ECON 110 Quiz 1 The Challenge of Economics The US Economy solutions complete answers

ECON 110 Quiz 1 The Challenge of Economics The US Economy solutions complete answers 

 

Which of the following is NOT a reason why the United States is able to produce such high levels of GDP?

 

In the United States, per capita GDP is

 

The factors of production include all of the following EXCEPT

 

Economic growth means:

 

Which of the following is NOT included in U.S. GDP?

 

Which of the following is NOT an example of land or a natural resource?

 

A market failure occurs:

 

If resources are limited

 

Economic theories can be used to do all of the following EXCEPT:

 

In periods of rising prices, real GDP will always rise more rapidly than nominal GDP.

 

Which of the following is true about the income-transfer system in the United States?

 

Economics is the study of how to allocate scarce resources among competing uses.

 

Most businesses in the U.S. are classified as

 

Consumer goods account for more than _____ of total U.S. output.

 

GDP is the sum of consumption, investment, government purchases, and

 

Which of the following is NOT a reason why the U.S. government intervenes in the economy?

 

Over the last century in the United States there has been an increase in _______ as a percentage of total output.

 

The essential signal of the market mechanism is

 

Which of the following is least likely to determine individual income in a market economy?

 

The following table shows the tradeoff between different combinations of missile production and home construction, ceteris paribus. Complete the table by calculating the required opportunity costs for both missiles and houses. Then answer the indicated question(s).

 

In the table Production of Missiles and Houses, what is the opportunity cost of increasing the production of missiles from 2 to 3 in terms of houses?

 

Which of the following best describes what allocates resources in the U.S. economy?

 

The FOR WHOM to produce question focuses on the distribution of output across the members of society.

 

Economic growth

 

Ceteris paribus, if North Korea increases the size of its military, then

 

Consumer goods account for approximately 70 percent of total U.S. output.

 

In a monopoly situation, government regulation is incapable of improving market outcomes.

 

Government services

 

In order to measure what a country produces, we

 

Which of the following best describes the "invisible hand?"

 

Which of the following is an example of labor as a factor of production?

 

Society might be able to produce this combination if new resources were discovered but cannot produce it with current resources. Select the appropriate point that would represent the production possibilities after this discovery.

 

Investment includes all of the following EXCEPT:

 

The main focus of economic studies concerns

 

American production is described as capital intensive, which means that

 

Karl Marx viewed ______________ as the major flaw within capitalism.

 

In order to understand a particular graph, it is important to know:

 

The central problem of economics is the

 

The primary concern of economics is the study of 

 

Which of the following explains why economic choices must be made?

 

Opportunity cost may be defined as the 

 

Given that resources are scarce 

 

The opportunity cost of playing tennis with your friend is 

 

There would be no reason for students to study the concept of opportunity costs if 

 

Which of the following is true about the factors of production?

 

If society lacks enough resources to satisfy all the desired uses of the resources, this is known as 

 

Scarcity means 

 

Societies must address the question of WHAT to produce because 

 

Which of the following is the best example of the "WHAT" economic question?

 

Which of the following is NOT a factor of production?

 

In economics, capital refers to 

 

In economics, which of the following is the best example of capital?

 

Entrepreneurship refers to 

 

In economics, which of the following represents entrepreneurship?

 

Output choices are necessary within a market because of 

 

When economists talk about a trade-off between "guns and butter," they mean 

 

In the table, the opportunity cost of increasing the production of houses from 17,000 to 21,000 in terms of missiles per house is: 

 

In the table, the lowest opportunity cost of houses in terms of missiles is: 

 

In the table, the highest opportunity cost of missiles in terms of houses is: 

 

Which of the following statements about production possibilities is true?

 

Which of the following is NOT an assumption under which the production possibilities curve is drawn?

 

All points on the production possibilities curve 

 

Assuming the level of resources and technology are constant, if France decreases the size of its military, then 

 

In the linear production possibilities model, we assume each of five equally sized parcels of land contributes the same to the production of food and timber: 6 units of timber or 3 units of food. By contrast, in the non-linear model, we will assume that there are five different types of land in equal-sized plots and that each plot may contribute as follows to the production of food or timber:

 

Assuming all parcels of land are the same, when all land is in use, one more unit of timber produced will require: 

 

Assuming all parcels of land are the same, there is a constant trade-off in the production of timber and food. When all land is in use, one more unit of food produced will require…

 

Assuming all land is equally productive in either use, how much output of each type will be produced with 2/5 of the land in timber production and 3/5 of the land in food production?

 

Starting from point A on the production possibilities line where 30 units of timber and no food is produced, suppose that we choose to produce more food by moving one parcel of land out of timber production and into food production. In order to minimize the opportunity cost of producing more food, the first plot to be re-purposed should be...

 

In the model where we assume that all parcels of land are the same, the relationship between food and timber produced when all land is in use is:

 

In the model where we assume that all five parcels of land are NOT the same, the relationship between food and timber produced when all land is in use is:

 

The most desirable attainable mix of output for society

 

In attempting to answer the WHAT question, a society seeks to

 

Investment refers to all of the following except 

 

Which of the following is NOT an example of investment?

 

Economic growth always takes the form of 

 

Economic growth is represented by 

 

The production possibilities curve shifts outward in response to 

 

Ceteris paribus, which of the following is likely to cause an outward shift of the production possibilities curve?

 

Ceteris paribus, when technological change allows a smaller amount of a resource to be used in producing any combination of two goods, there will be 

 

Ceteris paribus, which of the following is least likely to contribute to economic growth?

 

Ceteris paribus, which of the following will most likely cause an inward shift of the production possibilities curve?

 

Ceteris paribus, which of the following events would most likely cause the production possibilities curve to shift inward?

 

Society is employing some of the available technology but not all of it. Select the appropriate point that could represent this situation. 

 

Society is producing some output, but some of the available resources are unemployed. Select the appropriate point that could represent this situation. 

 

Society is producing the maximum potential output, given its existing resources and technology. Select the appropriate point that could represent this level of production for office buildings and housing. 

 

It is not possible for society to produce this combination of office buildings and housing with current resources and technology. Which of the following points in the figure could represent this combination?

 

Society is not producing either good because of extreme inefficiencies. Select a point that would represent this combination of office buildings and housing.

 

When society searches for the optimal method of producing goods and services, it is responding to the:

 

When society struggles with how to divide up the "economic pie," it is responding to the:

 

Welfare programs are designed to address the:

 

The market mechanism 

 

The market mechanism 

 

The price of a good or service 

 

The essential feature of the market mechanism is 

 

Laissez faire refers to 

 

Which of the following is most consistent with a market economy?

 

Which of the following individuals is typically associated with a laissez faire economic policy?

 

Which of the following statements is consistent with central planning?

 

Karl Marx wrote:

 

Central planning is the principal method for making economic decisions in:

 

The economy of the United States is best characterized as: 

 

If the market mechanism causes the economy to arrive at the wrong mix of output, there is: 

 

Market failure means: 

 

An externality is 

 

Which of the following is an example of a negative externality?

 

Pollution is an example of 

 

If government intervention fails to improve economic outcomes, the result is known as:

 

Government intervention designed to address market failure 

 

Which of the following is an example of government failure?

 

Which of the following groups of words best represents macroeconomic goals?

 

Macroeconomics focuses on:

 

Microeconomics focuses on:

 

Which of the following is associated with microeconomics?

 

Which of the following is associated with microeconomics?

 

Economic models:

 

According to the Latin phrase ceteris paribus:

 

Ceteris paribus means:

 

A News Wire article in the text asks, "Do you think the future of the next generation of Americans will be better, worse, or about the same as life today?" What is necessary for the standard of living to rise?

 

A News Wire article in the text indicates that North Korea is running out of food. If North Korea is on its production possibilities curve and reduces its production of food so that it can increase the size of its military, this is most consistent with:

 

A News Wire article in the text indicates that North Korea is expanding its missile programs, and at the same time it is running out of food. If North Korea is on its production possibilities curve and reduces food production so that it can increase the size of its military, this is an example of:

 

A News Wire article in the text indicates that North Korea is expanding its missile programs. Assume North Korea is currently on its production possibilities curve. If the increase in missile production results in a decrease in food production, this is an example of:

 

If government intervention makes the economy worse off, this is referred to as:

 

Most Americans do not trust the federal government to do the right thing. If they are correct, then government intervention results in:

 

The slope of a line is:

 

The slope of a curve is given by the formula:

 

When a curve shifts, this indicates that:

 

A linear curve can be distinguished by:

 

If one variable increases when the other variable decreases, then the drawn curve is:

 

If one variable increases when the other variable increases, then the drawn curve is:

 

A line that slopes upward from left to right has a:

 

In the figure, a grade-point average of 3.0 is associated with how many hours of study time per week? 

 

In the figure, a grade-point average of 1.0 is associated with how many hours of study time per week? 

 

The figure suggests that the relationship between the variables is: 

 

Based on the figure, if a student wants to achieve a grade-point average of 3.0, he or she should study: 

 

Based on the figure, if a student wants to achieve a grade-point average of 2.0, he or she should study:

 

Based on the figure, if a student studies 40 hours per week, he or she will: 

 

Based on the figure, if a student studies 30 hours per week, he or she will: 

 

When an economic choice is made, it is possible to avoid opportunity costs. 

 

The quantity of capital in an economy is unlimited since more can always be produced. 

 

Scarcity is not an issue in countries such as the United States since people live in nice homes and have plenty to eat. 

 

Every economy faces the situation of scarcity of resources. 

 

The United States is a prosperous nation because its resources are sufficient to meet the desires of its citizens. 

 

All economies must decide what to produce, how to produce it, and who gets the output. 

 

The factors of production include the land, labor, and money used to produce goods and services. 

 

Capital includes the machinery and buildings used to produce goods and services. 

 

When a society is operating on the production possibilities curve, it is using its available resources efficiently in the production of goods and services. 

 

More resources and better technology shift the production possibilities curve inward. 

 

To experience future economic growth, an economy must allocate some of its scarce resources to investment. 

 

The invisible hand refers to the price signal in a free market economy. 

 

Adam Smith was a proponent of the doctrine of laissez faire. 

 

The United States relies primarily on central planning to allocate resources. 

 

Karl Marx encouraged a policy of laissez faire because he believed that the market mechanism provided society with the best answers to the WHAT, HOW, and FOR WHOM questions. 

 

A mixed economy is one that relies solely on market signals to allocate goods and services. 

 

Pollution is an example of an externality. 

 

Government failure occurs when government intervention fails to improve economic outcomes. 

 

Because the economy is so complex, it is impossible to construct a theory about how it works. 

 

An accurate definition of the term "optimal mix" would be the production of goods and services that would satisfy all the wants and needs of the individuals in society.

 

Because of scarcity,

 

When an economist says that "there is no such thing as a free lunch," she means that:

 

Factors of production are:

 

Opportunity cost is:

 

Which of the three basic economic questions deals with choosing the correct mix of output?

 

Which of the following factors determines how the market mechanism allocates economic activity?

 

Consumers play a part in the market mechanism by:

 

Which of these is an example of a market failure?

 

Which of the following best describes the shift in attitudes for American adults in the years after the Great Recession of 2008–2009? 

 

Which of the following is true of American adults after the Great Recession of 2008–2009? 

 

GDP can be found by:

 

GDP most closely measures:

 

The output of cell phones can be added to the output of refrigerators in order to compute GDP by:

 

GDP is:

 

The value of output produced in the United States in current prices measures:

 

Nominal GDP measures the:

 

Nominal GDP measures changes in:

 

Changes in real GDP serve as a better measure of the health of the economy than changes in nominal GDP because real GDP measures changes in:

 

The inflation-adjusted value of final goods and services produced in the United States measures:

 

Real GDP is a more accurate measure of economic growth than nominal GDP because:

 

Which of the following is the best measure of an increase in actual output?

 

Which of the following countries has the largest GDP?

 

The economy of the United States is important because it:

 

U.S. GDP for 2009 was approximately:

 

To compare the standard of living of one country to another, economists use:

 

Per capita GDP is the most practical way to:

 

In 2009, per capita GDP in the United States was approximately:

 

Per capita GDP will always rise when:

 

If output growth exceeds population growth for a country, then:

 

If per capita GDP were distributed across the United States, each individual would receive:

 

When comparing GDP per capita, which list ranks countries correctly from largest to smallest?

 

Country A and Country B both recorded an increase in real GDP of 5 percent per year from 1980 to 2009. During this time, the population for Country A grew at 6 percent per year and the population for Country B grew at 4 percent. Which of the following is true during this period?

 

Country D and Country E both recorded an increase in real GDP of 4 percent per year from 1997 to 2007. During this time, the population for Country D grew at 3 percent per year and the population for Country E grew at 2 percent. Which of the following is true during this period?

 

Economic growth indicates that:

 

Ceteris paribus, economic growth involves an:

 

On average, U.S. real GDP has grown roughly _____ percent per year.

 

Which of the following statements is true?

 

Total output includes all of the following except:

 

Which of the following ranks the contribution to GDP in correct order from largest to smallest for the United States?

 

Suppose during a year an economy produces $6 trillion of consumer goods, $1 trillion of investment goods, $2 trillion in government services, and has $3 trillion of exports and $2 trillion of imports. GDP would be:

 

Suppose during a year an economy produces $10 trillion of consumer goods, $4 trillion of investment goods, $6 trillion in government services, and has $4 trillion of exports and $5 trillion of imports. GDP would be:

 

The largest component of U.S. GDP is:

 

Consumer goods:

 

Which of the following components of consumer spending is the most cyclical?

 

As an economy moves out of a recession into a period of economic growth, consumers tend to increase expenditures on:

 

Which of the following is included in investment, according to economists?

 

Which of the following is not an example of investment, according to economists?

 

Which of the following is an example of investment, as a component of GDP?

 

Which of the following expenditures is the most important in expanding a country's production possibilities?

 

Which of the following is not true about investment goods?

 

For the United States, investment accounts for approximately _____ percent of GDP.

 

Which of the following is true about government services as a component of GDP?

 

Which of the following is not included in GDP as part of government services?

 

As a portion of GDP, government purchases include:

 

Government income transfers are not included in the calculation of GDP because:

 

Income transfers include:

 

The goods and services sold to foreign buyers are:

 

Exports represent:

 

The goods and services purchased from foreign sources are:

 

Imports:

 

U.S. net exports are:

 

Net exports measures the:

 

The decline in employment in the farm sector in the U.S. during the 1900s can be attributed primarily to:

 

Which of the following has been a century-long trend in the United States?

 

Which of the following has not been a century-long trend in the United States?

 

Currently, the U.S. economy is best described as:

 

Which of the following sectors contributes the largest amount to the U.S. GDP?

 

Which sector is expected to grow most rapidly for the United States in the future?

 

Which of the following plays an increasingly important role in the U.S. economy?

 

The growth of international trade for the United States has been enhanced by:

 

The factors of production:

 

Which of the following is true about the factors of production?

 

Which of the following statements is true?

 

Which of the following contribute to high levels of U.S. production?

 

Capital intensive means:

 

A capital-intensive production process:

 

Productivity measures:

 

The productivity of American workers reflects all of the following except:

 

Which of the following does not contribute to an increase in productivity?

 

Education and job training are part of:

 

Technological advances contribute to:

 

Factor mobility refers to:

 

When World War II ended some resources moved easily from the production of military goods to the production of consumer goods which is referred to in economics as:

 

The primary way to distinguish among corporations, partnerships, and proprietorships is by observing:

 

Proprietorships:

 

Proprietorships:

 

In the United States, corporations:

 

Which of the following is not true about U.S. corporations?

 

In the United States, government regulation is designed to:

 

Which of the following is not viewed as a role for the U.S. government?

 

The government has an impact on the HOW to produce question when it does all of the following except:

 

A monopoly is:

 

A firm that produces the entire market supply of a certain good or service is known as:

 

When monopolies exist:

 

The term externalities refers to:

 

The dumping of chemicals into a lake, which contaminates the drinking water, is an example of:

 

If government intervention forces the economy inside the production possibilities curve, there is:

 

Too much government regulation might do all of the following except:

 

The basic economic issue concerning the FOR WHOM question is specifically interpreted to mean, who:

 

Which of the following statements is true concerning income inequality?

 

Which question does the "distribution of income" relate to most directly?

 

In terms of income distribution, if a person moves from the lowest fifth of households to the highest fifth over many years, this is known as:

 

The purpose of the U.S. tax-transfer system is to:

 

By definition, a progressive tax:

 

Which of the following is the best description of the U.S. tax system?

 

The nature of state and local property and sales taxes is such that they act as:

 

In general, state and local taxes:

 

A tax is regressive if it takes:

 

Suppose your tax is $3,000 if your income is $10,000, and your tax is $18,000 if your income is $100,000. Such a tax structure is:

 

Suppose your tax is $4,000 if your income is $40,000, and your tax is $9,000 if your income is $70,000. Such a tax structure is:

 

Suppose your tax is $3,000 if your income is $30,000, and your tax is $12,000 if your income is $100,000. Such a tax structure is:

 

Income transfers include all of the following except:

 

A HEADLINE article reports that "Virtually all Americans attend high school, and roughly 85 percent graduate." Education and training contribute to:

 

One HEADLINE article in the text, "Income Share of the Rich," reports: "In most developing countries the top tenth of all households receives 30-50 percent of all income." Which of the following forms of government intervention is designed to reduce this market situation?

 

GDP is a measure of the market value of final goods and services produced within a nation's borders in a given period.

 

Per capita GDP measures the distribution of income within a country.

 

In 2009, per capita GDP for the United States was approximately $49,000.

 

Growth in GDP per capita is achieved when population grows more rapidly than GDP.

 

Economic growth is desirable because it creates more jobs and income.

 

One reason that GDP is not a good measure of social welfare is because it does not include volunteer activities.

 

Since investment spending in the United States is a smaller percentage of GDP than consumer spending, it is not essential for economic growth.

 

Plant, machinery, and equipment that is produced for use in the business sector replaces worn out equipment and adds to the total stock of capital.

 

If an individual purchases stock in the stock market, this is included in the economic definition of investment as a component of GDP.

 

In the United States, all of the state and local governments combined use more of our scarce resources than does the federal government.

 

In the United States, net exports account for two-thirds of GDP.

 

If the United States imports more than it exports, this implies that the country uses more goods and services than it produces.

 

The manufacturing share of output has increased in the United States since World War II.

 

A capital-intensive production process increases the level of output per worker.

 

The reason that U.S. productivity is so high is because the United States has more natural resources and a larger population than any other country in the world.

 

The United States has invested heavily in human capital by promoting education and skill training.

 

U.S. corporations account for the majority of output in the country even though proprietorships outnumber corporations.

 

Externalities are costs or benefits of a market activity borne by a third party.

 

Incomes are distributed more equally in poor countries than in rich ones because of transfer payments.

 

The U.S. federal income tax is an example of a progressive tax.

 

A state sales tax is an example of a regressive tax system since poor people spend a greater percentage of their income than rich people do.

 

The U.S. tax-transfer system gives more output to lower-income households than does the market alone.