Test 1

A  achieve full employment and price level stability.

B  contribute to a more equal distribution of income.

C  reallocate resources from less desired to more desired uses.

D  promote the equal distribution of real assets and wealth.

A  market failure.

B  derived demand.

C  the invisible hand.

D  consumer sovereignty.

A  capital goods.

B  property rights.

C  human capital.

D  public goods.

A  International specialization and trade.

B  Productive efficiency.

C  Full production.

D  Full employment.

A  the presence of inflationary pressures.

B  that resources are imperfectly substitutable among alternative uses.

C  that more output could be produced with the available resources.

D  the presence of technological change.

A  the originator of the idea drew it this way and modern economists follow this convention.

B  wants are virtually unlimited.

C  resources are not generally equally efficient in producing every good.

D  resources are scarce.

A  An increase in the quantity of a society’s labor force.

B  An upgrading of the quality of a nation’s human resources.

C  The improvement of a society’s technological knowledge.

D  The reduction of unemployment.

A  an economy will automatically obtain full employment of its resources.

B  the production of more of any one good will in time require smaller and smaller sacrifices of other goods.

C  if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

D  an economy’s capacity to produce increases in proportion to its population size.

A  Natural gas

B  A machine for detecting earthquakes

C  An oil drilling rig

D  A farmer

A  A computer programmer

B  Silicon (sand) used to make computer chips

C  A corporate bond issued by a computer manufacturer

D  A piece of software used by a firm

A  subjective and is based on a value judgment

B  derived by induction

C  objective and is based on facts

D  derived by deduction

A  must use mathematical equations

B  make simplifying assumptions

C  expect to exactly duplicate the real world

D  include all available information

A  the scientific method

B  policy economics

C  the economic perspective

D  microeconomics

A  Principle

B  Hypothesis

C  Comparison

D  Anomaly

A  was not very tired, so the marginal cost of the extra mile was very low

B  decided that the marginal cost of running one more mile would outweigh the benefit of the additional mile

C  decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile

D  must be an avid runner

A  rational self-interest because he is attempting to increase his own income by identifying and satisfying someone else’s wants.

B  greedy because he is asking for a high wage that some of his neighbors can’t afford to pay

C  selfish because he is asking for a wage that is higher than others might charge

D  irrational because some neighbors refused his offer

A  contradicts the economic perspective

B  implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

C  is an example of irrational behavior

D  implies that electronic media sources are displacing print sources for many consumers

A  wants are scarce relative to resources

B  households and businesses make rational decisions

C  most decisions do not involve sacrifices or trade-offs

D  the decision to engage in one activity means forgoing some other activity

A  normative economics

B  marginal benefits that exceed marginal costs

C  opportunity costs.

D  imperfect information

A  Everyone receives an income that is as high as possible.

B  Everyone receives an equal income.

C  The distribution of income is the fairest.

D  Everyone receives an income that is equal to the value of their productive contribution to society.

A  The firm uses the most labor intensive method of production.

B  The firm is able to charge the highest price possible for the product.

C  Firms use “least cost” method of producing goods and services.

D  The production of goods and services uses the most “capital intensive” techniques.

A  Ditch diggers and doctors receive the same wage.

B  All industries are equally satiated with a particular resource

C  All industries are willing to pay the same price for all resources

D  All industries receive an equal amount of a particular resource.

A  The relationship between consumer spending and the unemployment rate is negative.

B  This is a normative statement.

C  This is a positive statement

D  The line on a graph representing the relationship between these two variables would have a negative slope.

A  An increase in the population, technological progress, and discovery of a new supply of resources.

B  Technological progress

C  An increase in the population and technological progress.

D  Discovery of a new supply of resources.

A  It’s purpose is to produce material wealth.

B  The central processing unit is the price mechanism.

C  The accelerator/decelerator is the level of total spending. 

D  It’s fuel is money.

A  models

B  biases

C  formulas

D  calculations

A  continually increase their productivity through technological progress and better uses of society’s scarce resources.

B  allocate and utilize society’s scarce resources as efficiently as they can.

C  Respond quickly and accurately to the dollar votes of the consumer, allocate and utilize society’s scarce resources as efficiently as they can, and continually increase their productivity through technological progress and better uses of society’s scarce resources.

D  respond quickly and accurately to the dollar votes of the consumer.

A  the fact that corporations impose their own wills on the consumer in determining what will be produced.

B  the fact that the government is ruled by the consumer, which in turn is ruled by the corporation.

C  the fact that the consumer is ruled by the corporation and must play by its set of rules.

D  the fact that the consumer is king in a market economy, and this dictator will harshly punish any firm that does not quickly respond to his dollar votes.

A  shifts outward.

B  becomes straighter.

C  starts to bow inward.

D  becomes more curved.

A  Operate at full employment, allocate its resources efficiently and avoid any waste or misallocation of resources.

B  operate at full employment.

C  avoid any waste or misallocation of resources.

D  allocate its resources efficiently.

A  Economic resources are sometimes misallocated.

B  Economic resources are perfectly adaptable to alternative uses.

C  Economic resources are finite.

D  Economic resources are not completely adaptable to alternative uses.

A  Ockham’s Razor

B  The law of increasing opportunity costs

C  The law of diminishing costs

D  The law of increasing returns

A  Investing

B  Politics

C  Getting rich

D  How people deal with scarcity