Honors Gov't/Econ Practice Questions

Krystal and Mark are both writers of poems and TV commercials. In one year, Krystal can produce 8 poems. Krystal could also produce 2 TV commercials. Meanwhile, Mark can produce 12 poems. Mark could also produce 4 TV commercials. For Mark, the opportunity cost of writing one TV commercial is

3 poems

Krystal and Mark are both writers of poems and TV commercials. In one year, Krystal can produce 8 poems. Krystal could also produce 2 TV commercials. Meanwhile, Mark can produce 12 poems. Mark could also produce 4 TV commercials. For Krystal, the opportunity cost of writing one TV commercial is

4 poems

In Chapter 10 of Naked Economics, Charles Wheelan makes several statements about inflation. He does not say:

America has suffered through 2 bouts of hyperinflation

Don can produce 10 pens or 20 pencils in one hour while Bob can produce 15 pens or 5 pencils in one hour

Bob has a comparative advantage over Don in the production of pens

In Chapter 9 of Naked Economics, Charles Wheelan discusses which of the following concepts in depth?

GDP

Why is it important to use other methods besides GDP per capita?

GDP per capita only gives you a limited snapshot of a country and does not really show you the wealth across the countries and among countries

Krystal and Mark are both writers of poems and TV commercials. In one year, Krystal can produce 8 poems. Krystal could also produce 2 TV commercials. Meanwhile, Mark can produce 12 poems. Mark could also produce 4 TV commercials.

Mark has a comparative advantage in writing TV commercials and Krystal has a comparative advantage in writing poems

If Matt trades two candy bars to Andy in exchange for one baseball card,

Matt must have valued the baseball card more than the two candy bars and Andy must have valued the two candy bars more than the baseball card

According to the theory of comparative advantage, specialization and free trade will benefit

all trading parties, even when some are absolutely more efficient producers than others

The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is

an expansion in investment resulting from a reallocation of resources away from consumption

Someone has a comparative advantage in producing a good if they can produce that good

at a lower opportunity cost

In an informed and voluntary exchange,

both parties receive something they value more than what they gave up

Which of the following is a driving force underlying economic growth?

entrepreneurial discovery and production of improved products

Economic growth will

expand the production possibilities of an economy

Monetary and price instability will

generate uncertainty, and encourage investors and businesses to move their activities to countries with a more stable monetary environment

If a poor country is going to grow rapidly and achieve a high level of per capita income, what is most important?

institutions and policies that encourage productive activities

What would be most likely to cause the per capita income of less-developed countries to rise?

investment expenditures that enhance the human capital of labor force participants

If an economy is operating at a point inside the production possibilities curve,

its resources are not being used efficiently

A legal system that protects private property and enforces contracts in an even-handed manner helps promote economic growth because it

provides people with a strong incentive to supply others with things that they value at an economical price

According to the theory of comparative advantage, ________ raise(s) productivity by lowering opportunity costs.

trade and specialization