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| 1 | |
Economics is the study of: |
| | A) | production technology. |
| | B) | consumption decisions. |
| | C) | how society decides what, how, and for whom to produce. |
| | D) | the best way to run society. |
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| 2 | |
A resource is scarce if supply exceeds demand at zero price. |
| | A) | True |
| | B) | False |
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| 3 | |
The income distribution (in a country or in the world) tells us: |
| | A) | How much people should be paid. |
| | B) | How income is divided between different groups or individuals. |
| | C) | The division of earnings between wages and salaries. |
| | D) | The relationship between productivity and earnings. |
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| 4 | |
The law of diminishing returns says that each extra worker adds ___________ to output than the previous extra worker ___________. |
| | A) | less, added |
| | B) | more, subtracted |
| | C) | less, subtracted |
| | D) | more, added |
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| 5 | |
The production possibility frontier (ppf) shows, for each output of one good, the maximum amount of the other good that can be produced. |
| | A) | True |
| | B) | False |
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| 6 | |
The opportunity cost of a good is: |
| | A) | the time lost in finding it. |
| | B) | the quantity of other goods sacrificed to get another unit of that good. |
| | C) | the expenditure on the good. |
| | D) | the loss of interest in using savings. |
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| 7 | |
The area to the right of the production possibility frontier is achievable. |
| | A) | True |
| | B) | False |
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| 8 | |
The slope of the _____ tells us how much of one _____ we have to sacrifice to make more of another. |
| | A) | Income distribution, good |
| | B) | Production possibility frontier, opportunity cost |
| | C) | Production possibility frontier, good |
| | D) | Income distribution, production possibility frontier |
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| 9 | |
Production efficiency is when ________ output of one good can be achieved for _________ of another. |
| | A) | more, less |
| | B) | more, more |
| | C) | less, none |
| | D) | less, less |
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| 10 | |
A market can accurately be described as: |
| | A) | a place to buy things. |
| | B) | a place to sell things. |
| | C) | the process by which prices adjust to reconcile households’, firms and workers buying and selling decisions. |
| | D) | a place where buyers and sellers meet. |
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| 11 | |
A command economy decides resource allocation by government planning. |
| | A) | True |
| | B) | False |
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| 12 | |
In a free market __________ ___________. |
| | A) | governments intervene |
| | B) | governments plan production |
| | C) | governments interfere |
| | D) | governments do not intervene |
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| 13 | |
When individuals’ pursuit of self-interest within free markets may allocate resources efficiently, this is known as: |
| | A) | The invisible boot. |
| | B) | The visible hand. |
| | C) | The invisible hand. |
| | D) | The visible boot. |
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| 14 | |
In the mixed economy: |
| | A) | Economic problems are solved by the government and private sector. |
| | B) | Economic decisions are made only by the private sector and free market. |
| | C) | Economic allocation is achieved by the invisible hand. |
| | D) | Economic questions are solved by government departments. |
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| 15 | |
Positive economics studies objective explanations of the workings of the economy. |
| | A) | True |
| | B) | False |
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| 16 | |
Normative economics forms ___________ based on _____________. |
| | A) | positive statements, facts |
| | B) | recommendations, personal value judgements |
| | C) | positive statements, values |
| | D) | opinions, facts |
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| 17 | |
Microeconomics is concerned with: |
| | A) | the economy as a whole. |
| | B) | the electronics industry. |
| | C) | individual decisions about particular commodities. |
| | D) | the interactions within the entire economy. |
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| 18 | |
Macroeconomics is the study of: |
| | A) | Individual building blocks in the economy. |
| | B) | The relationship between different sectors of the economy. |
| | C) | Household purchase decisions. |
| | D) | The complete interaction of the economy as a whole. |
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| 19 | |
Gross domestic product is the value of total output of an economy in a given period. |
| | A) | True |
| | B) | False |
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| 20 | |
The unemployment rate is: |
| | A) | The fraction of the labour force without a job. |
| | B) | The payments made to those without work. |
| | C) | A measure of how long people have been unemployed. |
| | D) | A measure of time wasted by people in work. |
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