Econ 201 Chapter 2

________ the owners of the factors of production, while ________ what amounts of those factors to hire. -Firms are; households determine -Firms are; the government determines -Households are; the government determines -The government is; firms determine -Households are; firms determine

Households are; firms determine

What would be an example of government good? -Bill Gates purchases furniture for his office. -Antonio, the manager of the local Taco Hut, purchases a new deep fryer. -The local driver's license office purchases a new digital camera and printer. -Rhianna gets a haircut. -Jake buys an iPhone

The local driver's license office purchases a new digital camera and printer

An example of a capital good is -an insurance policy. -a hair cut. -a fiber optic cable TV system. -an iPod. -a slice of pizza

a fiber optic cable TV system

An example of a U.S. export is -pasta made in Italy sold to buyers in Spain. -a washing machine made in Indiana sold to a buyer in France. -a TV made in China sold to a buyer in Azerbaijan. -diamonds mined in Africa sold to buyers in South America. -matchbooks made in Mexico sold to a buyer in New Jersey.

a washing machine made in Indiana sold to a buyer in France

The difference between consumption and capital goods is that -consumption goods can be enjoyed by many people at the same time. -capital goods are used to produce additional goods while consumption goods are not. -it is illegal to export capital goods. -only big corporations can afford capital goods. -capital goods are provided by the government.

capital goods are used to produce additional goods while consumption goods are not

The owners of the resource ________ are paid ________ -capital; rent -labor; profit -land; wages -entrepreneurship; wages -capital; interest

capital; interest

Which of the following is NOT a function of the federal government? -providing public goods and services -collecting property taxes -making social security and welfare payments -making transfers to state and local governments -imposing a personal income tax.

collecting property taxes

The largest share of total production in the United States is -exported goods and services. -capital goods. -consumption goods and services. -government goods and services. -imported goods and services.

consumption goods and services

The decisions of firms and households are -controlled by but not totally coordinated by the government. -made independently of one another. -unexplainable by the circular flow model. -coordinated by but not totally controlled by the government. -coordinated by markets.

coordinated by markets

The national debt is the total amount the ________ government has ________ to make expenditures that exceed tax revenue. -federal; taxed U.S. citizens -state and local; borrowed -federal; loaned -state and local; taxed U.S. citizens -federal; borrowed

federal; borrowed

In the circular flow model, rent, wages, interest, and profit paid flow from ________ through ________ to ________. -households; factor markets; firms -firms; goods market; firms -firms; goods markets; households -firms; factor markets; households -households; goods markets; firms as payment for goods

firms; factor markets; households

In the circular flow model with the government sector, taxes -on households flow in the same direction as do the goods and services. -flow in the opposite direction as do transfers. -on firms flow in the same direction as do factors of production. -flow in the same direction as do transfers. -flow from the goods market to the factor markets.

flow in the opposite direction as do transfers.

The circular flow model is used to show the -flow of expenditures and incomes in the economy. -flow of renewable natural resources. -recycling process of production materials. -expansions and contractions of economic activity. -flow of supply and the flow of demand.

flow of expenditures and incomes in the economy.

A circular flow model shows the interrelationship between the ________ market and the ________ markets. ------household; factor -goods; factor -business; household -expenditure; income -household; goods

goods; factor

Which factor of production does human capital enhance? i. land ii. labor iii. capital

ii

Which of the following is an example of capital? i. $1,000 in money. ii. 100 shares of Microsoft stock. iii. $10,000 in bonds issued by General Motors. iv. A drill press in your local machine shop.

iv

In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was -land. -entrepreneurship. -labor. -capital. -consumption goods and services.

labor

In economics, the factor of production "land" includes all of the following EXCEPT ________. -animals, birds, and fish -plastics -wild plants -oil -energy

plastics

The income earned by entrepreneurs is -rent, wages, and interest. -a mixture of rent, wages, interest, and profit. -interest. -wages. -profit or loss.

profit or loss.

Payments to the factors of production are -land, labor, capital, and entrepreneurship. -rent, interest, bonds, and profit or loss. -rent, mortgage, interest, and bonds. -rent, wages, interest, and profit or loss. -rent, wages, profit or loss, and bonus.

rent, wages, interest, and profit or loss.

The income paid for the use of land is called -wages. -profit. -interest. -rent. -land capital.

rent.

Of the following, the federal government's largest source of revenue is the -sales tax. -corporate income tax. -transfers from state and local governments. -property tax. -social security tax.

social security tax.

Property taxes are a major source of revenue for -the federal, state, and local governments. consumers. -firms wanting to relocate their operations. -state and local governments. -the federal governments.

state and local governments.

Which of the following is NOT considered capital? -an assembly line at a General Motors plant -a computer used by your instructor for presentations in class -a nail gun used for building houses -the furniture in the President's office -stocks and bonds that are sold by Pepsico

stocks and bonds that are sold by Pepsico

Human capital is -the money humans have saved. -solely the innate ability we are born with. -machinery that needs human supervision. -the knowledge humans accumulate through education and experience. -any type of machinery.

the knowledge humans accumulate through education and experience.

U.S. exports of goods and services flow to households and firms in ________ and U.S. financial inflows of capital flow to households and firms in ________. -the rest of the world; the rest of the world -the United States; the rest of the world and the United States -the United States; the United States -Correct the rest of the world; the United States -the United States; the rest of the world

the rest of the world; the United States

In the circular flow model, which of the following flows in the opposite direction from the flow of factors of production? -the goods market -firm's profit incentives -wages, rent, interest, and profit -finished goods and services -interests payments of Federal, state, and local governments

wages, rent, interest, and profit