Question;(TCO 1) Opportunity cost is best;defined as (Points: 4);marginal cost minus marginal benefit.;the time spent on an economic activity.;the value of the best forgone alternative.;the money cost of an economic decision.;Question 2.2. (TCO1) Which of the following is considered to be an;entrepreneur? (Points: 4);Self-employed person;MBA graduate hired by a firm to be its CEO;Production-line worker;Customer of a firm;Question 3.3. (TCO1) A point outside the production possibilities curve is;(Points: 4);attainable, but there is not full employment.;attainable, but there is not optimal allocation.;unattainable because the economy is inefficient.;unattainable because of limited resources.;Question 4.4. (TCO1) A basic characteristic of a command system is that (Points;4);wages paid to labor are higher.;government owns most economic resources.;free markets are never permitted in a command economy.;government planners play a limited role in deciding what goods will be;produced.;Question 5.5. (TCO 2) Which is consistent with the law of demand? (Points: 4);A decrease in the price of tacos causes no change in the quantity of tacos;demanded.;An increase in the price of pizza causes an increase in the quantity of pizza;demanded.;An increase in the price of hamburgers causes a decrease in the quantity;of hamburgers demanded.;A decrease in the price of turkey sandwiches causes a decrease in the;quantity of turkey sandwiches demanded.;Question 6.6. (TCO 2) What combination of changes would most likely decrease the;equilibrium price? (Points: 4);When supply decreases and demand increases;When demand increases and supply increases;When demand decreases and supply decreases;When supply increases and demand decreases;Question 7.7. (TCO 2) Chuck Grim has a price elasticity of demand for beer of;1.2. Suppose that the price of beer is increased by 10 percent. What will;happen to the total amount Chuck spends on beer? (Points: 4);It will not change.;It will decrease.;It will increase.;It is impossible to tell.;Question 8.8. (TCO 2) Which of the following factors will make the demand for a;product relatively elastic? (Points: 4);There are few substitutes.;The time interval considered is long.;The good is considered a necessity.;Purchases of the good require a small portion of consumers' budgets.;Question 9.9. (TCO 2) Which is true for a purely competitive firm in short-run;equilibrium? (Points: 4);The firm is making only normal profits.;The firm's marginal cost is greater than its marginal revenue.;The firm's marginal revenue is equal to its marginal cost.;A decrease in output would lead to a rise in profits.;Question 10.10. (TCO 2) Which would definitely not be an example of price;discrimination? (Points: 4);A theater charges children less than adults for a movie.;Universities charge higher tuition for out-of-state residents.;A doctor charges for services according to the income of patients.;An electric power company charges less for electricity used during;off-peak hours when production costs are lower.;Question 11.11. (TCO 3) A major reason that firms form a cartel is to (Points;4);reduce the elasticity of demand for the product.;enlarge the market share for each producer.;minimize the costs of production.;maximize joint profits.;Question 12.12. (TCO 3) In the short run, output (Points: 4);is absolutely fixed.;can vary as the result of using a fixed amount of plant and equipment;more or less intensively.;may be altered by varying the size of plant and equipment which now exist;in the industry.;can vary as the result of changing the size of existing plants and by new firms;entering or leaving the industry.;Question 13.13. (TCO 4) Which phase of the business cycle would be most closely;associated with an economic contraction? (Points: 4);Peak;Recession;Trough;Recovery;Question 14.14. (TCO 4) In calculating the unemployment rate, part-time workers;are (Points: 4);counted as unemployed because they are not working full-time.;counted as employed because they are receiving payment for work.;used to determine the size of the labor force, but not the unemployment;rate.;treated the same as "discouraged" workers who are not actively;seeking employment.;Question 15.15. (TCO 4) To avoid multiple counting in national income accounts;(Points: 4);only final goods and services should be counted.;intermediate goods and services should be counted.;both final and intermediate goods and services should be counted.;primary, intermediate, and final goods an;(TCO 5) An increase in expected;future income will (Points: 4);increase aggregate demand and aggregate supply.;decrease aggregate demand and aggregate supply.;increase aggregate supply.;increase aggregate demand.;Question 2.2. (TCO 5) The upward slope of the short-run aggregate supply curve;is based on the assumption that (Points: 4);wages and other resource prices do not respond to price level changes.;wages and other resource prices do respond to price level changes.;prices of output do not respond to price level changes.;prices of inputs are flexible while prices of outputs are fixed.;Question 3.3. (TCO 5) If the price of crude oil decreases, then this event;would most likely (Points: 4);decrease aggregate supply in the U.S.;increase aggregate supply in the U.S.;increase aggregate demand in the U.S.;decrease aggregate demand in the U.S.;Question 4.4. (TCO 5) Deflation refers to a situation where (Points: 4);price level falls.;price level rises.;the rate of inflation falls.;the rate of inflation rises.;Question 5.5. (TCO 6) Dissaving occurs when (Points: 4);income is greater than saving.;income is less than consumption.;saving is greater than consumption.;saving is greater than the interest rate.;Question 6.6. (TCO 7) The M1 money supply is composed of (Points: 4);all coins and paper money held by the general public and the banks.;bank deposits of households and business firms.;bank deposits and mutual funds.;checkable deposits and currency in circulation.;Question 7.7. (TCO 7) The basic requirement of money is that it be (Points: 4);backed by precious metals--gold or silver.;authorized as legal tender by the central government.;generally accepted as a medium of exchange.;some form of debt or credit.;Question 8.8. (TCO 7) The Federal Reserve System consists of which of the;following? (Points: 4);Federal Open Market Committee and Office of Thrift Supervision;Federal Deposit Insurance Corporation and Controller of the Currency;U.S. Treasury Department and Bureau of Engraving and Printing;Board of Governors and the 12 Federal Reserve Banks;Question 9.9. (TCO 7) Which group is responsible for the policy of changing the;money supply? (Points: 4);Federal Open Market Committee;Office of Management and Budget;Thrift Advisory Council;Federal Advisory Council;Question 10.10. (TCO 7) The Federal funds rate is the rate that banks pay for;loans from (Points: 4);the Fed.;the U.S. Treasury.;other banks.;large corporations.;Question 11.11. (TCO 7) The difference between Fed behavior during the Bank;Panics of 1930-1933 and the Financial Crisis of 2007-2008 is that the Fed;(Points: 4);was very active during the former crisis, while it was basically passive during;the latter crisis.;stood idly by during the former crisis, but took dramatic actions during;the latter crisis.;was not yet in existence during the 1930s.;was a much bigger institution in the 1930s than it is today.;Question 12.12. (TCO 7) Which one of the following is a tool of monetary policy;for altering the reserves of commercial banks? (Points: 4);Issuing currency;Check collection;Open-market operations;Acting as the fiscal agent for the federal government;Question 13.13. (TCO 7) The Federal Reserve could reduce the money supply by;(Points: 4);selling government bonds in the open market.;buying government bonds in the open market.;operating the term auction facility.;reducing the discount rate.;Question 14.14. (TCO 8) Which nation has greatly increased its role in;international trade in recent years? (Points: 4);Japan;Iran;Peru;China;Question 15.15. (TCO 8) In a two-nation world, comparative advantage means that;one nation can produce (Points: 4);a product with fewer inputs than the other nation.;a product at lower average cost than the other nation.;a product at a lower domestic opportunity cost than the other nation.;more of a product than the other nation.;Question 16.16. (TCO 8) If a nation imposes a tariff on an imported product;then the nation will experience a(n) (Points: 4);decrease in total supply and an increase in the price of the product.;decrease in demand and a decrease in the price of the product.;decrease in supply of, and an increase in demand for, the product.;increase in supply of, and a decrease in demand for, the product.;Question 17.17. (TCO 8) Tariffs and quotas are costly to consumers because;(Points: 4);the price of the imported good falls.;the supply of the imported good increases.;import competition increases for domestic go;consumers shift purchases to domestically-produced goods.
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