Practice Exam 2
In a small economy, consumption spending in 2012 is $6,000, government spending is $1,200, gross investment is $1,500, exports are $2,000, and imports are $1,000. What is gross domestic product in 2012?
$9,700
Which of the following is the best example of a tariff?
A $5,000 per-car fee imposed on all sports utility vehicles imported into the United States
When Sophie, a French citizen, purchases a Dell computer in Paris that was produced in Texas, the purchase is
A U.S. export and an French import.
The minimum wage is an example of
A price floor.
Which of the following would cause an increase in the supply of cheese?
An increase in the number of firms that produce cheese
The law of demand implies, holding everything else constant, that as the price of yogurt
Increases, the quantity of yogurt demanded will decrease
Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.
Invisible hand
The GDP deflator is equal to
Nominal GDP divided by real GDP, multiplied by 100
Opportunity cost is defined as
The highest valued alternative that must be given up to engage in an activity.
Which of the following is a positive economic statement?
The minimum wage law causes unemployment.
Which of the following statements is false?
Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall.
Which of the following transactions would be included in the official calculation of GDP?
You buy a new iPad
In a market economy, who decides what goods and services will be produced?
Consumers and producers
A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.
Bowed outward
Scarcity refers to the situation in which
Unlimited wants exceed limited resources.
