Economics quiz

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Two major virtues of the market system or that it

Allocates resources efficiently and allows economic freedom

The socially optimal amount of pollution abatement occurs where society's marginal

Benefit of abatement equals it's marginal cost of abatement

A firms supply curve is upsloping because

Beyond some point the production cost of additional units of Output will rise

Consumer Sovereignty means that

Buyers determine what will be produced based on the dollar votes for the goods and services offered by sellers

The rationing function of prices refers to the

Capacity of a competitive market to equalize quantity demanded and quantity supplied

Friends are motivated to minimize production cost because

Competitive pressures in the market will drive out higher cost producers

The amount of after-tax income received by household is measured by

Disposable income

Private property

Encourages owners to maintain or improve their property so as to preserve or enhance value

Transfer payments are

Exclude when calculating GDP because they do not reflect current production

Public choice economist hold the politicians will

Favor programs entailing immediate And clear cut benefits and vaguely defined or deferred costs

Which of the following statements best describes how firm's response to demand of shorts under conditions of inflexible prices

Firms respond to shorter-term demand of shocks by adjusting inventory; more persistent changes in demand result in changes in production levels

Real GDP refers to

GDP data that have been adjusted for changes in the price level

The term "laissez - faire" suggest that

Government should not interfere with the operation of the economy

Went and economies production capacity is expanding

Gross domestic investment exceeds depreciation

Unlike a private good a public good

Has benefits available to all including non-payers

In the resource market

Household so resources to businesses

For an economy to increase investment, it must

Increase saving

An increase in the price of product a will

Increase the demand for substitute product b

The invisible hand promote societies interest because

Individuals pursuing their self interest will try to produce goods and services the people in society want and are willing to purchase

Which of the following will enable a nation to obtain a combination of consumer goods and capital good outside it's production possibilities curve

International specialization and trade

According to economist economic self interest

Is a reality that underlies economic behavior

A market

Is an institution that brings together buyers and sellers

A normative statement is one that

Is based on value judgments

Producer surplus

Is the difference between the minimum prices producers are willing to acccept for a product and the higher equilibrium price

GDP is the

Monetary value of all final goods and services produced within the borders of a nation in a particular year

Which of the following is most closely related to recessions

Negative real growth in output

Real GDP is preferred to nominal GDP is a measure of economic performance because

Nominal GDP use this current prices and that may over, or understate true changes in output

If one person is consumption of a good does not preclude another's consumption the good is said to be

Nonexcludable

Which of the following statements if any is correct for a nation that is producing only consumer and capital goods

Other things equal, the more capital goods a nation produces, the greater will be its future growth rate

The construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is

Price

An increase in the quantity demanded means that

Prices decline and consumers therefore want to purchase more of the product

The market system does not produce public goods because

Private firms cannot stop consumers who are unwilling to pay for such good from benefiting from them

A government using the fiscal policy in an attempt to stimulate the economy would do which of the following

Raise government spending

If nominal GDP rises

Real GDP may either rise or fall

The three statistics that are the main focus for those measuring macro economic health are

Real GDP, inflation, and unemployment

Modern economic growth refers to countries that have experienced an increase in

Real output per person

The term quantity demanded

Refers to the amount of a product that will be purchased at some specific price

When economist refer to investment, they are describing a situation where

Resources are devoted to increasing future Output

The governments ability to coerce can enhance economic efficiency by

Restraining self interest

Government loan guarantees tend to have the effect of

Socializing losses and privatizing gains

Macroeconomics can best be described as the

Study of large aggregates of the economy or the economy as a whole

Individual accountability within the government bureaucracy

Tends to be lacking because of civil services protection and the complexity of government

Monetary stimulus is only helpful to an economy

That is in recession

Which of the following would best explain why regulatory capture is a problem

The regulations implemented serve the private interests of the regulated industry, rather than addressing social interests such as consumer safety and environmental protection

A negative externality or spillover cost occurs when

The total cost of producing a good exceeds the costsborn by the producer

Which of the following most closely relates to the idea of opportunity cost

Trade-offs

Chronic budget deficits can be attributed to

Voters wanting government programs but not wanting to pay taxes

A market is in equilibrium

When ever the demand curve is downsloping and the supply curve is upsloping

The optimal allocation of resources is found

Where marginal benefit equals marginal cost

Net exports are negative when

A nations imports exceed its exports


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