ECO 121

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

• rely upon the government to provide us with the basic necessities of life.

• rely upon one another for the goods and services we consume.

• have similar tastes and abilities

• are concerned about one another’s well-being

Refer to Figure 3-3. If Enid must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?

• 40 hours

• 100 hours

• 400 hours

• 1600 hours

The opportunity cost of an item is

• the number of hours that one must work in order to buy one unit of the item.

• what you give up to get that item

• always less than the dollar value of the item

• always greater than the cost of producing the item

Refer to Figure 3-4. The opportunity cost of 1 novel for Jordan is

• 1/3 poem

• 3 poems

• 4 poems

• 12 poems

Refer to Table 3-9. Barb has an absolute advantage in

• both setting up and testing computers and a comparative advantage in setting up computers

• both setting up and testing computers and a comparative advantage in testing computers

• neither setting up nor testing computers and a comparative advantage in setting up computers

• neither setting up nor testing computers and a comparative advantage in testing computers

Refer to Table 3-11. Varick has a comparative advantage in the production of

• wheat

• cloth

• both goods

• neither good

The value of the housing services provided by the economy's owner-occupied houses is

• included in GDP, and the estimated rental values of the houses are used to place a value on these housing services

• included in GDP, and the actual mortgage payments made on the houses are used to estimate the value of these rental services

• excluded from GDP since these services are not sold in any market

• excluded from GDP since the value of these housing services cannot be estimated with any degree of precision

Def01 stands for GDP deflator in year 1. Def02 stands for GDP deflator in year 2. The inflation rate in year 2 equals

• 100*(Def02-Def01)/Def01

• 100*(Def02-Def01)/Def02

• 100*(Def01-Def02)/Def01

• 100*(Def01-Def02)/Def02

When economists talk about growth in the economy, they measure that growth as the

• absolute change in nominal GDP from one period to another

• percentage change in nominal GDP from one period to another

• absolute change in real GDP from one period to another

• percentage change in real GDP from one period to another

Which of the following items is counted as part of government purchases?

• i) The federal government pays the salary of a Navy officer

• (ii) The state of Nevada pays a private firm to repair a Nevada state highway

• (iii) The city of Las Vegas, Nevada pays a private firm to collect garbage in that city

• All (i), (ii), and (iii) are correct