higher cost producers
The amount of after-tax income received by household is measured by
Disposable income
Private property
Encourages owners to maintain or improve their property so as to preserve or enhance value
Transfer payments are
Exclude when calculating GDP because they do not reflect current production
Public choice economist hold the politicians will
Favor programs entailing immediate And clear cut benefits and vaguely defined or deferred costs
Which of the following statements best describes how firm's response to demand of shorts under conditions of inflexible prices
Firms respond to shorter-term demand of shocks by adjusting inventory; more persistent changes in demand result in changes in production levels
Real GDP refers to
GDP data that have been adjusted for changes in the price level
The term "laissez - faire" suggest that
Government should not interfere with the operation of the economy
Went and economies production capacity is expanding
Gross domestic investment exceeds depreciation
Unlike a private good a public good
Has benefits available to all including non-payers
In the resource market
Household so resources to businesses
For an economy to increase investment, it must
Increase saving
An increase in the price of product a will
Increase the demand for substitute product b
The invisible hand promote societies interest because
Individuals pursuing their self interest will try to produce goods and services the people in society want and are willing to purchase
Which of the following will enable a nation to obtain a combination of consumer goods and capital good outside it's production possibilities curve
International specialization and trade
According to economist economic self interest
Is a reality that underlies economic behavior
A market
Is an institution that brings together buyers and sellers
A normative statement is one that
Is based on value judgments
Producer surplus
Is the difference between the minimum prices producers are willing to acccept for a product and the higher equilibrium price
GDP is the
Monetary value of all final goods and services produced within the borders of a nation in a particular year
Which of the following is most closely related to recessions
Negative real growth in output
Real GDP is preferred to nominal GDP is a measure of economic performance because
Nominal GDP use this current prices and that may over, or understate true changes in output
If one person is consumption of a good does not preclude another's consumption the good is said to be
Nonexcludable
Which of the following statements if any is correct for a nation that is producing only consumer and capital goods
Other things equal, the more capital goods a nation produces, the greater will be its future growth rate
The construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is
Price
An increase in the quantity demanded means that
Prices decline and consumers therefore want to purchase more of the product
The market system does not produce public goods because
Private firms cannot stop consumers who are unwilling to pay for such good from benefiting from them
A government using the fiscal policy in an attempt to stimulate the economy would do which of the following
Raise government spending
If nominal GDP rises
Real GDP may either rise or fall
The three statistics that are the main focus for those measuring macro economic health are
Real GDP, inflation, and unemployment
Modern economic growth refers to countries that have experienced an increase in
Real output per person
The term quantity demanded
Refers to the amount of a product that will be purchased at some specific price
When economist refer to investment, they are describing a situation where
Resources are devoted to increasing future Output
The governments ability to coerce can enhance economic efficiency by
Restraining self interest
Government loan guarantees tend to have the effect of
Socializing losses and privatizing gains
Macroeconomics can best be described as the
Study of large aggregates of the economy or the economy as a whole
Individual accountability within the government bureaucracy
Tends to be lacking because of civil services protection and the complexity of government
Monetary stimulus is only helpful to an economy
That is in recession
Which of the following would best explain why regulatory capture is a problem
The regulations implemented serve the private interests of the regulated industry, rather than addressing social interests such as consumer safety and environmental protection
A negative externality or spillover cost occurs when
The total cost of producing a good exceeds the costsborn by the producer
Which of the following most closely relates to the idea of opportunity cost
Trade-offs
Chronic budget deficits can be attributed to
Voters wanting government programs but not wanting to pay taxes
A market is in equilibrium
When ever the demand curve is downsloping and the supply curve is upsloping
The optimal allocation of resources is found
Where marginal benefit equals marginal cost
Net exports are negative when
A nations imports exceed its exports