Unit 1: Practice Quizzes

d. Indicates the quantity demanded at each price in a series of prices.

A demand curve: a. Graphs as an up-sloping line. b. Shows the relationship between price and quantity supplied. c. Shows the relationship between income and spending. d. Indicates the quantity demanded at each price in a series of prices.

d. Some firms leaving an industry.

A leftward shift of a product supply curve might be caused by: a. An improvement in the relevant technique of production. b. A decline in the prices of needed inputs. c. An increase in consumer incomes. d. Some firms leaving an industry.

d. If the amount producers are offering to sell is equal to the amount consumers are interested in buying.

A market is in equilibrium: a. Because the demand curve slopes down and the supply curve slopes up. b. when the distance between the supply and demand curves is equal. c. When there is a surplus of the product. d. If the amount producers are offering to sell is equal to the amount consumers are interested in buying.

d. Euro.

A number of European nations have agreed to use the___________ as a common currency: a. Mark. b. Pound. c. Continental. d. Euro.

b. Unemployment.

A point inside a production possibilities curve best illustrates: a. The use of best-available technology. b. Unemployment. c. The efficient use of resources. d. Unlimited wants.

Direct, positive, up-sloping

A positive relationship is the same as a ______ relationship. The slope is a _____ number. And the line is _______ from left to right.

Direct, positive, up

A positive relationship is the same as a ______ relationship. The slope is a _____ number. And the line is _______ sloping from left to right.

c. Gives direction to the market system.

According to Adam Smith, the pursuit of self-interest: a. Is reflected in the behavior of firms, but not in the behavior of consumers. b. Means the same as "selfishness." c. Gives direction to the market system. d. Is highly detrimental to the market system

a. Its domestic opportunity cost is least.

According to the concept of comparative advantage, a good should be produced in that nation where: a. Its domestic opportunity cost is least. b. Money is used as a medium of exchange. c. The terms of trade are maximized. d. Its domestic opportunity cost is greatest.

a. An increase in the average skill level of all occupational groups.

All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve, except: a. An increase in the average skill level of all occupational groups. b. Emigration of skilled workers from the nation. c. A decline in the birth rate. d. Depletion and reduced availability of major energy resources.

b. An increase in the average skill level of all occupational groups.

All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve, except: a. Depletion and reduced availability of major energy resources. b. An increase in the average skill level of all occupational groups. c. A decline in the birth rate. d. Emigration of skilled workers from the nation.

d. A mixed economy

An economy which has elements of both free market and command economies is called: a. Libertarianism b. Pure communism c. Pure capitalism d. A mixed economy

a. Shift the supply curve to the right.

An improvement in production technology will: a. Shift the supply curve to the right. b. Increase equilibrium price. c. Shift the supply curve to the left. d. Shift the demand curve to the left.

d. Cause a massive loss of U.S. jobs to Mexico.

Critics of the North American Free Trade Agreement (NAFTA) falsely feared that it would: a. Increase the flow of illegal Mexican immigrants to the United States. b. Cause the European Union and Japan to raise trade barriers against U.S. goods. c. Increase foreign ownership of assets in the United States. d. Cause a massive loss of U.S. jobs to Mexico.

a. The social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants.

Economics may best be defined as: a. The social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants. b. the use of policy to discover new facts and hypotheses. c. The production of goods and services in order to achieve limited resources. d. The sum of macro and micro considerations.

b. Licensing requirements and unreasonable quality standards.

Examples of nontariff barriers to trade are: a. Maximum limits on the quantity or total value of specific products imported to a nation. b. Licensing requirements and unreasonable quality standards. c. Government payments to domestic producers to reduce the world prices of exported goods. d. Excise taxes or duties placed on imported products.

b. Negative 0.2 (30-40)/(60-10) = -10/50 = -0.2 Formula is: (Y2-Y1)/(X2-X1)

Given the data points (10,40) and (60,30), what is the slope? a. Positive 0.2 b. Negative 0.2 c. Positive 5 d. Negative 5

c. 3%

Historically, the United States tends to grow about _____% per year. a. 1% b. 5% c. 3% d. 13%

d. A decrease in the price of one will increase the demand for the other.

If two goods are complements: a. An increase in the price of one will increase the demand for the other. b. They are consumed independently. c. They are necessarily inferior goods. d. A decrease in the price of one will increase the demand for the other.

b. An increase in one variable is associated with an increase in the other variable.

If we say that two variables are directly related, this means that: a. The two graph as a down-sloping line. b. An increase in one variable is associated with an increase in the other variable. c. An increase in one variable is associated with a decrease in the other variable. d. The relationship between the two is purely random.

b. Technology is fixed.

In drawing the production possibilities curve we assume that: a. Wants are limited. b. Technology is fixed. c. Economic resources are unlimited. d. Unemployment exists.

b. A trade deficit in goods because it imported more than it exported.

In recent years the United States has experienced: a. A trade deficit in goods because it exported more goods than it imported. b. A trade deficit in goods because it imported more than it exported. c. A trade deficit in services, as well as in goods. d. Realized an approximate balance in its imports and exports.

d. The entire national economy.

Macroeconomics approaches the study of economics from the viewpoint of: a. The operation of specific product and resource markets. b. Consumers. c. Individual firms. d. The entire national economy.

b. Money, as such, is not productive. Often the term capital is used to mean money, or financial capital. In economics, we don't consider money to be a resource because it doesn't actually do anything itself. What's important is what we can buy with the money. Real Economic Capital refers to the machinery, equipment, buildings, roads, bridges, etc. of the economy. These are the things we need the financial capital for. Economic Capital refers to man-made things that help to produce other things.

Money is not an economic resource because: a. The terms of trade can be determined in nonmonetary terms. b. Money, as such, is not productive. c. Money is not a free gift of nature. d. Idle money balances do not earn interest income.

b. The demand for automobiles decreases.

Since gasoline and automobiles are complementary goods, we would expect that as the price of gasoline increases, a. The supply of automobiles increases. b. The demand for automobiles decreases. c. The supply of automobiles decreases. d. The demand for automobiles increases.

d. We have limited resources with which to satisfy unlimited wants.

The Law of Scarcity exists because a. Supply is greater than demand. b. Society's resources are unlimited. c. Production possibilities are infinite. d. We have limited resources with which to satisfy unlimited wants.

a. Canada.

The United States' most important trading partner in terms of dollar volume is: a. Canada. b. Germany. c. Mexico. d. Japan.

b. The scarcity of productive resources relative to economic wants.

The fundamental problem of economics is: a. The establishment of prices that accurately reflect the relative scarcities of products and resources. b. The scarcity of productive resources relative to economic wants. c. To achieve a more equitable distribution of money income in order to mitigate poverty. d. To establish a democratic political framework for the provision of social goods and services.

c. Price and quantity demanded are inversely related.

The law of demand states that: a. The larger the number of buyers in a market, the lower will be product price. b. Consumers will buy more of a product at high prices than at low prices. c. Price and quantity demanded are inversely related. d. Price and quantity demanded are directly related.

b. If society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.

The law of increasing opportunity costs states that: a. If the prices of all the resources used to produce goods increase, the cost of producing any particular good will increase at the same rate. b. If society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so. c. The sum of the costs of producing a particular good cannot rise above the current market price of that good. d. If the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount.

a. Producers will offer more of a product at high prices than they will at low prices.

The law of supply indicates that: a. Producers will offer more of a product at high prices than they will at low prices. b. Producers will offer more of a product at low prices than they will at high prices. c. The product supply curve is down-sloping. d. Consumers will purchase less of a good at high prices than they will at low prices.

c. All other variables remain constant.

The term "ceteris paribus" means: a. Unemployment and inflation are inversely related. b. The difference between positive and normative economics. c. All other variables remain constant. d. That economics deals with values, not facts.

c. Government should not interfere with the operation of the economy.

The term "laissez faire" suggests that: a. Government action is necessary if the economy is to achieve full employment and full production. b. Land and other natural resources should be privately owned, but capital should be publicly owned. c. Government should not interfere with the operation of the economy. d. Land and other natural resources should be publicly owned, but capital equipment should be privately owned.

a. Product and resource.

The two basic markets shown by the simple circular flow model are: a. Product and resource. b. Free and controlled. c. Household and business. d. Capital goods and consumer goods.

d. The desires of resource suppliers and producers to further their own self-interest will automatically further the public interest.

Which of the following best describes the "invisible hand" concept? a. The nonsubstitutability of resources creates a conflict between private and public interests and calls for government intervention. b. Central direction by the government will improve resource allocation in a capitalistic economy. c. The communist economy is the best system for overcoming the scarce resources-unlimited wants problem. d. The desires of resource suppliers and producers to further their own self-interest will automatically further the public interest.

d. Dramatic improvements in communications technology

Which of the following has been a facilitating factor in world trade? a. General increases in tariffs b. The threat of nuclear war c. The implementation of strict import quotas d. Dramatic improvements in communications technology

c. Increased trade among Canada, Mexico, and the United States

Which of the following has been an outcome of the North American Free Trade Agreement (NAFTA)? a. Lower wages in the United States and Canada b. Lower wages and reduce employment in Mexico c. Increased trade among Canada, Mexico, and the United States d. A lower standard of living in Canada, Mexico, and the United States

c. Natural gas The resource "Land" in economics refers to all natural resources or raw materials.

Which of the following is a land resource? a. An oil drilling rig b. A machine for detecting earthquakes. c. Natural gas d. A farmer

d. The gross profits of all U.S. businesses were $182 billion last year.

Which of the following is a macroeconomic statement? a. General Motors' profits increased in 2000. b. The productivity of steelworkers increased by 1 percent in 2000. c. The price of beef declined by 3 percent last year. d. The gross profits of all U.S. businesses were $182 billion last year.

b. The opportunity cost in terms of reduced income is too great

Which of the following is an economic explanation for why most college-aged movie stars do not attend college. a. They are too dumb to get into college b. The opportunity cost in terms of reduced income is too great c. They would find college life boring d. They cannot afford the room, board, and tuition fees most colleges charge.

a. How will society produce goods and services?

Which of the following is one of the Five Fundamental Questions? a. How will society produce goods and services? b. How much should the society save? c. Who should appoint the head of the central bank? d. Which products will be in scarce supply and which in excess supply?

a. An increase in the amount of labor resource available.

Which of the following is supply factor in economic growth? a. An increase in the amount of labor resource available. b. Maximizing efficiency of existing resources. c. Operating at full employment, along with full production. d. An increase in overall demand for goods and services.

c. An increase in supply

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity? a. A decrease in supply b. An increase in demand c. An increase in supply d. A decrease in demand

d. An increase in money income if A is an inferior good

Which of the following will cause the demand curve for product A to shift to the left? a. An increase in the price of product A b. An increase in money income if A is a normal good c. Population growth that causes an expansion in the number of persons consuming A d. An increase in money income if A is an inferior good

d. A change in the price of Coca Cola

Which of the following will not cause the demand for Coca Cola to change? a. A change in consumer tastes b. An increase in consumer incomes c. A change in the price of close-substitute, Pepsi. d. A change in the price of Coca Cola

a. The reduction of unemployment Only things that generate more or better resources or improvements to technology will shift the curve out. Reducing unemployment would move us from a point inside the curve to the curve itself. It would not shift the curve. The amount of total labor resource does not change when unemployment is reduced - just the utilization of that resource changes. The PPC represents what can be produced if we fully employ all available resources.

Which of the following will not produce an outward shift of the production possibilities curve? a. The reduction of unemployment b. An increase in the quantity of a society's labor force c. The improvement of a society's technological knowledge d. An upgrading of the quality of a nation's human resources

a. The discovery and development of renewable energy resources

Which of the following would NOT be a factor that might discourage economic growth? a. The discovery and development of renewable energy resources b. The imposition of worker safety laws c. Pollution and congestion d. Racial and gender discrimination