DO NOT EXPLAIN JUST CHOOSE A, B, C, OR D

Economics explains that trade can improve people's lives by:

Select one:

a.

Moving resources from low valued uses to higher valued uses

b.

Leading to specialization and division of labor and knowledge

c.

Letting people focus on the activities they have a comparative advantage in

d.

All of the above

Which of the following would be an institution that promotes economic growth?

Select one:

a.

Government spending on scientific research

b.

A crackdown on corruption within the government

c.

Open trade with other countries

d.

All of the above

Which of the following would DECREASE the amount of savings by households?

Select one:

a.

a decrease in the probability of losing your savings

b.

an increase in household current income

c.

a decrease in the risk of inflation

d.

a switch to a time preference towards more instant gratification

The shape of the output function (increasing at a decreasing rate) is due to:

Select one:

a.

the law of supply

b.

the law of diminishing returns

c.

the law of increasing opportunity cost

d.

the law of demand

In Economics, it is assumed people are trying to maximize:

Select one:

a.

the years they live

b.

their utility

c.

the money they earn

d.

the amount of goods and services they can consume

There are two versions of GDP ____________, which looks at the output measured at current prices, and ___________ which looks at the output measured at base year prices

Select one:

a.

Nominal GDP ; Real GDP

b.

Real GDP ; Nominal GDP

c.

National GDP ; Historic GDP

d.

Total GDP ; GDP per capita

In terms of production abilities, Blake can vacuum the house in 30 minutes, and he can prepare dinner in 60 minutes. Melissa can vacuum the house in 15 minutes and prepare dinner in 45 minutes. Based on these numbers who has the ABSOLUTE advantage preparing dinner?

Select one:

a.

Melissa

b.

Blake

c.

Both have the absolute advantage in preparing dinner

d.

Neither have the absolute advantage in in preparing dinner

In terms of production abilities, Blake can vacuum the house in 30 minutes, and he can prepare dinner in 60 minutes. Melissa can vacuum the house in 15 minutes and prepare dinner in 45 minutes. Based on these numbers who has the COMPARATIVE advantage preparing dinner?

Select one:

a.

Neither have the comparative advantage in preparing dinner

b.

Blake

c.

Melissa

d.

Both have the comparative advantage in preparing dinner

The Boyd company makes custom t-shirts. It gets blank t-shirts from a supplier. It puts the blank shirts in their shirt press machine, adds the necessary fabric ink, and out comes a custom t-shirt that they sell online for $30. In this story what would be classified as an intermediate good?

Select one:

a.

The custom shirt that is sold for $30

b.

Just the shirt press machine

c.

Just the fabric ink

d.

Both the blank t-shirts and the fabric ink

The supply and demand model shows us that:

Select one:

a.

if there is a surplus in a market, buyers will change their preferences and decrease their demand until the surplus is gone.

b.

profit seeking firms will push the price so high that eventually nobody will buy the good and the market will dissolve

c.

if there is a shortage in a market, competition will make the price rise and the shortage will be eliminated

d.

once a market reaches equilibrium, the market price will stay the same, even if supply and demand change in the future.

You observe a developing nation with annual growth rates averaging around 10%, much faster than the average of the more developed nations. Economic growth theory suggests:

Select one:

a.

This nation is in it's "catch up" phase, but will eventually see their growth rate slow down to those of the developed nations.

b.

This fast growing nation must have lots of natural resources that have get to be exploited

c.

This fast-growing nation must have higher amount of capital per worker than the slower growing countries.

d.

This nation is using more of a centrally planned economy, where the government can organize the factors of production themselves.