Unit 1.1 test econ

What is the primary emphasis in macroeconomics

The national economy

A student sleeps 8 hours per day and divides the remaining time between study time and leisure time. The table shows the combinations of study and leisure time that can be produced in the 16 waking hours of each day. Suppose the student completes a speed-reading course that allows him to do the same amount of studying in half as many hours. Which of the following is now true of his opportunity costs?

The opportunity cost of leisure has decreased.

When a chef creates a dinner plate of food for a customer, which of the following represents the physical capital resource?

The oven

If an economy is efficient, this means:

all opportunities to make people better off without making other people worse off have been taken.

Inflation means that:

although overall prices are increasing, some prices may be increasing and some may be decreasing.

If during a period of several months we observe the economy to be simultaneously increasing its level of output and employment, we could assume that the economy is in:

an expansion

If the production possibility curve were a straight line sloping down from left to right, this would suggest that:

the opportunity cost of producing each good is constant.

France and England both produce wine and cloth under conditions of constant opportunity costs. France will have a comparative advantage in wine production if:

the opportunity cost of wine production is lower in France than in England.

Given the opportunity costs of production:

there is no basis for trade.

If resources are "scarce" it means that

they cannot provide enough goods or services to satisfy all human material wants and needs at zero cost.

A period of rising real gross domestic product is an indicator of a(n):

expansion

A typical expansion in the business cycle is detected by

falling unemployment rates and rising aggregate output.

The production possibility curve illustrates that:

if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.

A college student is faced with a difficult decision of how to spend one hour tonight. She could babysit her professor's child at an hourly wage of $7, she could work at the college library at a wage of $6, or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to:

$7

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear production possibility curve for his farm, the opportunity cost of producing an additional pound of cabbage is ________ pound(s) of potatoes.

1/2

If Largetown decides to devote half of its 80 hours of labor time toward the production of socks and half of the time to the production of shirts, what is the maximum number of socks and shirts it can produce?

10 shirts and 20 socks

At the point at which it is currently producing, Britain must give up the production of 75 hats to produce 25 additional sweaters. The opportunity cost of producing 4 sweaters is ________ hats.

12

If an economy is producing at alternative W, the opportunity cost of producing at X is ________ unit(s) of consumer goods per period.

4

Alexander has a straight line or linear production possibility curve when he produces soybeans and corn. If he uses all of his resources for soybean production, he can produce 200 bushels of soybeans; if he uses all of his resources for corn production, he can produce 400 bushels of corn. Which of the following combinations of corn and soybeans are not possible for him to produce?

600 bushels of corn and 200 bushels of soybeans

Smallville has a linear production possibility curve in the production of Good X and Good Y. It can produce 6X per hour or 8Y per hour. Suppose it currently has 240 hours of labor and divides labor hours equally between Good X production and Good Y production. What is the maximum amount of Good Y it can produce?

960Y

In terms of the production possibility curve, inefficient use of available resources is shown by:

A point located inside the production possibility curve

Who wrote The Wealth of Nations, a book that many credit with establishing economics as a discipline?

Adam Smith

Suppose people in households decide to spend less. How will this impact an economy?

It will decrease the level of income of other people since household spending becomes someone else's income.

If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 while Carrie Anne can make 4. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that:

Laurence has an absolute advantage in both programs and sunglasses.

Which of the following demonstrates how people respond to incentives to make themselves better off?

More students major in economics when they hear that salaries for economists are rising.

Which of the following statements is a normative statement?

The best way to encourage growth in the economy is through government spending.

The alternation between periods of economic growth and economic decline is known as the:

The business cycle

If there is a tremendous natural disaster, the effect can be shown by:

an inward contraction of the production possibility curve

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

at a lower opportunity cost than another economy.

With trade, a country may:

consume outside its production possibility curve

Trade can be beneficial to an economy because:

more goods and services can be obtained at lower opportunity cost.

If an economy is producing a level of output that is on its production possibility curve, the economy has:

no idle resources and is using resources efficiently.

Scarcity in economics means:

not having sufficient resources to produce all the goods and services we want

To encourage young people to go to college within their home state, state universities can:

offer lower tuition to in-state students.

Periods in which output and employment are falling are known as

recessions

The production of 14 units of consumer goods and 1 unit of capital goods per period would:

result in some unused or inefficiently used resources.

Technological improvements will:

shift the production possibilities curve outward.

In one hour, the United States can produce 25 tons of steel or 250 automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that:

the United States has a comparative advantage in the production of automobiles.

A new startup airline is offering free round-trip tickets to anywhere to the first 600 people who enter the office on the airline's first day of business. You arrive 24 hours before they are scheduled to open to be sure to get the free tickets, and you buy food from vendors while waiting in line. The cost of the tickets to you is:

the cost of food while you wait in line and the opportunity cost of your time.

The university recently inherited a large mansion from a wealthy alumnus. The university plans to use the mansion for faculty parties and to house distinguished guests. The cost of the mansion to the university is:

the cost of upkeep (including maintenance, utilities, and so forth) and the amount the university would receive if it rented or sold the mansion.