Question 1

A point or combination that is on the production possibilities curve is

Accepted Answer

A)   attainable, and resources are fully employed.
B)   attainable, but some resources are unemployed.
C)   unattainable, but some resources are unemployed.
D)   attainable only if we get additional resources.E) A) and C)
F) All of the above

Question 2

If a nation produces more consumer goods and less capital goods, then the nation will have

Accepted Answer

A)   more consumption now, but less consumption later.
B)   less consumption now, but more consumption later.
C)   more consumption now, with no effect on consumption later.
D)   less consumption later, with no effect on consumption now.E) A) and C)
F) B) and C)

Question 3

(Last Word)  A caller to a radio talk show states that oil companies are "greedy price gougers." This is an example of

Accepted Answer

A)   loaded terminology.
B)   the "after this, therefore because of this fallacy."
C)   the fallacy of composition.
D)   the economic perspective.E) C) and D)
F) B) and D)

Question 4

The issues of inflation, unemployment, and business cycles are

Accepted Answer

A)   major topics of macroeconomics.
B)   not relevant to the U.S. economy.
C)   the primary focus of microeconomics.
D)   positive economic issues, but not normative issues.E) A) and C)
F) B) and C)

Question 5

As a consequence of the problem of scarcity,

Accepted Answer

A)   there is never enough of anything.
B)   individuals have to make choices from among alternatives.
C)   only some people can "have it all."
D)   things which are plentiful have relatively high prices.E) A) and B)
F) A) and C)

Question 6

The alternative combinations of two goods that a consumer can purchase with a specific money income is shown by

Accepted Answer

A)   a production possibilities curve.
B)   a demand curve.
C)   a consumer expenditure line.
D)   a budget line.E) A) and B)
F) B) and C)

Question 7

Assume an economy is incurring unemployment. The effect of resolving this problem will be to

Accepted Answer

A)   move the level of actual output closer to the economy's production possibilities curve.
B)   create a less equal distribution of income.
C)   shift its production possibilities curve to the left.
D)   shift its production possibilities curve to the right.E) None of the above
F) A) and B)

Question 8

If the equation y = 15 - 4x was plotted, the

Accepted Answer

A)   vertical intercept would be -4.
B)   vertical intercept would be +4.
C)   slope would be +15.
D)   slope would be -4.E) A) and D)
F) A) and B)

Question 9

If a positive relationship exists between x and y,

Accepted Answer

A)   an increase in x will cause y to decrease.
B)   a decrease in x will cause y to increase.
C)   the relationship will graph as an upsloping line.
D)   the vertical intercept must be positive.E) B) and D)
F) B) and C)

Question 10

Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs. If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should

Accepted Answer

A)   produce more hamburgers and fewer TVs.
B)   produce more TVs and fewer hamburgers.
C)   produce more of both goods.
D)   produce fewer of both goods.E) None of the above
F) A) and B)

Question 11

The slope of a line parallel to the vertical axis is

Accepted Answer

A)   zero.
B)   one.
C)   infinite.
D)   one-half.E) C) and D)
F) A) and B)

Question 12

Money is not an economic resource because

Accepted Answer

A)   money, as such, does not produce anything.
B)   idle money balances do not earn interest income.
C)   it is not scarce.
D)   money is not a free gift of nature.E) B) and C)
F) A) and B)

Question 13

If we say that two variables are directly related, this means that

Accepted Answer

A)   the relationship between the two is purely random.
B)   an increase in one variable is associated with a decrease in the other variable.
C)   an increase in one variable is associated with an increase in the other variable.
D)   the two graph as a downsloping line.E) A) and B)
F) B) and C)

Question 14

Which of the following is not considered by economists to be an economic resource?

Accepted Answer

A)   money
B)   factory workers
C)   computers at a retail store.
D)   a forestE) A) and C)
F) B) and C)

Question 15

Answer the question on the basis of the data given in the following production possibilities table.  Refer to the table. For these data, the law of increasing opportunity costs is reflected in the fact that

Accepted Answer

A)   the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point.
B)   larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
C)   the production possibilities data would graph as a straight downsloping line.
D)   the economy's resources are presumed to be scarce.E) All of the above
F) B) and C)

Question 16

The study of economics is primarily concerned with

Accepted Answer

A)   keeping private businesses from losing money.
B)   demonstrating that capitalistic economies are superior to socialistic economies.
C)   choices that are made in seeking the best use of resources.
D)   determining the most equitable distribution of society's output.E) A) and C)
F) B) and D)

Question 17

The process of producing and accumulating capital goods is called

Accepted Answer

A)   money capital.
B)   depreciation.
C)   investment.
D)   consumption.E) A) and B)
F) All of the above

Question 18

The lower the consumer's income, the higher his or her budget line.

Accepted Answer

A) True 
 B)False

Question 19

The budget line shows the various incomes that an individual can earn from different jobs.

Accepted Answer

A) True 
 B)False

Question 20

Through specialization and international trade, a nation

Accepted Answer

A)   can attain some combination of goods lying outside its production possibilities curve.
B)   can move from a high consumption-low investment to a high investment-low consumption point on its production possibilities curve.
C)   will only attain some combination of goods lying within its production possibilities curve.
D)   will cause its production possibilities curve to shift leftward.E) B) and C)
F) A) and D)

Exam 1: Limits, Alternatives, and Choices

Suppose that a fully employed economy produces only two goods, hamburgers and flat-panel TVs. If the economy is currently producing more than the optimal quantity of hamburgers, then to attain the optimal allocation of resources, it should

Correct AnswerverifiedShow Answer

If a positive relationship exists between x and y,

Correct AnswerverifiedShow Answer

Through specialization and international trade, a nation

Correct AnswerverifiedShow Answer

The slope of a line parallel to the vertical axis is

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As a consequence of the problem of scarcity,

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Which of the following is not considered by economists to be an economic resource?

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If the equation y = 15 - 4x was plotted, the

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The budget line shows the various incomes that an individual can earn from different jobs.

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If a nation produces more consumer goods and less capital goods, then the nation will have

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Answer the question on the basis of the data given in the following production possibilities table. Refer to the table. For these data, the law of increasing opportunity costs is reflected in the fact that

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Money is not an economic resource because

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If we say that two variables are directly related, this means that

Correct AnswerverifiedShow Answer

The issues of inflation, unemployment, and business cycles are

Correct AnswerverifiedShow Answer

Assume an economy is incurring unemployment. The effect of resolving this problem will be to

Correct AnswerverifiedShow Answer

The study of economics is primarily concerned with

Correct AnswerverifiedShow Answer

A point or combination that is on the production possibilities curve is

Correct AnswerverifiedShow Answer

(Last Word) A caller to a radio talk show states that oil companies are "greedy price gougers." This is an example of

Correct AnswerverifiedShow Answer

The process of producing and accumulating capital goods is called

Correct AnswerverifiedShow Answer

The alternative combinations of two goods that a consumer can purchase with a specific money income is shown by

Correct AnswerverifiedShow Answer

The lower the consumer's income, the higher his or her budget line.

Correct AnswerverifiedShow Answer

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