Question;(15 points)Multiple-Choice Questions (25/15 points each).Please put your answers on scantron form 882-E.1. Economics is primarily the study of:A) why resources are scarce.B) how advertising and sales promotion shape consumer wants.C) how to make profitable financial investments.D) how to use scarce resources efficiently.2. A positive statement is one which is:A) derived by induction.B) derived by deduction.C) subjective and is based on a value judgment.D) objective and is based on facts.3. The production possibilities curve tells us:A) the specific combination of two products that is most desired by society.B) that costs do not change as society varies its output.C) costs are irrelevant in a society that has fixed resources.D) the combinations of two goods that can be produced with society's available resources.4. In drawing the production possibilities curve we assume that:A) technology is fixed.B) unemployment exists.C) economic resources are unlimited.D) wants are limited.Use the following to answer question 5:5. Refer to the above diagram. This economy will experience unemployment if it produces at point:A) A.B) B.Page 1C) C.D) D.6. Opportunity cost is best defined as:A) the monetary price of any productive resource.B) the amount of labor that must be used to produce one unit of any product.C) the ratio of the prices of imported goods to the prices of exported goods.D) the amount of one product that must be given up to produce one more unit of another product.7. The law of increasing opportunity costs states that:A) if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of othergoods to do so.B) the sum of the costs of producing a particular good cannot rise above the current market price of that good.C) if the sum of the costs of producing a particular good rises by a specified percent, the price of that good mustrise by a greater relative amount.D) if the prices of all the resources used to produce goods increase, the cost of producing any particular good willincrease at the same rate.8. "Allocative efficiency" refers to:A) the use of the least-cost method of production.B) the production of the product-mix most wanted by society.C) the full employment of all available resources.D) production at some point inside of the production possibilities curve.9. An increase in consumer incomes will:A) increase the demand for an inferior good.B) increase the supply of an inferior good.C) increase the demand for a normal good.D) decrease the supply of a normal good.Use the following to answer questions 10:P r ic exyD0D21Q u a n t it y10. A decrease in quantity demanded (as distinct from a decrease in demand) is depicted by a:A) move from point x to point y.B) a shift from D1 to D2.C) shift from D2 to D1.D) move from point y to point x.11. In moving along a stable supply curve which of the following is not held constant?A) the number of firms producing this goodB) expectations about the future price of the productC) techniques used in producing this productD) the price of the product for which the supply curve is relevantUse the following to answer questions 12-13:12. Which of the above diagrams illustrate(s) the effect of an increase in automobile worker wages on the market forautomobiles?A) A onlyB) B onlyC) C onlyD) D only13. Which of the above diagrams illustrate(s) the effect of a decline in the price of personal computers on the marketfor software?A) A onlyB) A and DC) B onlyD) D only14. The functional distribution of income refers to the:A) division of income between personal taxes, consumption expenditures, and saving.B) division of income on the basis of industry sources, for example, agriculture, transportation, mining, etc.C) distribution of income to basic resource classes, that is, wages, rents, interest, and profits.D) way income is distributed among specific households or spending units.Use the following to answer question 15:Page 315. Refer to the above diagram, in which solid arrows reflect real flows, broken arrows are monetary flows. Flow (5)might represent:A) personal income tax revenues.B) the provision of public schools by local governments.C) the purchase of laptop computers by the state of Iowa.D) transfer payments to unemployed workers.16. GDP is the:A. monetary value of all final goods and services produced within the borders of a nation in a particular year.B. national income minus all non-income charges against output.C. monetary value of all economic resources used in producing a year's output.D. monetary value of all goods and services, final and intermediate, produced in a specific year.17. Real GDP is:A. the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.B. that aggregate output that is produced when the economy is operating at full employment.C. always greater than nominal GDP.D. the nominal value of all goods and services produced in the economy.18. Growth is advantageous to a nation because it:A. eliminates the economizing problem.B. promotes faster population growth.C. slows the growth of wants.D. lessens the burden of scarcity.19. In which phase of the business cycle will the economy most likely experience rising real output and fallingunemployment rates?A. troughB. expansionC. recessionD. peak20. The United States' economy is considered to be at full employment when:A. 90 percent of the total population is employed.B. 90 percent of the labor force is employed.C. about 4-5 percent of the labor force is unemployed.D. 100 percent of the labor force is employed.21. Assuming an economy has a total population of 300 million people, 90 million people are under 16 years of age orinstitutionalized, 60 million people are not in labor force, and 9 million people are unemployed. The unemployment rateis:A. 7 percent.B. 5 percent.C. 6 percent.D. 3 percent.22. The GDP gap measures the difference between:A. NI and PI.B. actual GDP and potential GDP.C. NDP and GDP.D. nominal GDP and real GDP.23. For every 1 percentage point that the actual unemployment rate exceeds the natural rate, a 2 percentage point negativeGDP gap occurs. This is a statement of:A. Taylor's rule.B. Okun's law.C. Say's law.D. the Coase theorem.24. If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inflation in that year is:A. 33 percent.B. 11 percent.C. 91 percent.D. 10 percent.25. "Too much money chasing too few goods" best describes:A. demand-pull inflation.B. the inflation premium.C. cost-push inflation.D. the GDP gap.
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