Question;1. (TCO 1);As a consequence of the problem of scarcity (Points: 4);there is never enough of anything.;individuals;have to make choices from among alternatives.;production has to be planned by government.;things which are plentiful have relatively high prices.;Question 2. 2. (TCO1) Money is not considered to;be an economic resource because (Points: 4);as such, it;is not productive.;money is not a free gift of nature.;money is made by man.;idle money balances do not earn interest income.;Question 3. 3. (TCO1) A point inside the;production possibilities curve is (Points: 4);attainable and the economy is efficient.;attainable;but the economy is inefficient.;unattainable, but the economy is inefficient.;unattainable and the economy is efficient.;Question 4. 4. (TCO1) In a command system;(Points: 4);self-interest guides and commands individuals to;pursue actions that lead them toward achieving their goals.;the head of each family decides what to do with;the family's resources.;the government;makes production and allocation decisions.;market traders command what outputs are produced;and how they are allocated.;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 in supply and demand would most likely increase the equilibrium;quantity? (Points: 4);When supply;increases and demand increases;When supply decreases and demand decreases;When supply decreases and demand increases;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) The elasticity of supply;for a product will be 2 if: (Points: 4);A 1 percent decrease in the price causes a 0.2;percent decrease in quantity supplied;A 2 percent decrease in price causes a 1 percent;decrease in quantity supplied;A 1 percent decrease in price causes a 2 percent decrease in quantity;supplied;A 2 percent decrease in price causes a 2 percent;decrease in quantity supplied;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) Consumers who clip and;redeem discount coupons (Points: 4);exhibit the same price elasticity of demand for;a given product than consumers who do not clip and redeem coupons.;exhibit more;price elasticity of demand for a given product than consumers who do not clip;and redeem coupons.;exhibit less price elasticity of demand for a;given product than consumers who do not clip and redeem coupons.;cause total revenue to decrease for firms that;issue coupons for their products.;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) Refer to the diagram. The phases of the;business cycle from points A to D are, respectively;Graph Description;(Points: 4);Peak, recession, expansion, trough;Trough, recovery, expansion, peak;Expansion, recession, trough, peak;Peak, recession, trough, expansion;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) GDP is the market value;of (Points: 4);resources (land, labor, capita, and;entrepreneurship) in an economy in a given year.;all final;goods and services produced in an economy in a given year.;consumption and investment spending in an;economy in a given year.;all output produced and accumulated over the;years.;Question 16. 16. (TCO 4) Nominal GDP differs;from real GDP because (Points: 4);nominal GDP is based on constant prices.;real GDP is based on current prices.;real GDP is;adjusted for changes in the price level.;nominal GDP is adjusted for changes in the price;level.;Question 17. 17. (TCO 6) The goal of;expansionary fiscal policy is to increase (Points: 4);the price level.;aggregate supply.;real GDP.;unemployment.;Question 18. 18. (TCO 6) Refer to the figure.;The economy is at equilibrium at Point B. What would expansionary fiscal policy;do?;Graph Description;(Points: 4);Shift aggregate demand from AD2 to AD1;Shift aggregate demand from AD2 to AD3;Move the economy from Point B downward along AD2;Move the economy from Point B upward along AD2;Question 19. 19. (TCO 6) The American Recovery;and Reinvestment Act of 2009 is a clear example of (Points: 4);nondiscretionary expansionary fiscal policy.;nondiscretionary contractionary fiscal policy.;discretionary contractionary fiscal policy.;discretionary;expansionary fiscal policy.;Question 20. 20. (TCO 6) The time which elapses;between the beginning of a recession or an inflationary episode and the;identification of the macroeconomic problem is referred to as a(n) (Points: 4);budget lag.;recognition;lag.;operational lag.;administrative lag.
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