QUESTION 1 The law of demand states that there is a direct relationship between

Question

QUESTION 1

The law of demand states that there is a direct relationship between supply and demand.

True

False

4 points   

QUESTION 2

Equilibrium is a state of balance between supply and demand.

True

False

4 points   

QUESTION 3

Goods are scarce for both rich and poor.

True

False

4 points   

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

4 points   

QUESTION 5

The law of supply states that there is a direct relationship between price and quantity demanded.

True

False

4 points   

QUESTION 6

In the circular flow model, firms own economic resources, and householdsbuy the manufactured products and services.

True

False

4 points   

QUESTION 7

Households play a dual role of providing the factors of production whilepurchasing the goods and services of firms.

True

False

4 points   

QUESTION 8

Opportunity cost is the lowest valued benefit that must be sacrificed asthe result of choosing an alternative.

True

False

4 points   

QUESTION 9

Scarcity denotes that our desire for a good exceeds the amount that isfreely available from nature.

True

False

4 points   

QUESTION 10

Economics is a social science concerned with satisfying man's unlimitedwants with limited resources.

True

False

4 points   

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

4 points   

QUESTION 12

The production possibilities frontier assumes that the level of technologyvaries when applying the model.

True

False

4 points   

QUESTION 13

Excess demand in the market will cause the price of a product to decline.

True

False

4 points   

QUESTION 14

Demand is measured on the vertical axis and supply on the horizontalaxis.

True

False

4 points   

QUESTION 15

A change in quantity demanded is a movement along the same demandcurve.

True

False

4 points   

QUESTION 16

As globalization and world trade proliferates, individual markets withincountries' economies become more competitive.

True

False

4 points   

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

4 points   

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

4 points   

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.

4 points   

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.

4 points   

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)

4 points   

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.

4 points   

QUESTION 23

A movement along the production function is the result of a change in:

the quantity of labor.

technology.

capital.

interest rates.

4 points   

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.

4 points   

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.

Classical growth theory

Inflation growth theory

Neoclassical growth theory

New growth theory

Explanation / Answer

1. FALSE

2. TRUE

3. TRUE

4. FALSE

5. FALSE

6. TRUE

7. TRUE

8. TRUE

9. TRUE

10. TRUE

11. FALSE

12. TRUE

13. FALSE

14. FALSE

15. FALSE

16. TRUE

17. Inflation growth theory

18. labor force; 75

19. does not change because there is no change in the money wage rate.

20. the total expenditures of consumption, investment, and government expenditure on goods and services over a period of time.

21. (100 x (money wage rate/price level)

22. 13.8 percent.

23. the quantity of labor.

24. controlling the money supply.

25. decreases.

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