Econ

How are the fundamental economic decisions determined in Cuba? A. The government decides because Cuba is a centrally planned economy. B. These decisions are made by the country's elders who have had much experience in answering these questions. C. Individuals, firms, and the government interact in a market to make these economic decisions. D. The United Nations decides because Cuba is a developing economy.

A. The government decides because Cuba is a centrally planned economy.

If society decides it wants more of one good and __________, then it has to give up some of another good and incur some opportunity costs. A. all resources are fully utilized B. resources are underutilized C. new resources are discovered D. technology advances

A. all resources are fully utilized

The size of the underground economy would tend to decrease if the government of a country A. decreased government regulations on businesses. B. increased business taxes. C. made over -- the -- counter drugs illegal. D. increased income tax rates.

A. decreased government regulations on businesses.

Gross domestic product in the economy is measured by the A. dollar value of all final goods and services produced in the economy. B. total number of services produced in the economy. C. total number of goods produced in the economy. D. total number of goods and services produced in the economy.

A. dollar value of all final goods and services produced in the economy.

Textbook examples of trade between two nations are simplified in order to show how two nations both benefit from trade. These examples are misleading because A. some individuals in both countries may be made worse off because of trade. B. in the real world, rich countries can take advantage of poor countries. C. trade restrictions are likely to be imposed as trade grows over time. D. they do not account for the reduction in wages that occurs in both countries as a result of trade.

A. some individuals in both countries may be made worse off because of trade.

Which of the following is an example of spending on goods and services in the circular flow model? A. Micah purchases a new wrench for his auto repair business. B. Lily purchases a new massage table for use in her therapy center. C. Chester buys a first -- class ticket from Atlanta to London for his long -- awaited vacation. D. Toby buys a new lawn mower to use in his lawn care business.

C. Chester buys a first -- class ticket from Atlanta to London for his long -- awaited vacation.

Which of the following will not shift the demand curve for a good? A. a decrease in the price of a substitute good. B. an increase in population. C. an increase in the price of the good. D. an increase in consumer incomes.

C. an increase in the price of the good.

The percent increase in the CPI from one year to the next is a measure of the A. unemployment rate. B. real interest rate. C. inflation rate. D. GDP deflator.

C. inflation rate.

Disposable personal income is defined as A. personal income less personal taxes plus indirect sales taxes. B. personal income less depreciation. C. personal income less personal taxes. D. personal income less transfer payments plus personal taxes.

C. personal income less personal taxes.

If your nominal wage rises faster than the price level, we can say your real wage has __________ and the purchasing power of your income has __________. A. risen; fallen. B. fallen; fallen. C. risen; risen. D. fallen; risen.

C. risen; risen.

National income is derived from gross domestic product by A. adding personal taxes and depreciation to gross domestic product. B. subtracting retained earnings from gross domestic product. C. subtracting depreciation from gross domestic product. D. adding personal income and transfer payments to gross domestic product.

C. subtracting depreciation from gross domestic product.

Because workers in the United States work fewer hours per week, on average, than they did over 100 years ago, A. workers in the United States earn less income than they did over 100 years ago. B. GDP is higher than it would be if U.S. workers worked the same workweek they had 100 years ago. C. workers in the United States are worse off than they were over 100 years ago. D. GDP is lower than it would be if U.S. workers worked the same workweek they had 100 years ago.

D. GDP is lower than it would be if U.S. workers worked the same workweek they had 100 years ago.

Which of the following best describes an assumption economists make about human behavior? A. They assume that people take into account the question of fairness in all decisions they make. B. They assume that individuals act randomly. C. They assume that individuals act rationally all the time in all circumstances. D. They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.

D. They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.

Minimum wage laws cause unemployment because the legal minimum wage is set A. too low B. below the market wage, causing labor demand to be less than labor supply. C. above the market wage, causing labor demand to be greater than labor supply. D. above the market wage, causing labor demand to be less than labor supply. E. below the market wage, causing labor demand to be greater than labor supply.

D. above the market wage, causing labor demand to be less than labor supply.

Farmers can raise either goats or ostriches on their land. Which of the following would cause the supply of goats to decrease? A. an increase in the demand for goats. B. an increase in the price of ostrich feed. C. a decrease in the price of goats. D. an increase in the price of ostriches.

D. an increase in the price of ostriches.

A production possibilities frontier with a __________ shape indicates increasing opportunity costs as more and more of one good is produced. A. bowed inward B. linear C. perfectly horizontal D. bowed outward

D. bowed outward

Individuals who have never been the best at doing anything A. cannot have a comparative advantage in producing any product. B. must have an absolute advantage in at least ones task. C. perform all tasks at a higher opportunity cost than others. D. can still have a comparative advantage in producing some product.

D. can still have a comparative advantage in producing some product.

An economic principle that explains why people pursue different occupations is A. absolute advantage. B. NAFTA. C. international trade. D. comparative advantage.

D. comparative advantage.

The unemployment rate equals the number of unemployed divided by the __________ , all times 100. A. number of employed B. total population. C. working -- age population. D. labor force.

D. labor force.

Real GDP will increase A. only if the price level rises. B. only if the price level falls. C. if either the price level rises or the quantity of final goods and services produced rises. D. only if the quantity of final goods and services produced rises.

D. only if the quantity of final goods and services produced rises.

When deflation occurs, A. the nominal interest rate is equal to the real interest rate and inflation is positive. B. the nominal interest rate is equal to the real interest rate and inflation is negative. C. the nominal interest rate is greater than real interest rate. D. the real interest rate is greater than the nominal interest rate.

D. the real interest rate is greater than the nominal interest rate.

We say that the economy is at full employment if the unemployment rate is equal to A. the sum of frictional and cyclical unemployment. B. the amount of cyclical unemployment. C. zero. D. the sum of structural and cyclical unemployment. E. the natural rate of unemployment.

E. the natural rate of unemployment.

Which of the following is a normative economic statement? A. Global warming should be at the top of every economic agenda. B. With falling mortgage rates and falling unemployment rates, the number of new homes being built has increased. C. The state of Florida's unemployment rate dropped when several large companies relocated to the Miami area. D. Falling global demand for pesticides has led to decreases in the price of pesticides.

A. Global warming should be at the top of every economic agenda.

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions)? A. The supply of video game consoles would increase and the equilibrium price of video game consoles would decrease. B. The demand for video game consoles would increase and the equilibrium price of video game consoles would increase. C. The demand for video game consoles would decrease because consumers could afford to buy fewer LCD televisions and video game consoles. D. The demand for video game consoles would decrease and the equilibrium price of video game consoles would decrease.

B. The demand for video game consoles would increase and the equilibrium price of video game consoles would increase.

What is the largest component of spending in the U.S.? A. investment spending. B. consumption spending. C. government spending. D. net investment spending.

B. consumption spending.

Legalizing all forms of illegal activities A. increases GDP and increases the size of the underground economy. B. increases GDP and reduces the size of the underground economy. C. reduces GDP and increases the size of the underground economy. D. reduces GDP and the size of the underground economy.

B. increases GDP and reduces the size of the underground economy.

Which of the following is a true statement about real and nominal GDP? A. If nominal GDP increases from one year to the next, we know that production of goods and services has risen. B. Increases in average prices do not affect the calculation of nominal GDP. C. If real GDP increases from one year to the next, we know that production of goods and services has risen. D. Nominal GDP is a better measure than real GDP in comparing changes in the production of goods and services year after year.

C. If real GDP increases from one year to the next, we know that production of goods and services has risen.

Which of the following is considered a durable good? A. food. B. medical care. C. a washing machine. D. clothing.

C. a washing machine.

When Tesla, A U.S. company, purchases Italian -- made Pirelli tires for its automobiles, the purchase is A. neither an export nor an import for either country. B. a U.S. export and an Italian import. C. both a U.S. and an Italian import. D. a U.S. import and an Italian export.

D. a U.S. import and an Italian export.