MULTIPLE CHOICE QUESTIONS

The circular flow diagram of economic activity is a model of the:

• interaction among taxes, prices, and profits.
• flow of goods, services, and payments between households and firms.
• None of the listed choices is correct.
• role of unions and government in the economy.

influence of government on business behavior.

According to your reading, a correct definition of economics is:

• ALL of the listed options are correct.
• the study of how to best increase a nation's wealth with the given resources.
• the study of human behavior.
• the study of how to make government decisions, which keep the inflation rate stable.

the study of government monetary policy.

If one event follows the other, we can automatically conclude that the other must have caused the one.

• The above statement is an example of a nominally positive statement.
• The above statement is an example of the fallacy of cause and effect.
• The above statement is a correct application of the law of increasing marginal costs.
• The above statement is an example of the fallacy of composition.
• None of the listed options accurately reflect the above statement.

Which of the following is true about the production possibilities curve?

• The production possibilities curve shifts outward (to the right) as a result of advances in technology and increases in the country's resources.
• The production possibilities curve shifts outward (to the right) as a result of an increase in the nation's money supply.
• The production possibilities curve always remains in the same place over time, because the demand for goods and services remains the same for most capitalist countries.
• The production possibilities curve must be linear since opportunity costs are always constant.
• The production possibilities curve always remains in the same place over time, because resources and technology are fixed for each country.

Use the tables below to answer thisquestion.(Units are in thousands)

CountryFCountryFCountryG

CountryGPointCapital GoodsTanksPointCapital GoodsTanksA012A036B110B327C28C618D36D99E44E120F52G60

Based on the tables above:

• neither country has an absolute advantage in the production of capital goods or tanks.
• Country F has an absolute advantage in the production ofbothgoods.
• we cannot determine if either country has an absolute advantage.
• Country G has an absolute advantage in the production of tanks, but not capital goods.
• Country G has an absolute advantage in the production of both goods.

the table below, P and Q indicate the Price (in $) and Quantity Purchased (in billions of $$), respectively. Use this table to answer this question.

P($)Q

12060

9070

6080

3090

0100

Which of the following correctly expresses the indicated relationship as an equation?

None of the listed options.

P = 300 - 3Q.

P = 300 + 3Q.

P = 300 - 0.3Q.

P = 500 + 0.3Q.

the table below, P and Q indicate the Price (in $) and Quantity Purchased (in billions of $$), respectively. Use this table to answer this question.

P($)Q

12060

9070

6080

3090

0100

The relationship depicted by the table above is __________:

direct.

negative.

positive.

both positiveanddirect.

indeterminate.

As a person receives more of a good, the _______________ from each additional unit of the good declines.

utility

sunk costs

budget constraint

marginal utility

cost

Public goods:

• are described by two of the listed options.
• are provided by government - but with a direct charge to the user.
• include items like cereal and beverages.
• are solely provided by private corporate entities.
• like defense are typically provided by government.

Suppose that a tax is imposed on a particular good while consumer incomes rise. Holding everything else constant, if this good is an inferior good:

• all of the listed options are inaccurate.
• equilibrium price will rise, but the impact on equilibrium quantity is uncertain.
• equilibrium quantity will fall, but the impact on equilibrium price is uncertain.
• equilibrium price and quantity will rise and fall, respectively.
• equilibrium price and quantity will both fall.