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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 | |
Which of the following is not an explanation for the sharp rises in oil prices since 1999? |
| | A) | China’s rapid economic growth |
| | B) | Continuing uncertainty in the Middle East |
| | C) | Production cutbacks by OPEC |
| | D) | Continuing energy conservation measures by developed countries |
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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 for any given output of the other good. |
| | 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 only 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 allocates 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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