Unit 1 AOS 1 Revision 2

Which of the following is an injection into the circular flow model of the economy?

• savings

• imports

• taxation

• welfare payments

Which of the following is classified as a microeconomic event?

• a fall in the unemployment rate to 5.6 per cent

• a decline in the supply of Victorian cherries due to prolonged cold and wet weather

• the announcement of an inflation rate of 1.5 per cent in January 2017

• the announcement of an annual trade surplus of $12b

The following is generally not considered an example of positive economic analysis:

• As the price rises, demand falls.

• An increase in income tax will reduce disposable income

• An increase in the interest rate will lead to a decline in borrowing

• The government should reduce spending on welfare and increase spending on infrastructure

Capital resources refer to:

• human-made items used to produce final goods and services

• physical power provided by workers

• gifts of nature that are suitable as productive inputs

• entrepreneurial skills assisting the productive process

The opportunity cost of producing a given commodity is:

• the value added at each stage of production.

• the market price of that commodity

• the value of the next best alternative forgone for which the resources used in its production could have produced

• the total cost of production for that commodity

Capitalism refers to the:

• dominance of government ownership of the factors of production.

• dominance of private ownership of the factors of production.

• reliance on government-directed resource allocation.

•      reliance on the market forces of demand and supply to allocate scarce resources between competing uses.

Mineth can make five jumpers or 10 T-shirts per hour. For Mineth, the opportunity cost of making an additional T-shirt is:

• half a jumper

• five jumpers

• two jumpers.

• two T-shirts.

During the recession phase of the business cycle, it would be expected that:

• government tax receipts would increase and outlays would increase

• government tax receipts would decrease and outlays would increase

• government tax receipts would increase and outlays would decrease

• government tax receipts would decrease and outlays would decrease

The situation where it is not possible to increase output without increasing inputs is referred to as:

• dynamic efficiency

• allocative efficiency.

• productive efficiency

• inter-temporal efficiency

Select from the following list the best example of a normative economic statement

• The unemployment rate is currently 4.5%

• Last year, real gross domestic product growth was 2.0%.

• The federal government should increase the age pension to reduce income inequality.

• The value of Australia’s Gross National Product is less than its Gross Domestic Product.