Economics Quiz

When an economy produces a combination of goods that lies on the production possibilities frontier, what does it indicate?

• A) resources are being used fully and efficiently.

• B) prices are constant.

• C) opportunity cost is constant.

• D) resources cannot be exhausted.

• E) prices are fair.

According to the information in the table below, _______ has the absolute advantage and _______ has the comparative advantage in butter.

• A) Cuba; Spain

• B) Cuba; Cuba

• C) Spain; Cuba

• D) Spain; Spain

• E) Spain; neither country

Which of the following events has no effect on GDP?

• A collector invests in a classic, mint condition 1957 Chevy.

• The Department of Transportation repaves a road.

• A homeowner pays a landscaper for services rendered.

• A college buys computers.

• A foreign corporation buys a jet produced by a domestic company.

If nominal GDP equals $5,000 and real GDP equals $4,000, then the GDP deflator equals:

• 125

• 1.25

• 800

• 0.8

• 300

Inflation can be defined as the:

• percentage change in the price level.

• cost of living.

• level of prices in the economy.

• growth rate of production.

• decline in a nation’s living standards.

What is given up to pursue another alternative is known as

• capital.

• real cost.

• money cost.

• price.

• opportunity cost.

Bill is a skilled welder, but he cannot find work because employers do not need as many welders since machines do much of the welding these days. Bill is

• frictionally unemployed.

• cyclically unemployed.

• structurally unemployed.

• considered to be a hidden worker.

• not counted in the ranks of the unemployed.

If the relative price of coffee rises due to an increase in demand, then

• less coffee will be consumed.

• more resources will be devoted to coffee production.

• less tea will be consumed.

• suppliers will bring less to market.

• the price will eventually return to where it was prior to the increase in demand.

In order to compare living standards in two countries, one may use:

• the level of GDP.

• per capita GDP.

• the growth rate of GDP.

• the GDP deflator.

• real GDP multiplied by population.

Which of the following shifts the production possibilities frontier inward?

• Exports

• Imports

• Climate change that makes agriculture less productive

• Rising prices

• An increase in the number of unemployed people