Honors Econ: Test 1

Polanyi observed that embedded economies were built on states whereas disembedded economies rested on contractus. Which one of the following would best represent status and contracts, respectively. a) slave vs wage-laborer b) slave vs peasant c) slave vs slave owner d) peasant vs landlord

a)

Which one of the following would be a more plausible statement about human nature in capitalism? a) capitalism promotes and nurtures selfish behavior b) capitalism promotes and nurtures altruistic behavior c) capitalism promotes and nurtures egalitarian behavior d) capitalism promotes and nurtures compassionate behavior

a)

If 20 million workers are unemployed and 180 million workers are employed, then the unemployment rate is a) 80%. b) 11.1%. c) 18%. d) 10%.

d

Which one of the following would be considered a reason for studying history of ideas and economic history according to Rima (CP-1) a) Understanding disagreement among economists b) Inability to provide agreed upon theoretical explanations and policy recommendations by economists c) gaining a better understanding of material world around us d) all of the above

d)

**An example of an investment is a) the purchase of a Hewlett Packard laser printer for use by a business b) the purchase of an Exxon Mobil bond c) the purchase of a share of Google stock d) all of the above

a

**Which of the following is subtracted from national income to get to personal income? a) retained earnings b) personal Taxes c) personal interest income d) depreciation

a

Aggregate behavior is a) the behavior of all households and firms together. b) the behavior of each household and firm. c) none of the above. d) the behavior of each individual

a

Assume that the market is initially in the middle of a demand curve and that the good is a normal good. A decrease in income would cause the market to move from point B on the demand curve to a) a different demand curve closer to the origin b) a higher point on the same demand curve c) a lower point on the same demand curve d) a different demand curve farther from the origin

a

If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is a) -3%. b) 28%. c) 4%. d) -7%.

a

If improvements in technology have reduced the cost of producing personal computers, you accurately predict that in the market for personal computers, there will be a(n) a) increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded. b) increase in the supply of personal computers, a reduction in the price, and an increase in the demand. c) decrease in the supply of personal computers, an increase in the price, and a decrease in the demand. d) increase in the quantity supplied of personal computers, a reduction in the price, and an increase in the quantity demanded.

a

If national income is $600 billion, personal income is $400 billion, personal taxes are $120 billion, then disposable income equals a) $280 billion. b) $480 billion. c) $80 billion. d) $320 billion.

a

If no foreign companies produce in a country, but many of the country's companies produce abroad, then a) the country's GNP will tend to exceed its GDP. b) the country's GNP and GDP will tend to be equal. c) the country's GDP will tend to exceed its GNP. d) the country's GDP will tend to be equal to its domestic income.

a

If pizza and hamburgers are substitutes, an increase in the price of hamburgers will cause a movement from a point in the middle of a demand curve to a) a diff demand curve farther from the origin b) a point higher on the same demand curve c) a diff demand curve closer to the origin d) a lower point on the same demand curve

a

Refer to a set of three supply curves for garden burgers. A decrease in the price of mushrooms (an input for garden burgers) will cause a movement from a middle point on middle curve to a) a lower curve b) a higher point on same curve c) a lower point on same curve d) a higher curve

a

The ________ can change the quantity of money in the economy. a) Federal Reserve b) Office of the Comptroller of the Currency c) Congress d) Treasury Department

a

The demanders in the goods-and-services market are a)households, the government, business firms, and the rest of the world. b) households and business firms. c) the government and business firms. d) households, the government, and the rest of the world.

a

The law of ________ opportunity costs is best depicted by production possibilities frontier in Panel A (shows a concave down curve in 1st quadrant). a) increasing b) decreasing c) constant d) zero

a

When hurricane andrew passed through Lousiana in the summer of 1992, approximately a quarter of the sugar cane crop was destroyed. Ceteris paribus, a) the supply of sugar decreased, and the price of sugar increased b) the supply of sugar decreased and the price of sugar decreased c) the demand for sugar increased, and the price of sugar increased d) the demand for sugar decreased, and the price of sugar decreased

a

Which of the following will definitely occur when there is a simultaneous decrease in demand and a decrease in supply? a) a decrease in equilibrium quantity b) a decrease in equilibrium price c) an increase in equilibrium quantity d) an increase in equilibrium price

a

**Which of the following is not one of the factors per se that transforms wageless labor, unprintable land, and private treasures into factors of production according to Heilbroner and Thurow a) technological changes b) transformation of ancestral estates into potential capital c) the great price inflation due to influx of gold d) the enclosure movement

a)

According to Heilbroner and Thurow, the market system was the cause of a) unrest, insecurity, and individuals suffering as well as progress, opportunity, and fulfillment b) progress, opportunity, and fulfillment c) unrest, insecurity, and individual suffering d) none of the above

a)

**During the Iraq War, many of Iraq's oil refineries were destroyed. This would best be represented by a a) movement of Iraq's production possibility frontier to some point inside the frontier b) shift of Iraq's ppf toward the origin c) movement down Iraq's ppf d) movement up Iraq's ppf

b

As an individual consumes more of a product within a given period of time, it is likely that each additional unit consumed will yield a) less satisfaction for a while and then start to add more satisfaction b) successively less satisfaction c) the same amount of satisfaction d) successively more satisfaction

b

If the equilibrium price of gasoline is $4.00 per gallon and the government will not allow oil companies to charge more than $3.00 per gallon of gasoline, which of the following will happen? a) Demand must eventually decrease so that the market will come into equilibrium at a price of $3.00. b) A nonprice rationing system such as ration coupons must be used to ration the available supply of gasoline. c) Supply must eventually increase so that the market will come into equilibrium at a price of $3.00. d) The market will be in equilibrium at a price of $3.00.

b

In terms of the ppf, an increase in productivity attributable to new technology would best be shown by a) a movement along the frontier b) the ppf shifting outward, away from the origin c) a movement toward the origin d) a movement from a point inside the frontier to a point on it

b

In which of the following conditions is the inflation rate likely to fall and the unemployment rate likely to rise? a) stagflation b) recession c) boom d) hyperinflation

b

Price per Pizza QD QS $3 1200 600 6 1000 700 9 800 800 12 600 900 15 400 1000 If the price per pizza is $15, there is a(n) a) market equilibrium. b) excess supply of 600 units. c) excess demand of 400 units. d) excess demand of 900 units.

b

Price per Pizza QD QS $3 1200 600 6 1000 700 9 800 800 12 600 900 15 400 1000 If the price per pizza is $6, there is an excess a) supply of 700 pizzas. b) demand of 300 pizzas. c) demand of 600 pizzas. d) supply of 1,000 pizzas.

b

Profits earned in the United States by foreign-owned companies are included in a) neither the U.S. GDP nor GNP. b) the U.S. GDP but not GNP. c) the U.S. GNP but not GDP. d) both the U.S. GDP and GNP.

b

Promissory notes issued by the federal government when it borrows money are known as a) Treasury shares. b) Treasury bonds. c) Treasury stocks. d) none of the above

b

Refer to a set of three supply curves for garden burgers. An increase in the wage rate of burger cooks will cause a movement from a middle point on the middle supply curve to a) a higher point on same supply curve b) a diff supply curve above the original c) a lower point on same supply curve d) a diff supply curve lower than the original

b

The concept of opportunity cost is based on the principle of a) profit b) scarcity c) need d) consumption

b

The economy is at Point A (40,120). The opportunity cost of moving from Point A to Point B (60,90) is a) 30 LCD tbs that must be forgone to produce 60 additional plasma televisions b) 30 LCD tbs that must be forgone to produce 20 additional plasma tvs c) 120 LCDs that must be forgone to produce 40 plasmas d) 90 LCDs that must be forgone to produce 20 plasmas

b

The government wants to encourage consumer spending through cutting income taxes. This is an example of a) a supply-side policy. b) a fiscal policy. c) an incomes policy. d) a monetary policy.

b

Unemployment generally ________ during recessions and ________ during expansions. a) falls; rises. b) rises; falls. c) falls; falls. d) rises; rises.

b

What should be subtracted from GDP to calculate national income? a) net factor payments to the rest of the world b) depreciation c) personal income taxes d) indirect taxes

b

Which of the following is an example of a final good or service? a) lumber purchased by a construction company to used in building houses b) a computer purchased by Federal Express to track shipments c) wheat a bakery purchases to make bread d) coffee beans Starbucks purchases to make coffee

b

Which of the following statements is FALSE? a) During a recession, output and employment are falling. b) Business cycles are always symmetric—the length of an expansion is the same as the length of a contraction. c) The rate of change in economic activity is used to assess whether an economy is expanding or contracting. d) Short-term ups and downs in the economy are known as business cycles.

b

According to Polanyi, productive activity in pre-capitalist societies were driven by a) production for exchange b) householding (production for own use) c) production for profit d) none of the above

b)

** Krystal Mark Poems 8 12 Writing comerc. 2 4 Which of the following statements is TRUE? a) Krystal has a comparative advantage both in writing TV commercials and writing poems b) Krystal has a comparative advantage in writing TV commercials, and Mark has a comparative advantage in writing poems c) Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems d) Mark has a comparative advantage in both writing TV commercials and writing poems

c

**Refer to a set of three supply curves for garden burgers. A decrease in supply is represented by the movement from a) the middle curve to one higher b) a middle point on middle curve to a lower point on same curve c) the middle curve to one lower d) a middle point on middle curve to a higher point on same curve

c

**Which of the following will NOT cause a shift in the demand curve for compact discs a) a change in wealth b) a change in the price of downloadable online music c) a change in the price of CDs d) a change in income

c

An example of a transfer payment is a) the salary paid to a member of the armed forces. b) an interest payment on a General Motors' bond. c) a Social Security retirement benefit. d) the added value of stock from the time it was bought to the time it was sold.

c

Assume that there are only two people in the market for baseball caps: Alex($10,5;$8,7) and Ryan($10,6;$8,7). Along the total market demand for baseball caps at a price of ____ quantity demanded would be ____ a) 10,7 b) 8,12 c) 10,11 d) 8,13

c

Classifying discouraged workers as unemployed would a) decrease the unemployment rate. b) have an indeterminate impact on the unemployment rate. c) increase the unemployment rate. d) not change the unemployment rate.

c

If in a year there is a positive inventory investment, then final sales a) equal GDP. b) exceed GDP. c) are less than GDP. d) are zero.

c

If personal saving is -$10 billion and disposable personal income is $370 billion, then personal consumption spending a) is $360 billion. b) is $390 billion. c) is $380 billion. d) cannot be determined from this information.

c

If pizza and beer are complementary goods, a decrease in the price of beer will cause a movement from a point in the middle of a demand curve to a) a different demand curve closer to the origin b) a higher point on the same demand curve c) a different demand curve farther from the origin d) a lower point on the same demand curve

c

In a business cycle, a peak represents the end of ________ and a trough represents the end of ________. a) a recession; an expansion b) a depression; an expansion c) an expansion; a recession d) a trough; a peak

c

In the short run, it is necessary to non-prie ration a good whenever _______ exists. a) excess supply b) a surplus c) excess demand d) market equilibrium

c

In which basic market would DVDs be traded? a) the labor market b) the factor market c) the goods and services market d) the money market

c

Price per Pizza QD QS $3 1200 600 6 1000 700 9 800 800 12 600 900 15 400 1000 This market will be in equilibrium if the price per pizza is a) 15 b) 6 c) 9 d) 12

c

The change in capital stock in a period is equal to a) the amount of the capital at the beginning of the period plus gross investment. b) the amount of the capital at the beginning of the period minus net investment. c) the amount of the capital stock at the beginning of the period plus gross investment minus depreciation. d) the ratio of the amount of the capital at the beginning of the period to the amount of depreciation.

c

Unemployment means that a) there are some people who will not work at the going wage rate. b) people are not willing to work at the going wage rate. c)at the going wage rate, there are people who want to work but cannot find work. d) there is excess demand in the labor market.

c

Which of the following is NOT a topic studied in Macroeconomics? a) the inflation rate b) the unemployment rate c) the price of Dell computers d) gdp

c

Which of the following is an example of an intermediate good? a) lumber you buy to build a house for your dog b) the chocolate you buy to make yourself some cookies c) the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to d) the dough you buy to fix yourself a pizza for dinner

c

Which one of the following would be the most plausible statement about the role of the state in capitalism? a) it guarantees political freedom b) it lets market rule by itself c) it both promotes laissez-faire and intervenes markets in reality d) none of the above

c

According to Polanyi, the major difference between capitalist economics and pre-capitalist economies is a) the embedded nature of economy in relation to society b) the embedded nature of the state in economic affairs c) the disembedded nature of economy in relation to society d) the disembedded nature of the state in economic affairs

c)

"Disembedded" economy in Polanyi's writings refers to a) self-sufficient economy b) self-reliant economy c) self-protected economy d) self-regulating economy

d)

Division of labor results in a) productivity of workers b) fragmentation of work c) alienation from work d) all of the above

d)

Heilbriner and Thurow argue that the three distinguishing aspects of pre-capitalist societies were a) presence of the institution of private property; lack of a market system; turbulence in social life b) presence of the institution of private property, lack of a market system, stability of economic life, c) lack of the institution of private property, the lack of a market system, turbulence in social life d) lack of the institution of private property, lack of a market system; stability of economic life

d)

Polanyi calls land, labor, and money as 'fictitious' commodities because a) they had never been considered as commodities like the ones sold and bought in a market place before (capitalism) b) they had never been considered as factors of production before capitalism c) they had never been relied on as the main source of livelihood before capitalism d) all of the above

d)

The Greek origin of modern word economics, oikonomia means a) the business of household management b) the science of household management c) the study of household management d) the art of household management

d)

Which one of the following would be considered one of the characteristics of social sciences (including econ) according to Rima? a) the discovery of a new theory offering solution to a puzzle results in discarding the older theory with the dominant paradigm b) the discovery of a new theory offering solution to a puzzle is considered a progress and modifies the older theory c) the discovery of a new theory offering a solution to a puzzle does not necessarily discard the older theory d) none of the above

c)

**According to Aristotle, human economy stem from a) unlimited needs and wants of humans b) scarcity of resources c) acquisitive and maximizing behavior of humans d) none of the above

d

A decrease in demand for cameras would likely be caused by a) an increase in the price of cameras b) a decrease in the price of cameras c) an increase in the price of a substitute good d) an increase in the price of a complementary good

d

A decrease in unemployment, on the possibilities frontier, may be represented by the movement from a point a) up and to the left b) down and to the right c) down, to the right, and inside the PPF d) inside the PPF to a point on the PPF

d

Capital, as economists use the term, a) refers to the process by which resources are transformed into useful forms b) is the money the firm spends to hire resources c) is money the firm raises from selling stock d) refers to things that have already been produced that are in turn used to produce other goods and services

d

In 2012, GDP was exactly equal to final sales. This implies that a) there was a decline in inventories that year. b) there was accumulation of inventories that year. c) GDP did not grow that year compared to the year before. d) there was no change in inventories that year.

d

Interest paid by households and by the government is a) included in both GDP and GNP because it represents an expenditure by one group and a receipt of income by another group. b) not counted in GDP but is counted in GNP because it is paid by U.S. citizens to people living in the United States. c) counted in national income, but not in GDP. d) not counted in GDP because it is not assumed to flow from the production of goods and services.

d

Price per Pizza QD QS $3 1200 600 6 1000 700 9 800 800 12 600 900 15 400 1000 If the price per pizza is $12, the price will a) remain constant because the market is in equilibrium. b) increase because there is an excess demand in the market. c) decrease because there is an excess demand in the market. d) a decrease because there is an excess supply in the market

d

Refer to a set of three supply curves for garden burgers. An increase in the quantity supplied is represented by a movement from a) a middle point on middle curve to a lower point on same curve b) middle curve to lower curve c) middle curve to higher one d) middle point, middle curve to a higher point on same curve

d

The price of mozzarella cheese, which is used in making pizza, increases. In the market for pizza you would expect that a) the demand for pizza would increase and the price of pizza would increase. b) the demand for pizza would decrease and the price of pizza would fall. c) the supply of pizza would increase and the price of pizza would decrease. d) the supply of pizza would decrease and the price of pizza would increase

d

Which of the following is a CORRECT statement? a) Companies issue shares but don't issue bonds. b) The government issues both bonds and shares. c) Bondholders earn dividends but shareholders don't. d) Shareholders earn dividends but bondholders don't.

d

Which of the following would NOT be counted in 2013's GDP? a) the commissions earned by a real estate agent in selling condominiums built prior to 2013 b) the 2013 salary of a used motorcycle salesperson c) the value of a refrigerator manufactured in 2013 but not sold in 2013 d) the value of a 2008 boat you purchase from a boat dealer in 2013

d

the term business cycle refers to the a) short-term ups and downs in the price level b) long-term trends in the level of economic activity. c) long-term trends in the price level. d) short-term ups and downs in the level of economic activity.

d