Questions:
1.Service jobs produce approximately ___ of U.S. output.
A) 20 percent
B) 50 percent
C) 80 percent
D) 90 percent
2. Economic growth means that
A) The dollar value of the output has risen.
B) Per capita GDP has fallen.
C) The production possibilities curve has shifted outward.
D) The distribution of income has become more equal.
3. In poor nations it is common to see per capita GDP decline because
A) Population growth exceeds output growth.
B) Per capita GDP is rising.
C) The value of output increases every year.
D) Population growth is less than output growth.
4. The mix of output in the United States has
A) Not changed substantially over the last 100 years.
B) Shifted primarily from the production of goods to the production of services.
C) Shifted primarily from the production of services to the production of goods.
D) Seen a relative decline in service production.
5. Outsourcing and trade allow countries to
A) Import what they have a comparative advantage in and export goods that they do not produce as efficiently.
B) Export where they have a comparative advantage and import goods that they do not produce as efficiently.
C) Import products that they are unable to produce.
D) Specialize in what they are relatively weak at producing to develop know-how.
6. Productivity refers to
A) The total quantity of goods a nation can produce with machines.
B) Whether a country is primarily capital-intensive or labor-intensive in production.
C) The output per labor-hour.
D) How well each worker uses the machine she or he is working with.
7. Investments in human capital include
A) Purchases of new equipment run by factory workers.
B) Spending on education and job training.
C) Investments that humans make in the stock market.
D) The labor that goes into producing housing and industrial output.
8. With technological advances, a country
A) Moves from a point on the production possibilities curve to a point inside the curve.
B) Adds to its labor force.
C) Decreases its capital stock.
D) Can produce more output with current resources.
9. Which of the following is a role for government in an economy?
A) Providing a legal framework and police force.
B) Preventing or regulating monopolies and ensuring competition.
C) Protecting consumers and workers.
D) All of the answers are correct.
10. The top 20 percent (top quintile) of U.S. income earners
A) Get nearly half of all income.
B) Get nearly three-fourths of all income.
C) Earn over $200,000 per year.
D) Get 20 percent of the total income.
11. The market demand curve results from
A) Adding the quantities demanded at each price by all consumers.
B) Adding the quantities supplied at each price by all suppliers.
C) Adding each supply curve to each demand curve.
D) The market demand curves cannot be determined from individual demand curves.
12. Which is true of an individual demand curve?
A) It slopes downward because of the law of demand.
B) It slopes upward because as the price falls, consumers are willing to buy more.
C) It shows the quantities of a good an individual is able but not willing to buy.
D) It is vertical because most consumers do not care about price.
13. For the law of demand to be true,
A) The only factor influencing a consumer is the price of the product.
B) Other factors that might influence a purchase besides price do not change.
C) A consumer will choose the cheaper price on two identical products sold by two separate and nearby sellers.
D) All of the answers are correct.
14. When the price of a good rises,
A) The quantity demanded of a complementary good rises.
B) The quantity demanded of a complementary good falls.
C) The demand for a complementary good shifts to the right.
D) The demand for a complementary good shifts to the left.
15. Which of the following will shift the demand curve to the right for a normal good?
A) An increase in consumer income.
B) An increase in the price of a complementary good.
C) A decrease in consumer tastes for this product.
D) A decrease in the number of buyers in a market.
16. A supply curve is upward-sloping because
A) At higher prices sellers have a greater incentive to produce more, ceteris paribus.
B) The law of supply states that as price rises, the quantity supplied increases.
C) At lower prices sellers may not be covering their costs of production and are therefore willing to supply less.
D) All of the answers are correct.
17. The market supply curve will shift to the right if
A) The price of the product rises.
B) A new technology improves production.
C) There are fewer sellers in the market.
D) The costs of production rise.
18. When a market is in equilibrium,
A) There are still shortages, especially for fossil fuels.
B) The quantity demanded equals the quantity supplied.
C) All government regulations have been repealed.
D) There are still some surpluses because sellers can be stubborn.
19. Which of the following will not change the demand for movie tickets?
A) A change in the cost of child care services.
B) A change in the price of movie tickets.
C) A change in the availability of Internet movies.
D) A change in the income of moviegoers.
20. Which of the following happens when a price ceiling is set below the market's equilibrium price?
A) Quantity demanded will increase when price falls.
B) A surplus will develop when price falls.
C) The quantity sold will increase when price falls.
D) The market will remain in equilibrium
21. Market failure occurs when
A) Society chooses the optimal mix of output.
B) Market prices signal what to produce.
C) Society does not vote on what should be produced.
D) The market mechanism does not produce the optimal outcome.
22. Which of the following would meet an economist's definition of a public good?
A) Solar panels on a house.
B) Low-pollution hybrid cars.
C) Fruits and vegetables eaten to improve health.
D) Highways with wide shoulders to improve safety.
23. A good with a negative externality is an example of a market failure because
A) A good can be consumed by many people without them having to pay for it.
B) The market is producing a good very few people want.
C) The price of the product does not reflect all costs.
D) The price does not fluctuate with supply and demand.
24. An example of a transfer payment is
A) Minimum wages received by a worker in the fast-food industry.
B) Taxes to support local bus systems.
C) Taxes to support local subway systems.
D) Tax revenues used to provide housing for poor families.
25. Public goods are often under produced because
A) Corporations rarely pay their fair share.
B) Most public goods have already been provided.
C) Private goods already satisfy consumer needs.
D) Free riders receive benefits but avoid paying.
26. Which of the following is not a regressive tax?
A) Social Security taxes.
B) Sales taxes.
C) Federal income taxes.
D) Excise taxes on cigarettes.
27. Which of the following is the federal government's biggest source of tax revenue?
A) Excise taxes.
B) Corporate taxes.
C) Social Security taxes.
D) Income taxes.
28. What part of federal government spending has grown the most rapidly over the last few years?
A) Interest on the national debt.
B) Environmental programs.
C) Courts and the criminal justice system.
D) Transfer payments.
29. When government intervention causes society to move away from the optimal mix of output, this is called
A) Market failure.
B) Equity.
C) Externalities.
D) Government failure.
30. Economists would say that additional public sector activity is desirable only if
A) Public opinion is strongly for it.
B) Congress passes a bill authorizing it.
C) The benefits from the activity exceed its opportunity costs.
D) Spending does not occur during an election year.