Econ: Exam 1 Ch. 1-4
Which of the following countries would rely most on central planning for economic decisions?
Cuba.
An increase in productivity occurs when:
output per worker increases.
The three major macroeconomic problems are:
unemployment, falling production, and inflation.
A demand schedule:
indicates the amounts of a product a buyer would purchase at different prices in a defined time period.
Beginning in the mid-1980s, the Soviet Union, China, and other planned economies:
moved toward greater use of free markets and individual decision making.
A demand curve for a good or service is shown on a graph that has:
price on the vertical axis, quantity on the horizontal axis, and the curve is downward sloping.
The basic concern of economics is:
the scarcity problem created because people's desires for material things exceed the ability to produce them.
(graph) There would be no surplus or shortage in this market if producers charged a price of:
$4.
A good cost $400 in the base year, and in a later year the price index number for the good was 125.0. In that later year the good cost:
$500.
If the stated rate of interest on a security is 9 percent and the rate of inflation is 7 percent, the real rate of interest is:
2 percent.
Changes in the quantity supplied of a good or service are caused by changes in the:
price of the good or service.
If the quantity of prerecorded CDs demanded is equal to 600 - 10 (price of the CD), at a price of $16 each, the number of CDs demanded would be:
440.
Which of the following is an example of a capital good?The basic reason we study economics is because material wants and needs are
A cash register
Which of the following statements is FALSE?
A change in the level of prices in the economy causes a change in real GDP.
Which of the following would cause an increase in the supply of automobiles?
A decrease in the cost of steel.
Which is NOT an example of a model?
A list of key economic indicators for a year.
Which of the following is an example of an economic theory?
An explanation as to why raising the price of a product would cause people to buy less of that product.
Which of the following is an economic policy?
Giving families a tax break on college tuition in order to encourage more degrees.
Which of the following statements about government intervention in the U.S. economy is FALSE?
Government tax and expenditure programs are generally not considered forms of intervention into the economy.
Which of the following statements about price indexes is FALSE?
If items that cost $200 in the base year cost $300 this year, the price index number for this year is 300.0.
If economic policymakers decide to primarily pursue the goal of full employment and full production, which of the following is most likely to result?
Inflation
Which of the following statements is correct?
Regulatory activity increased in the 1960s and early 1970s, and was followed by deregulation in the late 1970s and 1980s.
Which of the following statements is FALSE?
Scarcity could be overcome if people were willing to work harder to produce all the goods and services that would satisfy their material wants and needs.
An economic system where many of the factors of production are collectively owned and there is an attempt to equalize incomes is:
Socialism.
Which of the following statements about demand is FALSE?
The demand curve for a product will shift to the left as its price rises.
Which of the following statements about price elasticity is FALSE?
The demand for a necessity should be more price elastic than the demand for a luxury.
Which of the following recent developments in the U.S. economy is true?
The deregulatory trend of the late 1970s and 1980s reversed in the 1990s.
Which of the following would cause the demand curve for a product to shift to the right today?
The expectation that the product will be unavailable in the future.
None of the following activities are included in the calculation of GDP. Which one does NOT result in understating GDP?
The sale of preowned goods, such as used cars.
A possible economic policy problem exists in that:
When an economy reaches full production and full employment buyers' increased spending power may cause inflation.
You are given the following price-quantity information: ($10 and 180 units), ($15 and 150 units), ($20 and 120 units). This information would graph as:
a downward-sloping line and conform to the Law of Demand.
Full employment occurs when the unemployment rate falls to:
a level that includes only the frictionally unemployed.
The minimum wage law is an example of:
a price floor.
Economic growth is illustrated using a production possibilities curve by:
a rightward shift of the curve
If producers in this market charged a price of $2, there would be:
a shortage of 300 units.
A weakness of a planned economy is:
all of these answers are correct.
When deciding on a method of production, a firm in a pure market economy selects the method that:
all of these answers are correct.
The concept of opportunity cost is illustrated in a production possibilities model by the:
amount of one good that must be given up to get more of the other good while moving along the production possibilities curve.
Equity as defined in a market system requires that every person receive
an amount of goods and services based on their contribution to production
If supply decreases and demand increases in a market, there will be:
an increase in equilibrium price, but whether equilibrium quantity increases or decreases will depend on how much supply and demand shift.
A decrease in the number of buyers in a market would cause equilibrium price:
and quantity to decrease.
An auto repair shop, a corn field, and a person managing a coffee shop that they own are, respectively, examples of:
capital, land, and entrepreneurship.
Planning failure occurs when:
centralized decision making produces a problem for society or fails to achieve society's goals.
Upward pressure on prices coming from the sellers' side of the market causes:
cost-push inflation.
Cyclical and structural unemployment differ in that:
cyclically unemployed persons have the possibility of regaining their jobs, while structurally unemployed persons have no possibility of regaining their jobs.
If there were a decrease in the market demand for a product with no change in market supply, the equilibrium price would:
decrease and the equilibrium quantity decrease.
The way a society is organized to make the basic economic decisions is referred to as its:
economic system.
The factor of production that organizes economic activity and bears the risk of success or failure in a business venture is:
entrepreneurship
GDP measures the value of all
finished goods and services produced in one year.
GDP measures the value of all:
finished goods and services produced in one year.
A person who quits a job in Los Angeles to look for work in Chicago is:
frictionally unemployed.
Laissez-faire capitalism:
holds that individual decision making with minimal government intervention will maximize the interests of society.
According to the circular flow model, payments for goods and services flow from:
households to businesses in output markets.
A country where there are extremely rapid increases in the general level of prices is experiencing:
hyperinflation.
Human capital investments:
include formal education, on-the-job training, and related activities.
In a market economy the three basic economic decisions are made by the:
interaction of individual buyers and sellers based on prices.
The study of the U.S. economy as a whole, and how all households in the economy interact with all businesses and the government is:
macroeconomics.
Two variables are inversely related when:
one variable decreases as the other increases.
An inverse relationship occurs when two variables move in:
opposite directions, and graph as a downward-sloping line.
The two functions of an entrepreneur are:
organize resources and bear the risk of a business' failure
Interest is earned by:
owners of capital.
A usury law on interest rates is an example of a:
price ceiling.
If a firm's sales revenue increases after lowering the price of its product, the demand for its product is:
price elastic.
A country that allows no market activity in making the basic economic choices has a:
purely planned economy.
If the price of a product were to decrease, a seller's supply curve for that product would:
remain unchanged.
The incomes received by the four factors of production are:
rents, wages, interest, and profits.
The transition from a planned to a market-oriented economy:
requires that property rights be redefined to allow private ownership.
Based on the information in this production possibilities table, the opportunity cost of going from 0 to 40 million units of consumer goods is:
smaller than the opportunity cost of going from 40 to 80 million units of consumer goods.
The government programs and legislative reforms initiated during the 1930s to reduce the problems of the Great Depression were termed:
the New Deal.
A production possibilities curve shows:
the different amounts of two goods that an economy can produce when it is at full employment with fixed resources and technology.
The opportunity cost of working rather than going to school is:
the higher wages that come with additional education.
Macroeconomics is the study of:
the operation of the economy as a whole, and economic topics such as total output, employment, and inflation.
If the price charged in a market was $7 and the equilibrium price in that market was $11, you would expect:
the price charged in the market to increase to $11.
If there were a decrease in both demand and supply in a market:
there would be a decrease in equilibrium quantity, but it would not be certain how equilibrium price would change.
The economic systems of people such as some early Native American tribes that were small, focused on agriculture, and operated with production methods not changed for generations are best characterized as:
traditional or agrarian economies.
The basic reason we study economics is because material wants and needs are
unlimited but resources are not
The basic problem that gives rise to the study of economics is the need to:
use scarce resources to satisfy people's unlimited material wants and needs
The three basic economic decisions are:
what to produce, how to produce, and who receives what has been produced.
