Question 1. Scarcity requires that we
(A) Produce efficiently. (B) Learn to limit our wants. (C) Have the most rapid economic growth possible. (D) Have unlimited resources. (E) Make choices about what goods and services to produce.
Question 2. What is the reason that all economic problems occur?
(A) All nations use some form of money to buy and sell goods and services. (B) Humans are always wasteful and inefficient in production and consumption. (C) Powerful governments are able to control production and consumption. (D) Human wants exceed the resources available to satisfy them. (E) People seek only their own self-interest.
Question 3. The primary focus of microeconomics is
(A) To examine the operation of the entire (aggregate) economy. (B) To examine the behavior and operation of the individual units or sectors that make up the economy. (C) Our government's monetary policy. (D) The levels of employment and inflation. (E) To study how we managed to eliminate scarcity.
Question 4. Which of the following is a microeconomic topic?
(i). Shoprite's decision to close stores that are not making a profit (ii)Home Corp's choice to hire more full-time employees because its sales increased (iii). Zambia Airways changes its fares.
Answer Choices: (A) i only (B) ii only (C) i and iii (D) ii and iii (E) i, ii, and iii
Question 5. Which of the following is a macroeconomic topic?
(i) China increases interest rates to slow its economic growth. (ii) Congress lowers tax rates to try and lower the unemployment rate. (iii) Nissan decides to produce more electric Leaf models and fewer Altima sedans.
(A) i and ii (B) i, ii and iii (C) iii only (D) i and iii (E) ii and iii
Question 6. What is NOT true about rational choice?
(A) It can result in different decisions for different individuals. (B) It involves comparing costs and benefits. (C) It might turn out not to have been the best choice after the event. (D) It is a choice that uses the available resources to best achieve the objective of the person making the choice. (E) It is the same for all individuals.
Question 7. An opportunity cost is
(A) The dollar amount that is paid. (B) Anything the decision maker believes costs to be. (C) The benefits of the highest-valued alternative forgone. (D) Whatever is paid out and cannot be reduced or reversed. (E) Another term for all the sunk costs.
Question 8. You have chosen to take a trip during spring break. If you had not gone, you would either have worked at a temporary job or studied for exams. The opportunity cost of your trip is
(A) The wages you would have earned from working. (B) The lower grade earned by not studying.
(C) The wages you would have earned from working and the lower grade earned by not studying.
(D) The value of the trip.
(E) We cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.
Question 9. Which of the following is an example of a normative economic statement?
(A) Universal access to quality health insurance is the most important domestic policy issue of our time.
(B) Extending the time in which laid-off workers are eligible to receive government unemployment compensation has increased the unemployment rate. (C) Lowering marginal income tax rates depresses consumer spending. (D) Prices rise when the government prints too much money. (E) Interest rates rise when the government runs persistent budget deficits.
Question 10. A time series graph reveals whether there is a ________, which represents ________.
(A) trend in a variable; a general tendency for the variable to rise or fall
(B) relationship between two variables; a cross-section relationship
(C) trends in two variables; unrelated variables
(D) relationship between two variables; a trend in a variable
(E) cross-section relationship; a general tendency for the variables to rise or fall
Question 11. Which of the following statements is correct?
(A) When a line slopes downwards moving to the right, the variable measured on the x-axis and the variable measured on the y-axis are directly related. (B) When a line slopes upwards moving to the right, the variable measured on the x-axis and the variable measured on the y-axis are directly related.
(C) The higher the temperature, the more ice cream people consume. Thus the temperature and ice cream consumption are inversely related. (D) If two variables are directly related, a graph of the two variables has a negative slope. (E) None of the above statements is correct.
Question 12. The slope of a line equals the change in the variable measured along the
(A) X-axis divided by the change in the variable measured along the y-axis.
(B) Y-axis divided by the change in the variable measured along the x-axis.
(C) X-axis minus the change in the variable measured along the y-axis.
(D) X-axis multiplied by the change in the variable measured along the y-axis.
(E) Y-axis minus the change in the variable measured along the x-axis.
Question 13. If the quantity of the variable on the y-axis increases by 10 when the quantity of the variable on the x-axis decreases by 2, then the slope of the curve equals (A) 2. (B) -10. (C) 10. (D) -5. (E) None of the above answers is correct.
Question 14. The table above shows data on two variables. If these data were graphed, the slope of the line would be
(A) 1/2. (B) 4/3. (C) 2/3. (D) 3/4. (E) 2.
Question 15. To graph a relationship among several variables, we hold all but ________ variable(s) constant and use the ________ assumption.
(A) one; scarcity (B) two; ceteris paribus (C) three; scarcity (D) one; ceteris paribus (E) one; absence of trend