1. Which one of the following statements about trade blocs is correct?
A. A trade bloc is a tariff or quota that impedes imports.
B. A trade bloc is a group of nations that allows free trade among member nations but restricts imports from nonmember nations via tariffs and quotas.
C. A trade bloc is an area of a nation where manufacturers can import product components without paying tariffs.
D. A trade bloc is a group of nations that advertise their common export goods abroad.

2. The largest functional share of the national income consists of
A. corporate profits.
B. wages and salaries.
C. proprietors' income, that is, the income of unincorporated businesses.
D. interest and rental income.

3. Black markets are associated with _______ and the resulting product _______.
A. price floors, surpluses
B. ceiling prices, shortages
C. price floors, shortages
D. ceiling prices, surpluses

4. According to the concept of comparative advantage, a good should be produced in that nation where
A. money is used as a medium of exchange.
B. the terms of trade are maximized.
C. its domestic opportunity cost is greatest.
D. its domestic opportunity cost is least.

5. Government's economic role is complicated by the fact that
A. the public sector can't base decisions on marginal costs and marginal benefits.
B. the marginal utility of public goods rises rather than falls.
C. economic decisions are made in a political context.
D. public goods entail no opportunity costs.

6. Taxes on commodities or on purchases are known as _______ taxes.
A. corporate income
B. payroll
C. personal income
D. sales and excise

7. Which one of the following is not an important source of revenue for the federal government?
A. Personal income taxes
B. Payroll taxes
C. Corporate income taxes
D. Property taxes

8. The economizing problem is one of deciding how to make the best use of
A. unlimited resources to satisfy limited wants.
B. virtually unlimited resources to satisfy virtually unlimited wants.
C. limited resources to satisfy limited wants.
D. limited resources to satisfy virtually unlimited wants.

9. If a product is in surplus supply, its price
A. is below the equilibrium level.
B. will rise in the near future.
C. is in equilibrium.
D. is above the equilibrium level.

10. Macroeconomics approaches the study of economics from the viewpoint of
A. individual firms.
B. the operation of specific product and resource markets.
C. the entire economy.
D. governmental units.

11. Macroeconomic stability is said to exist in an economy whenever
A. output matches production capacity, labor is fully employed, and inflation is low and stable.
B. total spending exceeds production capacity.
C. the rates of output growth, unemployment, and inflation are all zero.
D. there's no inflation.

12. Money is not considered to be an economic resource because
A. it isn't scarce.
B. idle money balances don't earn interest income.
C. money, as such, isn't productive.
D. money isn't a free gift of nature.

13. Which one of the following is not a characteristic of the market system?
A. Government ownership of the major industries
B. Private property
C. Competition in product and resource markets
D. Freedom of enterprise

14. Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any
money on my financial investment." His economist friend points out that in effect he did lose money,
because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of
deposit instead of the coins. The economist's analysis in this case incorporates the idea of
A. normative economics.
B. marginal benefits that exceed marginal costs.
C. imperfect information.
D. opportunity costs.

15. When an economist says that the demand for a product has increased, this means that
A. consumers are now willing to purchase more of this product at each possible price.
B. the demand curve has shifted to the left.
C. the product has become particularly scarce for some reason.
D. product price has fallen and, as a consequence, consumers are buying a larger quantity of the product.

16. Which one of the following statements about the scarcity problem is correct?
A. The scarcity problem persists only because countries have failed to achieve continuous full employment.
B. The scarcity problem persists because economic wants exceed available productive resources.
C. The scarcity problem has been eliminated in affluent societies such as the United States and Canada.
D. The scarcity problem has been solved in all industrialized nations.

17. An income tax is progressive if the
A. absolute amount paid as taxes varies directly with income.
B. percentage of income paid as taxes is the same regardless of the size of income.
C. tax rate varies inversely with income.
D. percentage of income paid as taxes increases as income increases.

18. The U.S. Food Stamp program, which provides coupons that allow low-income individuals to buy
food, is an illustration of
A. the redistributional function of government.
B. public provision of a suitable legal framework for the market system.
C. the stabilization function of government.
D. a government action designed to enhance competition.

19. Which one of the following statements about stocks is correct?
A. Stock are issued by sole proprietorships.
B. Stock are also known as bonds.
C. Stock are promises to repay a loan.
D. Stock are shares of ownership of a corporation.

20. Other things equal, an excise tax on a product will increase
A. its price.
B. its supply.
C. its demand.
D. the quantity sold.