QUESTION 1: The law of demand states that there is a direct relationship between supply and demand.
True
False
QUESTION 2: Equilibrium is a state of balance between supply and demand.
True
False
QUESTION 3: Goods are scarce for both rich and poor.
True
False
QUESTION 4: "The big corporations in this country, like ExxonMobil and GM, have deep pockets and need to be hiring more people." This is a positive statement about economic policy.
True
False
QUESTION 5: The law of supply states that there is a direct relationship between price and quantity demanded.
True
False
QUESTION 6: In the circular flow model, firms own economic resources, and householdsbuy the manufactured products and services.
True
False
QUESTION 7: Households play a dual role of providing the factors of production whilepurchasing the goods and services of firms.
True
False
QUESTION 8: Opportunity cost is the lowest valued benefit that must be sacrificed asthe result of choosing an alternative.
True
False
QUESTION 9: Scarcity denotes that our desire for a good exceeds the amount that isfreely available from nature.
True
False
QUESTION 10: Economics is a social science concerned with satisfying man's unlimitedwants with limited resources.
True
False
QUESTION 11: Joint output of individuals or nations will be maximized when goods areexchanged between parties in accordance with the law of"comparative advantage".
True
False
QUESTION 12: The production possibilities frontier assumes that the level of technologyvaries when applying the model.
True
False
QUESTION 13: Excess demand in the market will cause the price of a product to decline.
True
False
QUESTION 14: Demand is measured on the vertical axis and supply on the horizontalaxis.
True
False
QUESTION 15: A change in quantity demanded is a movement along the same demandcurve.
True
False
QUESTION 16: As globalization and world trade proliferates, individual markets withincountries' economies become more competitive.
True
False
QUESTION 17: Which growth theory compares a subsistence real wage rate to the actual real wage rate?
Classical growth theory
Inflation growth theory
Neoclassical growth theory
New growth theory
QUESTION 18: Suppose the working age population in Tiny Town is 100 people. If 25 of these people are NOT in the labor force, the ________ equals ________.
unemployment rate; 25/100 × 100
employment rate; 25/75 × 100
labor force; 75
labor force; 25/100 × 100
QUESTION 19: Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded:
increases.
decreases.
does not change because there is no change in the money wage rate.
increases only if the price level also decreases.
QUESTION 20: GDP can be computed as the sum of:
all sales that have taken place in an economy over a period of time.
the total expenditures of consumers and business over a period of time.
the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time.
the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time.
QUESTION 21: The real wage rate equals:
(100 x (money wage rate/price level)
(100 x (price level/money wage rate)
(money wage rate x (price level)
(money wage + (number of hours worked/(price level)
QUESTION 22: If the CPI was 121.5 at the end of 2007 and 138.3 at the end of 2008, the inflation rate over these two years was:
10.2 percent.
13.8 percent.
12.2 percent.
16.8 percent.
QUESTION 23: A movement along the production function is the result of a change in:
the quantity of labor.
technology.
capital.
interest rates.
QUESTION 24: All of the following are part of fiscal policy EXCEPT:
setting tax rates.
setting government spending.
choosing the size of the government deficit.
controlling the money supply.
QUESTION 25: Along a production possibilities frontier for real GDP and the quantity of leisure time, as leisure time increases, real GDP:
decreases.
increases.
stays the same.
could increase, decrease or stay the same.