Lesson 1

What does scarcity refer to?

• Unlimited resources

• Insufficient resources to satisfy wants

• Excess production

• Unlimited wants and unlimited resources

Which of the following is NOT a factor of production?

• Land

• Capital

• Money

• Entrepreneurship

Gross Domestic Product (GDP) measures:

• Total value of goods produced by a country’s citizens only

• Total market value of all final goods and services produced within a country

• Total income earned by residents abroad

• Total exports minus imports

The Consumer Price Index (CPI) measures:

• The average price of capital goods

• Changes in the price level of a basket of consumer goods and services

• The total value of goods produced

• Government spending

Unemployment rate is calculated as:

• Number of employed persons ÷ Total population

• Number of unemployed persons ÷ Total labor force

• Number of unemployed persons ÷ Total population

• Number of employed persons ÷ Labor force

Demand-pull inflation is caused by:

• Excess demand over supply

• Increase in production costs

• Decrease in money supply

• Government price controls

Cost-push inflation occurs when:

• Productivity increases

• Money supply decreases

• Demand exceeds supply

• Prices increase due to higher production costs

Which of the following is an example of the tertiary sector?

• Farming

• Manufacturing

• Banking

• Mining

Exports minus imports is known as:

• Gross Domestic Product

• Net exports

• Trade deficit

• Fiscal deficit

Nominal GDP differs from real GDP because nominal GDP:

• Is measured at current prices

• Is adjusted for inflation

• Excludes government spending

• Only counts exports