Econ Test 1.

25 July 2022
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question
Which of the following is the best synonym for "marginal" in economics? Basic Additional Scarce Minor
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Additional
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The problems of aggregate inflation and unemployment are: not relevant to the U.S. economy. major topics of microeconomics. major topics of macroeconomics. peculiar to command economies.
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major topics of macroeconomics.
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Which of the following do economists consider to be capital? A savings account. A construction crane. A pair of stockings. A share of IBM stock.
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A construction crane.
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If the production possibilities curve is a straight line: economic resources are perfectly substitutable between the production of the two products. the two products are equally important to consumers. the two products will sell at the same market prices. equal quantities of the two products will be produced at each possible point on the curve.
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economic resources are perfectly substitutable between the production of the two products.
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Microeconomics: is the basis for the "after this, therefore because of this" fallacy. is concerned with individual economic units and specific markets. is not concerned with details, but only with the overall big picture of the economy. describes the aggregate flows of output and income.
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is concerned with individual economic units and specific markets.
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A nation's production possibilities curve is bowed out from the origin because: resources are scarce. wants are virtually unlimited. resources are not generally equally efficient in producing every good. the originator of the idea drew it this way and modern economists follow this convention.
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resources are not generally equally efficient in producing every good.
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You observe that when stock prices rise, interest rates soon fall, and therefore conclude that higher stock prices lead to lower interest rates. This would be an example of: The post hoc fallacy The use of loaded terminology Tradeoff among economic goals The fallacy of composition
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The post hoc fallacy
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Which of the following is not a main function of the entrepreneur? To innovate. To assume the risk of economic losses. To make strategic business decisions. To make routine pricing decisions.
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To make routine pricing decisions.
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Which of the following statements is not correct? Economic growth can be illustrated by an expansion of a nation's production possibilities curve New technologies or new ways of producing output can cause a nation's production possibilities curve to shift outwards An increase in a nation's labor supply will cause its potential output to increase An increase in the quantity of a nation's resources will cause economic growth, but an increase in the quality of resources will not
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An increase in the quantity of a nation's resources will cause economic growth, but an increase in the quality of resources will not
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Which of the following is a land resource? An oil drilling rig. Natural gas. A farmer. A machine for detecting earthquakes.
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An oil drilling rig.
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Which of the following is a positive statement? Summer evenings are nice when it cools off to around 70 degrees. It is too hot to run outside when the temperature exceeds 80 degrees. The temperature is 92 degrees today. A humidity level of 90 percent is too high.
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The temperature is 92 degrees today
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Economists contend that most economic decisions are? purposeful. random. chaotic. spontaneous.
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Purposeful
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Which of the following will shift the production possibilities curve to the right? A decrease in the unemployment rate from 8 to 6 percent. A decline in the efficiency with which the present labor force is allocated. An increase in the unemployment rate from 6 to 8 percent. A technological advance that allows farmers to produce more output from given inputs.
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A technological advance that allows farmers to produce more output from given inputs.
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Which of the following is assumed in constructing a typical production possibilities curve? The economy is engaging in international trade. The economy is using its resources inefficiently. Production technology is fixed. Resources are perfectly shiftable among alternative uses.
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Production technology is fixed.
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The term "other things equal" means that: the associated statement is normative. many variables affect the variable under consideration. when variable X increases so does related variable Y. a number of relevant variables are assumed to be constant.
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a number of relevant variables are assumed to be constant.
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Other things equal, which of the following would shift an economy's production possibilities curve to the left? The entrance of more women into the labor force. A law requiring mandatory retirement from the labor force at age 55. An increase in the proportion of total output that consists of capital or investment goods. The discovery of a low-cost means of generating and storing solar energy.
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A law requiring mandatory retirement from the labor force at age 55.
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The law of increasing opportunity costs states that: the sum of the costs of producing a particular good cannot rise above the current market price of that good. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so. if the prices of all the resources used to produce goods increase, the cost of producing any particular good will increase at the same rate. if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount.
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if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so.
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The four factors of production are labor, capital, technology, and entrepreneurial ability. land, labor, capital, and money. labor, capital, entrepreneurial ability, and money. land, labor, capital, and entrepreneurial ability.
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land, labor, capital, and entrepreneurial ability.
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The production possibilities curve shows: the various combinations of two goods that can be produced when society employs all of its scarce resources. the ideal, but unattainable, combinations of two goods that would maximize consumer satisfactions. the minimum outputs of two goods that will sustain a society. the various combinations of two goods that can be produced when some resources are unemployed.
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the various combinations of two goods that can be produced when society employs all of its scarce resources.
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A person observes that consumer prices often fall when a nation experiences economic growth. The person then concludes that falling consumer prices leads to economic growth. This would be an example of: The use of loaded terminology The fallacy of composition Confusing correlation and causation Biases
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Confusing correlation and causation
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The basic truth that underlies the study of economics is the fact that we all face: Death Taxes Scarcity Risk
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Scarcity
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In economics, the pleasure, happiness, or satisfaction received from a product is called: rational outcome. marginal cost. status fulfillment. utility.
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Utility
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The study of economics is primarily concerned with: demonstrating that capitalistic economies are superior to socialistic economies. choices that are made in seeking the best use of resources. keeping private businesses from losing money. determining the most equitable distribution of society's output.
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choices that are made in seeking the best use of resources.
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A normative statement is one that: applies only to microeconomics. is based on value judgments. is based on the law of averages. applies only to macroeconomic
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is based on value judgments.
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Opportunity costs exist because: wants are scarce relative to resources. households and businesses make rational decisions. most decisions do not involve sacrifices or trade-offs. the decision to engage in one activity means forgoing some other activity.
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the decision to engage in one activity means forgoing some other activity.
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Which situation would most likely cause a nation's production possibilities curve to shift inward? An increase in the amount of imports An increase in the number of skilled immigrant workers An increase in unemployment The destruction caused by bombing and warfare in a losing military conflict
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The destruction caused by bombing and warfare in a losing military conflict
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Any point inside the production possibilities curve indicates: the presence of inflationary pressures. the presence of technological change. that more output could be produced with the available resources. that resources are imperfectly substitutable among alternative uses.
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that more output could be produced with the available resources.
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The role of an assumption in an economic theory is to: Prove the theory Cover special cases Simplify the complex reality Add realism
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Simplify the complex reality
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The economic perspective entails: irrational behavior by individuals and institutions. rejection of the scientific method. a comparison of marginal benefits and marginal costs in decision making. short-term but not long-term thinking.
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a comparison of marginal benefits and marginal costs in decision making.