21 Sep Because people’s wants are unlimited but resources are scarce,
Module 2 Quiz
Question 1Because people’s wants are unlimited but resources are scarce,
there will be more services produced than goods
choices must be made
poor people never get anything they want
only the rich get everything they want
Question 2The problem of scarce resources
is that there are not enough resources to satisfy people’s unlimited wants
means that in some cities there are not enough jobs
is that resources are used inefficiently
could be solved if the unemployment rate fell
Question 3Economics is best defined as the study of how
individuals decide to use scarce resources in an attempt to satisfy their unlimited wants
to make money
to eliminate the problem of scarce resources
the government should deal with unemployment and inflation
Question 4In economics, capital is defined as
natural resources, such as water, oil, and iron ore
the natural, unskilled abilities of people
money and other financial assets
human creations used in the production process
Question 5Economists classify all of the following as capital, except one. Which one is not capital?
a plumber’s wrench
a railroad car
a $20 bill in a firm’s petty cash drawer
the building where our economics class meets
Question 6If a business produces and sells only one unit of a good, its profit would be the
price received for the good
wages paid for the labor used to produce the product minus the price
price of the product minus the cost of the resources used to produce the product
return paid to the firm’s bank on its outstanding loans
Question 7The difference between a good and a service is that
a services is available in unlimited quantities; a good is not
a service helps satisfy unlimited wants; a good does not
a good is tangible; a service is not
a good helps satisfy unlimited wants; a service does not
Question 8Which of the four types of decision makers in the U.S. economyplays the largest role?
U.S. firms and government because they produce the products that households consume
U.S. households, as buyers in product markets and sellers in resource markets
U.S. firms and government because they create employment for domestic households and produce goods and services
U.S. households because they supply goods to the product markets and are demanders in resource markets
Question 9A market
facilitates exchanges between buyers and sellers
typically involves monetary transactions
is often a physical place
all of the above
Question 10In economics, the term “marginal” usually refers to
an all-or-nothing economic decision
a low-quality product or resource
a small change in an economic variable
an unimportant and irrelevant economic variable
Module 3 Quiz
Question 1Which of the four types of economic decision makers is most important?
households, because they demand goods and services and supply resources
government, because it ultimately sets and enforces the “rules of the game”
firms, because they produce all goods and services in the economy
the rest of the world, because there are over 150 countries
Question 2Harold, a delivery man, washes and irons his own shirts. Sarah,his boss, sends her clothes to a laundry. Which is the most plausible economic explanation for this difference?
Harold must be better at ironing than Sarah is.
Sarah has a higher opportunity cost of laundering her clothes than Harold does.
The opportunity cost of ironing is greater for Harold.
Harold must enjoy ironing more than Sarah does.
Question 3The objective of the household is to
maximize household wealth
acquire as many goods as possible
own as much land as possible
Question 4Rationality in the household decision-making process means that
everyone in the household agrees on all decisions
households act in their own best interests
all households make the same decisions
households want to earn as much income as possible
Question 5Which resource generates the largest share of the income in the United States?
Question 6Which of the following is an example of an in-kind transfer?
unemployment compensation payments
Question 7Which of the following represents the largest source of income for U.S. households?
wages and salaries
Question 8Households supply four basic types of resources. They include allof the following except
final goods and services
Question 9Which of the following is an example of a durable good?
food prepared at home
Question 10A cottage industry is one that
carries out production in workers’ homes
uses highly specialized resources in a complex production process
produces rural housing
produces cottage cheese
Module 4 Quiz
Question 1The ultimate objective of macroeconomics is to
develop and test theories about how the overall economy works
improve the international competitiveness of the U.S. financial markets
stabilize the economy’s growth rate
reduce the unemployment rate
Question 2Which of the following is a stock variable?
the federal government’s budget deficit
the federal government’s debt
business spending on capital equipment
Question 3Which of the following is a flow variable?
the U.S. population
U.S. plant and equipment
Question 4If business leaders become optimistic about future sales and profits, they will __________ spending on plant and equipment, which __________ employment and income and, therefore, their expectations are __________.
increase; decreases; fulfilled
increase; increases; fulfilled
decrease; decreases; fulfilled
increase; increases; not met
Question 5During the Great Depression, President Hoover
incorrectly called for a decrease in taxes
incorrectly called for an increase in taxes
correctly called for a decrease in government spending
correctly called for an increase in taxes
Question 6A recession is best defined as a period during which
the budget deficit and trade deficit are both growing
more resources are used
he percentage of the population employed is declining
employment, output, and income decline
Question 7A depression can be defined as
a mild reduction in total production coupled with a rising unemployment rate that lasts for several years
a severe reduction in total production coupled with high unemployment that lasts several years
a decline in government spending and taxes that lasts for several months
a decline in total production that lasts less than six months
Question 8When economists refer to the economy’s price level, they mean
the price of goods and services relative to consumers’ incomes
the rate of inflation
a general measure of prices of all goods and services
a period of level, or steady, prices
Question 9If the wealth of consumers increases substantially, this would shift
the aggregate supply curve outward
the aggregate supply curve inward
the aggregate demand curve inward
the aggregate demand curve outward
Question 10Equilibrium of aggregate supply and aggregate demand is best described as a situation in which
the slope of aggregate demand equals the slope of aggregate supply
quantity supplied exceeds quantity demanded at a unique price level
quantity demanded equals quantity supplied at a unique price level
quantity demanded exceeds quantity supplied
Module 5 Quiz
Question 1A government program that invested in financial institutions and automakers to help stabilize markets during the great recession of 2008 was the _____
Social Security System.
Troubled Asset Relief Program.
Supplemental Security Income Program.
Public Housing Assistance Program.
Question 2The objective of a demand-management policy is to ___
decrease aggregate demand to smooth economic fluctuations.
increase or decrease aggregate demand to smooth economic fluctuations.
increase aggregate demand to smooth economic fluctuations.
increase or decrease aggregate supply to smooth economic fluctuations.
Question 3The chair of the Board of Governors of the Fed serves _____.
a fourteen-year term.
a seven-year term.
a four-year term.
a two-year term that coincides with that of members of Congress.
Question 4If the purchasing power of a dollar measured in terms of the base year was $1, what was the price index?
Question 5Which of the following is true of the unit of account function of money?
It makes money durable in nature.
It implies that money can be used to save up purchasing power.
It makes the values of goods and services known.
It implies that money should be made of something valuable.
Question 6A new tax introduced by the government will _____.
increase disposable income.
lead to a reduction in government spending.
lead to an increase in investment.
decrease disposable income.
Question 7A decrease in net taxes _____.
lowers aggregate expenditure by lowering disposable income, thereby decreasing consumption.
raises aggregate expenditure by raising disposable income, thereby increasing consumption.
raises aggregate expenditure by raising disposable income, thereby decreasing consumption.
lowers aggregate expenditure by lowering disposable income, consumption remaining constant.
Question 8Each member of the Board of Governors of the Fed serves _____.
until a new president is elected.
a four-year term that does not coincide with the term of the current president.
a four-year term that begins at the same time as that of the newly elected president.
a fourteen-year term.
Question 9As a result of the financial crises in 2008, which bank was seized by the FDIC after a 10-day bank run during which depositors withdrew $16 billion, or about 10 percent of all deposits?
Bank of America
Question 10In which of the following ways does government affect the consumption component of planned aggregate expenditures?
through net taxes, which change disposable income
by reducing the interest rate to encourage firms to invest
by purchasing goods and services, which increase consumption
by using subsidies to encourage firms to invest
Module 6 Quiz
Question 1The demand for money is a relationship between _____.
the interest rate and how much money people earn during a certain time period.
the price level and the actual output produced in an economy.
the interest rate and how much money people choose to hold.
the price level and the amount of cyclical unemployment.
Question 2If a bank sells a $1,000 security to the Fed and the required reserve ratio is 10 percent, _____.
the bank has $1,000 in additional reserves, of which it can lend $900.
the bank has lost an asset and must reduce its loans.
the bank has lost a liability.
the bank has $1,000 in additional reserves, of which it can lend $800.
Question 3If each bank in the United States had to keep 100 percent of checkable deposits as reserves, each $1 the Fed injected into new reserves could increase the money supply by _____.
Question 4Which of these changes is likely to follow when the Fed sells U.S. government securiti
The demand for financial securities will decrease.
Aggregate demand will increase.
Rate of interest will decrease.
Planned investment spending will decrease.
Question 5Identify the correct statement about changes in money supply.
A decrease in money supply causes gross domestic product to increase.
A decrease in money supply causes investment spending to decrease.
A decrease in money supply causes investment spending to increase.
A decrease in money supply causes interest rates to fall.
Question 6If the Fed decreases the money supply, gross domestic product _____.
increases by the same amount as the increase in the interest rate.
decreases by a greater amount than the increase in the interest rate because of the multiplier.
decreases by the same amount as the decrease in investment.
decreases by a greater amount than the decrease in investment because of the multiplier.
Question 7The demand for money will be high in an economy experiencing _____.
Question 8Which of the following is not money?
federal reserve notes
Question 9If an increase of $5 million in excess reserves increases checkable deposits in the banking system by a maximum of $50 million, the required reserve ratio would be _____.
Question 10If the Fed decreases the required reserve ratio at a time when banks are holding no excess reserves, the Fed is _____.
making it possible for banks to decrease the money supply but not forcing them to do so.
forcing banks to decrease the money supply.
forcing banks to increase the money supply.
making it possible for banks to increase the money supply but not forcing them to do so.
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