Econ 211 Exam 1 - M/C with answers PDF

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Exam 1 Due Sep 30 at 10pm Points 120 Questions 60 Available Sep 26 at 8am - Sep 30 at 10pm 5 days Time Limit 75 MinutesQuestion 1What statement would complete a short definition of economics as presented in the textbook and class. Economics is the social science which studies how:The prices for...

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Exam 1     

Due Sep 30 at 10pm Points 120 Questions 60 Available Sep 26 at 8am - Sep 30 at 10pm 5 days Time Limit 75 Minutes

Question 1 What statement would complete a short definition of economics as presented in the textbook and class. Economics is the social science which studies how: The prices for products in competitive markets increase and decrease over time. Money gets created and circulated in an economy for purchasing goods and services. Businesses try to maximize profits and minimize losses from the sale of products they make. Correct! How individuals, institutions, and society make optimal choices under conditions of scarcity.

Question 2 Which statement would be an example of the fallacy of composition? Whatever goes up in price must come down. Correct! What is true for the individual is necessarily true for the larger group. If event B occurs after event A, event A must have caused event B.

Facts are more important than theories in explaining economic events.

Question 3 Which best describes an opportunity cost for a person who chooses to quit a full-time job to go to college? paying state and federal income taxes having a higher level of education Correct! giving up the job's wages and benefits paying for meals and college housing

Question 4 Economists classify economic recourses into four general categories. Which one of the following is one of those categories? income

spending Correct! entrepreneurial ability

production possibilities

Question 5 Which would be a normative economic statement? The unemployment rate hit an all-time high this year. Prices are increasing at a fast rate of 4 percent a year. Correct! The government should do more to reduce poverty for families.

Retail sales were flat last month and continue on their downward trend.

Question 6 A city currently has one recreation center to serve its young people. To reduce juvenile crime, the city is considering building a second recreation center to provide more young people with healthy alternative activities. According the the economic perspective, under what conditions should the city build a second center? If the second center is expected to reduce the juvenile crime rate in the city. Correct! If the marginal cost of the second center is less than the marginal benefit from it. If the second center can be built efficiently and productively used more than half the time. If the the opportunity cost of the center is declining and the city’s resources are not scarce.

Question 7 You are given data showing that as people increase their level of education, their incomes also rise. You conclude, therefore, that more education causes higher incomes. This would be an example of: You Answered the broken window fallacy.

the fallacy of composition. confusing correlation and causation. misusing purposeful simplications and terms.

Question 8

Suppose an economist says that “Other things equal, the lower the price of corn, the greater the quantity of corn purchased. This statement indicates that: the quantity of corn purchased determined the price of corn. Correct! all factors other than the price of corn are assumed to be the same or held constant. economists can conduct controlled laboratory experiments on the price of corn in the market. it is not possible to generalize about the relationship between the price of corn and the quantity purchased.

Question 9 Which is considered an economic resources or factor of production by economists? money in a checking account

shares of stock in a corporation U.S. savings bonds Correct! an automobile plant

Question 10 A point outside the production possibilities curve is: attainable, but there is not full employment.

attainable, but there is not productive efficiency.

unattainable because the economy is inefficient.

Correct! unattainable because of limited resources.

Question 11 Use the following production possibilities table to answer the next question for an economy that produces two products. Assume that current output is located at position B. What is the opportunity cost of producing another 60 units unit of machines? Product A B C D E F G Machines 0 20 40 60 80 100 120 Food 1200 1100 1050 850 700 400 0

250 units of food Correct! 400 units of food

600 units of food

700 units of food

Question 12 The production possibilities curve bows outward from the origin because: Correct! opportunity costs increase as the production of a good increases. opportunity costs decrease as the production of a good increases.

more production of one good results in more production of the other good.

resources are of uniform quality when they are placed into productive use.

Question 13 Suppose there are two economies, Xenon and Yantel, which have the same production possibilities curves showing the allocation of resources to consumer goods and investment good. Now assume that Xenon devotes more resources to investment goods relative to consumer goods compared with Yantel. In that case, we would most likely expect: Yantel to realize a greater shift outward in its future production possibilities curve compared to the shift for Xenon. Correct! Xenon to realize a greater shift outward in its future production possibilities curve compared to the shift for Yantel. both Xenon and Yantel would have the same shift outward in their future production possibilities curves. no shift in the future production possibilities curves for either Xenon or Yantel.

Question 14 If an economy is producing at a point inside a production possibilities curve: the economy is efficient

there is economic growth. Correct! resources are unemployed.

the possibility is unattainable.

Question 15 A television station reports that the price of autos has decreased and the quantity sold has increased. In a competitive market for autos, this situation would be caused by a(n): increase in demand.

decrease in demand. decrease in supply. Correct! increase in supply.

Question 16 If two goods are close substitutes in competitive markets: an increase in the price of one will decrease the demand for the other. Correct! an increase in the price of one will increase the demand for the other. a decrease in the price of one will increase the demand for the other. a decrease in the price of one will have no effect on the demand for the other.

Question 17 A newspaper reports that in an urban area the average price of new houses had decreased and the number of new houses sold had decreased. In a competitive market for houses, this situation would best be explained by a(n): increase in supply. Correct! decrease in demand.

decrease in supply.

increase in demand.

Question 18 Which is most consistent with the law of demand? You Answered A decrease in the price of pizza causes a decrease in the quantity of pizza demanded. A decrease in the price of automobiles causes no change in the quantity of tires demanded. An increase in the price of natural gas causes a decrease in the quantity of natural gas demanded. An increase in the price of gasoline causes a decrease in the quantity of sport utility vehicles demanded.

Question 19 If in a competitive market for copper, the quantity sold has decreased, but it is uncertain what has happened to the price of copper, then the best explanation is that: the demand for copper increased and the supply of copper increased. Correct! the demand for copper decreased and the supply of copper decreased. the demand for copper increased and the supply of copper decreased. the demand for copper decreased, and the supply of copper increased.

Question 20 A news report states that the price of coffee has increased but the quantity sold in the market has decreased. In a competitive market, this situation would be caused by a(n): Correct! decrease in supply.

increase in supply. decrease in demand.

increase in demand.

Question 21 A fall in the price of resources used to produce a product causes: You Answered a movement up the supply curve, resulting in both a higher equilibrium quantity and price. a rightward shift of the supply curve so that more is offered at each price.

no movement of the supply curve but a fall in price and a decrease in quantity supplied. a leftward shift of the supply curve so that less is offered for sale at each price.

Question 22 You are given the following information affecting the construction industry making new houses: the average incomes of new house buyers is increasing; the price of construction materials to make new houses is increasing. What will most likely happen to demand and supply in this industry?

demand will increase and supply will increase

demand will decrease and supply will increase Correct! demand will increase and supply will decrease

demand will decrease and supply will decrease

Question 23 In a competitive market, an increase in demand for oil and an increase in supply of oil will: decrease price and increase quantity. increase price and decrease quantity. increase price, but whether it increases quantity depends on how much each curve shifts. Correct! increase quantity, but whether it increases price depends on how much each curve shifts.

Question 24 Over a period of time both the price and the quantity sold of a certain product have increased. The most likely explanation would be that: Correct! demand increased over time, while supply remained the same.

supply increased over time, while demand remained the same.

supply decreased over time, while demand remained the same.

demand decreased over time, while supply remained the same.

Question 25 A television station reports that more people are paying less for a product, but it is uncertain whether they are buying more of the product. In a competitive market for this product, the most likely explanation for this event would be a(n): Correct!

increase in the supply of the product and a decrease in the demand for the product. decrease in the demand for the product and a decrease in the supply of the product. increase in the demand for the product and an increase in the supply of the product. decrease in the supply of the product and an increase in the demand for the product.

Question 26 A surplus will occur in a competitive market whenever: Correct! price is above the equilibrium price. price is below the equilibrium price. the supply curve is vertical. the demand curve is horizontal.

Question 27 Assume that the supply curve for a product is vertical at a particular quantity and the demand curve is downsloping. If the demand for the product increases, then there will be: Correct! an increase in the price of a product.

a decrease in the price of the product.

a decrease in the quantity of the product.

an increase in the quantity of the product.

Question 28 For a national sporting event such as the Super Bowl there is widespread reselling (scalping) of tickets. This situation shows that: the face value of tickets is at the equilibrium price.

the face value of tickets is above the equilibrium price.

the quantity demanded for tickets is less than the quantity supplied for the face value of tickets. Correct! the quantity demanded tickets is greater than the quantity supplied for the face value of tickets.

Question 29 Qd 10 15 20 25 30 35

Price $4.00 $3.50 $3.00 $2.50 $2.00 $1.50

Qs 35 30 25 20 15 10

The above table shows the demand and supply schedules for a product. In a competitive market, if the demand schedule then increases by 5 units at each price, the equilibrium price will be: $2.00 $2.50 Correct! $3.00

$3.50

Question 30 GDP is the total market value of all: expenditures on natural resources, labor, and capital goods in an economy in a given year expenditures on consumption, investment, and net exports in an economy in a given year intermediate goods and services produced in an economy in a given year Correct! final goods and services produced in an economy in a given year

Question 31

An example of a final good in national income accounts would be new: You Answered lawn mowers purchased by Cut-rite Mowers. Correct Answer plants purchased by homeowner Tom Larson. chemicals purchased by Green Grass Lawn Care. trees purchased by Wendy Lee’s Garden Center.

Question 32 If the value of washing machines purchased by consumers and the value of the the parts used to make the washing machines were both included in the calculation of GDP, this calculation method would lead to the problem of: depreciation. Correct! multiple counting.

stocks versus flows.

the consumption of fixed capital.

Question 33 Which of the following would be the best example of purchasing a service in national income accounting? purchase of a uniform to use at work Correct! purchase of an airline ticket for a trip

purchase of gasoline at a convenience store

purchase of bricks for a repair to the home

Question 34 The value of corporate stocks and bonds traded in a given year is: Correct! excluded from the calculation of GDP because they make no contribution to current production of goods and services. included in the calculation of GDP because they make a contribution to the current production of goods and services. included in the calculation of gross private domestic investment, but excluded from personal consumption spending. excluded in the calculation of gross private domestic investment, but included in personal consumption spending.

Question 35 Which would be considered an economic investment according to economists?

the buying of corporate bonds from Amazon the purchase of stock in MacDonald’s Correct! the purchase of a new machine by Ford

the buying of shares in a Fidelity mutual fund

Question 36 Government purchases in national income accounts would include expenditures for payments of: You Answered social security to retirees.

public assistance to welfare recipients.

disability support for military veterans. salaries for police officers.

Question 37 If an economy is increasing its stock of capital goods, then: gross private domestic investment is greater than depreciation.

depreciation is greater than gross private domestic investment.

nominal GDP is rising and real GDP is falling. You Answered nominal GDP is rising and real GDP is constant.

Question 38 The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,940); personal consumption expenditures ($8,920); imports ($1,170); exports ($1,111); gross private domestic investment ($1,650). What is GDP in this economy? $11,340 billion Correct! $12,451 billion

$12,510 billion

$13,621 billion

Question 39 In national income or GDP accounts, all construction is classified as: durable goods. non-durable goods.

personal consumption expenditures. Correct! gross private domestic investment.

Question 40 Which item would be included in the income approach to GDP? net exports

corporate profits You Answered gross private domestic investment

personal consumption expenditures

Question 41 In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $15,000 billion. In year 2, the total expenditure for the same market basket of goods was $15,450 billion. What was the GDP price index for the economy in year 1 and year 2? Correct! 100 in year 1 and 103 in year 2 100 in year 1 and 105 in year 2

1.00 in year 1 and 1.04 in year 2

1.00 in year 1 and 1.05 in year 2

Question 42 Real GDP is preferred to nominal GDP as a measure of economic performance because nominal GDP: includes goods that are produced, but excludes the value of services. Correct! uses current prices, and thus overstates changes in output over time. does not adjusted for population changes that affect economic output. does not account for changes in the quality of goods and services produced.

Question 43 Assume that in Year 1 nominal GDP was $14,625 billion and the GDP price index was 114. in Year 2 nominal GDP was $15,811 billion and the GDP price index was 116. In What was real GDP in Year 1 and Year 2?

$12,829 billion in Year 1 and $13,749 billion in Year 2. Correct! $12,828 billion in Year 1 and $13,630 billion in Year 2 $13,630 billion in Year 1 and $14,1035 billion in Year 2 $14,103 billion in Year 1 and $14,852 billion in Year 2

Question 44 Over time the relationship between nominal GDP and real GDP is such that: as nominal GDP falls, real GDP rises. as nominal GDP rises, real GDP falls. nominal GDP is greater than real GDP before the base year. Correct! nominal GDP is greater than real GDP after the base year.

Question 45 GDP tends to understate the productive activity in the economy because it excludes: spending by the government on military goods. spending by businesses to build new plants and factories. the work done by construction companies to remodel houses. Correct! the full value improvement in the quality of goods and services over time.

Question 46

Real GDP in an economy increased from $13,299 billion in year 1 to $13,588 billion in year 2. The rate of growth of real GDP from year 1 to year 2 would be approximately: You Answered 1.4 percent.

2.2 percent.

3.6 percent.

4.1 percent.

Question 47 Consider two scenarios for a nation's long-run economic growth. Scenario A has real GDP growing at an average annual rate of 2.5%. Scenario B has real GDP growth at an average annual rate of 1.5%. The nation's real GDP would double in approximately: 28 years under scenario A compared with 35 years under scenario B. Correct! 28 years under scenario A compared with 47 years under scenario B. 35 years under scenario A compared with 47 years under scenario B. 47 years under scenario A compared with 35 years under scenario B

Question 48 Which of the following statements is most accurate about modern economic growth? It has reduced the time that people have available for leisure. It has encouraged tighter government control over economies. It is an uneven and fluctuating rise in the price level of nations.

Correct! It is a sustained and ongoing increase in the standard of living.

Question 49 Is it possible for poorer or follower countries to catch up with richer or leader countries in terms of the standard of living? You Answered No, because the rule of 70 should be applied differently for follower countries than leader countries. No, because follower countries cannot achieve economies of scale in production as is possible in leader countries. Yes, because leader countries will eventually redistribute their income and wealth to follower countries. Yes, because follower countries can grow faster by adopting and applying technologies from leader countries.

Question 50 Which would be considered an important institutional structure that promotes modern economic growth? Correct! strong property rights

a declining population

being a leader nation

more learning by doing

Question 51 Which of the following is best considered a supply factor for economic growth?

increases in real interest rates You Answered increases in economic efficiency increases in ...