Question 1

Production possibilities (alternatives)   Refer to the above table.For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:

Accepted Answer

A)  achieve economic growth.
B)  use its resources more efficiently than the data in the table now indicate.
C)  allocate its available resources most efficiently among alternative uses.
D)  achieve the full employment of available resources.E) A) and B)
F) B) and D)

Question 2

In line (1)  on the above graph, the variables x and y are:

Accepted Answer

A)  nonlinearly related.
B)  positively related.
C)  negatively related.
D)  inversely related.E) None of the above
F) B) and C)

Question 3

The global financial crisis that spread to Canada in late 2008 has been dubbed:

Accepted Answer

A)  The housing bubble crash.
B)  The great financial crisis.
C)  The great recession.
D)  The great depression.E) C) and D)
F) B) and D)

Question 4

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:

Accepted Answer

A)  the principle of increasing opportunity costs is relevant.
B)  society's resources are limited.
C)  the opportunity cost of producing each product is constant.
D)  resources are perfectly shiftable between alternative uses.E) A) and D)
F) A) and C)

Question 5

The above data indicates that:

Accepted Answer

A)  consumers spend 80 percent of their after-tax incomes.
B)  consumers spend 90 percent of their after-tax incomes.
C)  a tax reduction will reduce consumption.
D)  the relationship between consumption and after-tax income is random.E) B) and C)
F) All of the above

Question 6

The vertical intercept of line (2)  on the above graph is:

Accepted Answer

A)  8
B)  12
C)  16
D)  24E) All of the above
F) B) and C)

Question 7

If an economy is operating inside its production possibilities curve for consumer goods and capital goods, this means that it:

Accepted Answer

A)  can only produce more consumer goods by producing fewer capital goods.
B)  can only produce more capital goods by producing fewer consumer goods.
C)  can produce more of both consumer goods and capital goods by using its resources more efficiently.
D)  must improve its technology to produce more output.E) B) and C)
F) A) and D)

Question 8

A point on the frontier of the production possibilities curve is:

Accepted Answer

A)  attainable and the economy is efficient.
B)  attainable, but the economy is inefficient.
C)  unattainable, but the economy is inefficient.
D)  unattainable and the economy is efficient.E) All of the above
F) A) and B)

Question 9

Refer to the above diagram.Which line(s)  show(s)  a positive relationship between x and y?

Accepted Answer

A)  A only
B)  both A and D
C)  A, B, and D
D)  both C and EE) B) and C)
F) A) and B)

Question 10

Economics involves "marginal analysis" because:

Accepted Answer

A)  most decisions involve changes in the status quo.
B)  marginal benefits always exceed marginal costs.
C)  marginal costs always exceed marginal benefits.
D)  much economic behaviour is irrational.E) All of the above
F) B) and D)

Question 11

Production possibilities (alternatives)   Refer to the above table.A total output of 3 units of capital goods and 4 units of consumer goods:

Accepted Answer

A)  is irrelevant because the economy is capable of producing a larger total output.
B)  will result in the maximum rate of growth available to this economy.
C)  would involve an inefficient use of the economy's scarce resources.
D)  is unobtainable in this economy.E) All of the above
F) A) and B)

Question 12

Which of the following is a normative statement?

Accepted Answer

A)  The temperature is high today.
B)  The humidity is high today.
C)  It is too hot to play tennis today.
D)  It will cool off later this evening.E) A) and B)
F) All of the above

Question 13

Macroeconomics explains the behaviour of individual households and business firms; microeconomics is concerned with the behaviour of aggregates or the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 14

Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina
Production possibilities (alternatives) 
 South Cantina
Production possibilities (alternatives) 
 Refer to the above tables.The opportunity cost of the fifth unit of capital goods:

Accepted Answer

A)  is higher in North Cantina than in South Cantina.
B)  is the same in North Cantina and South Cantina.
C)  is lower in North Cantina than in South Cantina.
D)  cannot be determined from the information provided.E) B) and D)
F) None of the above

Question 15

Assume a household would consume $100 worth of goods and services per week if its weekly income were zero and would spend an additional $80 per week for each $100 of additional income.Letting C represent consumption and Y represent income, the equation which summarizes this relationship is:

Accepted Answer

A)  C = 80 + 100Y.
B)  C = 100 + .8Y.
C)  C = 100 + 80Y.
D)  C = 80 + .1Y.E) C) and D)
F) B) and D)

Question 16

In line (3)  on the above graph, variables x and y are:

Accepted Answer

A)  directly related.
B)  negatively related.
C)  positively related.
D)  nonlinearly related.E) None of the above
F) All of the above

Question 17

If the equation y = 15 - 4x was plotted, the:

Accepted Answer

A)  vertical intercept would be -4.
B)  vertical intercept would be +4.
C)  vertical intercept would be +9.
D)  slope would be -4.E) A) and C)
F) None of the above

Question 18

Specialization and trade are beneficial to society because:

Accepted Answer

A)  the output of economic goods may be increased with no increase in resources.
B)  scarce resources are utilized more efficiently.
C)  a division of labour lowers prices for products.
D)  all of the above are correct.E) A) and C)
F) A) and B)

Question 19

A positive statement is concerned with:

Accepted Answer

A)  some goal which is desirable to society.
B)  what should be.
C)  what is.
D)  the formulation of economic policy.E) C) and D)
F) None of the above

Question 20

Which of the following will not shift a nation's production possibilities curve?

Accepted Answer

A)  the acquisition of more education and training by its labour force
B)  the widespread application of irrigation to its agricultural land
C)  an increase in the rate of unemployment
D)  the discovery of new super-conductivity materials which makes manufacturing more efficientE) A) and C)
F) C) and D)

Exam 1: B: Limits, Alternatives, and Choices

Which of the following is a normative statement?

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The above data indicates that:

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If the equation y = 15 - 4x was plotted, the:

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In line (1) on the above graph, the variables x and y are:

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Macroeconomics explains the behaviour of individual households and business firms; microeconomics is concerned with the behaviour of aggregates or the economy as a whole.

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The vertical intercept of line (2) on the above graph is:

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In line (3) on the above graph, variables x and y are:

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Which of the following will not shift a nation's production possibilities curve?

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Production possibilities (alternatives) Refer to the above table.For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:

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A point on the frontier of the production possibilities curve is:

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The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:

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If an economy is operating inside its production possibilities curve for consumer goods and capital goods, this means that it:

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Production possibilities (alternatives) Refer to the above table.A total output of 3 units of capital goods and 4 units of consumer goods:

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Economics involves "marginal analysis" because:

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Refer to the above diagram.Which line(s) show(s) a positive relationship between x and y?

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Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina Production possibilities (alternatives) South Cantina Production possibilities (alternatives) Refer to the above tables.The opportunity cost of the fifth unit of capital goods:

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A positive statement is concerned with:

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The global financial crisis that spread to Canada in late 2008 has been dubbed:

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Specialization and trade are beneficial to society because:

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Assume a household would consume $100 worth of goods and services per week if its weekly income were zero and would spend an additional $80 per week for each $100 of additional income.Letting C represent consumption and Y represent income, the equation which summarizes this relationship is:

Correct AnswerverifiedShow Answer

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