1. Along a bowed-out production possibility frontier, with corn and tobacco as the two goods, as more corn is produced, the opportunity cost of

Select one:

a. corn decreases.

b. corn increases.

c. tobacco increases.

d. both goods increases.

2. Which of the following is most likely to shift out the French production possibility frontier?

Select one:

a. An increase in the general educational level of the French labor force.

b. An increase in the income of French consumers.

c. An increase in the purchase of stocks on the French Stock Exchange.

d. A reallocation of resources toward consumer goods.

3. The nation of Arbez can produce consumer goods and capital goods. Arbez becomes able to increase its maximum output of consumer goods. The maximum amount of capital goods is unchanged. This indicates that the opportunity cost of consumer goods in Arbez has

Select one:

a. decreased and the opportunity cost of capital goods has remained unchanged.

b. increased and the opportunity cost of capital goods has decreased.

c. increased and the opportunity cost of capital goods has remained unchanged.

d. decreased and the opportunity cost of capital goods has increased.

4. Along the production possibility frontier, trade-offs exist because

Select one:

a. buyers will want to buy less when price goes up, but producers will want to sell more.

b. not all production levels are efficient.

c. at some points, unemployment or inefficiency exists.

d. the economy has only a limited quantity of resources to allocate between competing uses.

5. Because the nation of Arboc is operating at a point inside its production possibility frontier, it

Select one:

a. has full employment.

b. has unemployed or inefficiently employed resources.

c. must cut output of one good to increase production of another.

d. will be unable to experience economic growth.

6. France commits a greater proportion of its resources to capital production than does Germany. _________ should experience ________ rapid rate of economic growth.

Select one:

a. Both; an equally

b. France; a more

c. Germany; a more

d. France; a less

7. The exchange rate is 2 euros = $1. Now the exchange rate adjusts to 3 euros = $1. The dollar has __________ in value. The exchange rate change might have been caused by _________.

Select one:

a. appreciated; an increase in the U.S. exports

b. appreciated; a decrease in the U.S. exports

c. depreciated; an increase in the U.S. exports

d. depreciated; a decrease in the U.S. exports

8. U.S. exports become more fashionable with foreign consumers. The demand for dollars on international currency markets will ___________ and the U.S. dollar will _________ in value.

Select one:

a. increase; appreciate

b .increase; depreciate

c. decrease; appreciate

d. decrease; depreciate

9. Specialization and trade allow a country to produce _________ its production possibility frontier and to consume _________ its production possibility frontier.

Select one:

a. inside; inside

b. on; inside

c. outside; outside

d. on; outside

10. The U.S. imposes a tariff (tax) on goods imported from Japan. The Japanese retaliate by imposing a tariff (tax) on U.S. produced goods. The international demand for the dollar will __________; the international supply of the dollar will __________.

a.

increase; increase

b.

increase; decrease

c.

decrease; increase

d.

decrease; decrease