Question 1

From the perspective of economists, which term provides the highest degree of confidence for explaining economic behaviour?

Accepted Answer

A)   an economic principle or a law
B)   a fact
C)   a hypothesis
D)   an assumptionE) None of the above
F) All of the above

Question 2

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.
 
-Refer to the above table. What is the opportunity cost of producing the fourth unit of capital goods?

Accepted Answer

A)   6 units of consumer goods
B)   7 units of consumer goods
C)   15 units of consumer goods
D)   22 units of consumer goodsE) B) and C)
F) C) and D)

Question 3

-Refer to the above diagram. The slope of curve ZZ at point B is:

Accepted Answer

A)   infinity.
B)   zero.
C)   one.
D)   none of the above.E) A) and C)
F) A) and B)

Question 4

-Recessions are typically characterised by points:

Accepted Answer

A)   inside the production possibilities curve.
B)   outside the production possibilities curve.
C)   on the production possibilities curve.
D)   that are not attainable on the production possibilities curve.E) None of the above
F) C) and D)

Question 5

Which of the following is associated with macroeconomics?

Accepted Answer

A)   an examination of the incomes of the University of Toronto Business School graduates
B)   an empirical investigation of the general price level and unemployment rates in the 2000s
C)   a study of the trend of pecan prices since World War II
D)   a case study of pricing and production in the textbook industryE) B) and D)
F) A) and B)

Question 6

A country can achieve some combination of goods outside its production possibilities curve by:

Accepted Answer

A)   idling some of its resources.
B)   specializing and engaging in international trade.
C)   buying the debt (bonds and stocks)  of foreign nations.
D)   producing more consumption goods and fewer capital goods.E) B) and C)
F) C) and D)

Question 7

-Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:

Accepted Answer

A)   will be 4 units of bicycles.
B)   will be 2 units of bicycles.
C)   will be zero because unemployed resources are available.
D)   of doing so cannot be determined from the information given.E) C) and D)
F) B) and D)

Question 8

Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment so that investment would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate.
-Refer to the above information. Which of the following is the correct graphical presentation of the indicated relationship?

Accepted Answer

A)   line 4
B)   line 3
C)   line 2
D)   line 1E) A) and D)
F) A) and C)

Question 9

In drawing the production possibilities curve we assume that:

Accepted Answer

A)   technology is fixed.
B)   unemployment exists.
C)   economic resources are unlimited.
D)   wants are limited.E) A) and B)
F) B) and C)

Question 10

The global financial crisis that spread to Canada in late 2008 has been dubbed:

Accepted Answer

A)   The housing bubble crash
B)   The great financial crisis
C)   The great recession
D)   The great depressionE) B) and D)
F) B) and C)

Question 11

The main function of the entrepreneur is to:

Accepted Answer

A)   make routine pricing decisions.
B)   innovate.
C)   purchase capital.
D)   create market demand.E) A) and D)
F) All of the above

Question 12

-Refer to the above graph. Which of the following statements is correct?

Accepted Answer

A)   Quantity demanded and quantity supplied are independent of price.
B)   Price and quantity demanded are directly related.
C)   Price and quantity supplied are directly related.
D)   Price and quantity supplied are inversely related.E) A) and B)
F) C) and D)

Question 13

1/4. B)  is + 1/4. C)  is .40. D)  cannot be determined from the information given." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram. The slope of the line:

Accepted Answer

A)   is - 1/4.
B)   is + 1/4.
C)   is .40.
D)   cannot be determined from the information given.E) A) and B)
F) A) and C)

Question 14

Assume an economy is incurring unemployment and failing to realize least-cost production. The immediate effect of resolving these problems will be to:

Accepted Answer

A)   move the level of actual output closer to the economy's production possibilities curve.
B)   create a less equal distribution of income.
C)   shift its production possibilities curve to the left.
D)   shift its production possibilities curve to the right.E) All of the above
F) None of the above

Question 15

Production possibilities tables for two countries, North Cantina and South Cantina:
North Cantina Production possibilities (alternatives) 
  South Cantina Production possibilities (alternatives) 
 
-Assume that a change in government policy results in the increased production of both consumer goods and investment goods. It can be concluded that:

Accepted Answer

A)   the economy was suffering from unemployment and/or the inefficient use of resources before the policy change.
B)   the economy's production possibilities curve has been shifted to the left as a result of the policy decision.
C)   this economy's production possibilities curve is convex (bowed inward)  as viewed from the origin.
D)   the law of increasing opportunity costs does not apply in this society.E) A) and B)
F) A) and C)

Question 16

Microeconomics is concerned with:

Accepted Answer

A)   the aggregate or total levels of income, employment, and output.
B)   a detailed examination of specific economic units which comprise the economic system.
C)   the concealing of detailed information about specific segments of the economy.
D)   the establishing of an overall view of the operation of the economic system.E) A) and B)
F) B) and C)

Question 17

Purposeful behaviour implies that everyone will make identical choices.

Accepted Answer

A) True 
 B)False

Question 18

1 to PP2. B)  shift the production possibilities curve from PP2 to PP1. C)  move the economy from A to C along PP1. D)  move the economy from A, B, or C on PP1 to D" class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram. An improvement in technology will:

Accepted Answer

A)   shift the production possibilities curve from PP1 to PP2.
B)   shift the production possibilities curve from PP2 to PP1.
C)   move the economy from A to C along PP1.
D)   move the economy from A, B, or C on PP1 to DE) B) and C)
F) C) and D)

Question 19

Which of the following will not shift a nation's production possibilities curve?

Accepted Answer

A)   the acquisition of more education and training by its labour force
B)   the widespread application of irrigation to its agricultural land
C)   an increase in the rate of unemployment
D)   the discovery of new super-conductivity materials which makes manufacturing more efficientE) B) and C)
F) A) and C)

Question 20

Individuals face an economic problem but not the society.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. -Refer to the above table. What is the opportunity cost of producing the fourth unit of capital goods?

Correct Answer
verified

-Refer to the above diagram. An improvement in technology will:

Correct Answer
verified

Purposeful behaviour implies that everyone will make identical choices.

Correct Answer
verified

Microeconomics is concerned with:

Correct Answer
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Individuals face an economic problem but not the society.

Correct Answer
verified

-Refer to the above graph. Which of the following statements is correct?

Correct Answer
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-Recessions are typically characterised by points:

Correct Answer
verified

The global financial crisis that spread to Canada in late 2008 has been dubbed:

Correct Answer
verified

-Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:

Correct Answer
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Which of the following is associated with macroeconomics?

Correct Answer
verified

From the perspective of economists, which term provides the highest degree of confidence for explaining economic behaviour?

Correct Answer
verified

In drawing the production possibilities curve we assume that:

Correct Answer
verified

Correct Answer
verified

-Refer to the above diagram. The slope of the line:

Correct Answer
verified

Which of the following will not shift a nation's production possibilities curve?

Correct Answer
verified

Correct Answer
verified

-Refer to the above diagram. The slope of curve ZZ at point B is:

Correct Answer
verified

Assume an economy is incurring unemployment and failing to realize least-cost production. The immediate effect of resolving these problems will be to:

Correct Answer
verified

The main function of the entrepreneur is to:

Correct Answer
verified

A country can achieve some combination of goods outside its production possibilities curve by:

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. -Refer to the above table. What is the opportunity cost of producing the fourth unit of capital goods?

Correct AnswerverifiedShow Answer

-Refer to the above diagram. An improvement in technology will:

Correct AnswerverifiedShow Answer

Purposeful behaviour implies that everyone will make identical choices.

Correct AnswerverifiedShow Answer

Microeconomics is concerned with:

Correct AnswerverifiedShow Answer

Individuals face an economic problem but not the society.

Correct AnswerverifiedShow Answer

-Refer to the above graph. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

-Recessions are typically characterised by points:

Correct AnswerverifiedShow Answer

The global financial crisis that spread to Canada in late 2008 has been dubbed:

Correct AnswerverifiedShow Answer

-Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:

Correct AnswerverifiedShow Answer

Which of the following is associated with macroeconomics?

Correct AnswerverifiedShow Answer

From the perspective of economists, which term provides the highest degree of confidence for explaining economic behaviour?

Correct AnswerverifiedShow Answer

In drawing the production possibilities curve we assume that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Refer to the above diagram. The slope of the line:

Correct AnswerverifiedShow Answer

Which of the following will not shift a nation's production possibilities curve?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Refer to the above diagram. The slope of curve ZZ at point B is:

Correct AnswerverifiedShow Answer

Assume an economy is incurring unemployment and failing to realize least-cost production. The immediate effect of resolving these problems will be to:

Correct AnswerverifiedShow Answer

The main function of the entrepreneur is to:

Correct AnswerverifiedShow Answer

A country can achieve some combination of goods outside its production possibilities curve by:

Correct AnswerverifiedShow Answer

Correct Answer
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