Economics Quiz

The factors of production are labour, land, and money.

• True

• False

If a production function exhibits diminishing marginal product, the slope of the corresponding total-cost curve

• becomes steeper as the quantity of output increases

• could be any of these s

• is linear (a straight line)

• becomes flatter as the quantity of output increases

A reduction in the budget deficit should shift the supply of loanable funds to the right, lower the real interest rate, and increase the quantity demanded of loanable funds.

• False

• True

Assuming a closed economy, which of the following is FALSE in the market for loanable funds?

• National saving provides the supply of loanable funds.

• The loanable funds market determines the interest rate in the economy.

• Domestic investment provides the demand for loanable funds.

• The amount of funds loaned depends on national saving alone.

The quantity supplied of loanable funds is greater if real interest rates are higher.

• False

• True

Investment is the purchase of capital equipment and structures.

• False

• True

All the following promote outward oriented growth policies, EXCEPT

• requiring foreign companies to produce their goods in the home country, if they want to sell there

• avoiding tariffs and other trade restrictions

• allowing foreign money to be invested in the home country with the least amount of restrictions

• reducing as much as possible the paperwork needed to export and import parts and finished goods

Which price index measures the average price of things purchased by the typical family?

• producer price index

• consumer price index

• minimum wage

• GDP deflator

Human capital refers to human-made capital such as tools and machinery, as opposed to natural capital such as rivers and timber.

• False

• True

If a prisoners' dilemma game is repeated, the participants are more likely to independently maximize their profits and reach a Nash equilibrium.

• False

• True