Worksheetsecon
Total questions: 80
Worksheet time: 20hrs 0mins
The basic goal of economics is to
control the effects of government action.
determine how to distribute all that is produced in an economy.
address the scarcity problem created because the population’s desire for goods exceeds the ability to produce them.
match limited resources to people’s limited wants and needs.
control tastes and wishes so that there will be enough resources to produce all the goods and services that people want.
Which of the following is a macroeconomic question?
How many textbooks should be published by a publisher?
How much should English majors earn after college?
How do members of a household decide whether to clean their own houses or hire someone else to do it?
What is the rate of unemployment?
What is the price of a new 40-inch television?
Microeconomics is the branch of economics that focuses on the
entire economy.
production side of the economy.
consumption side of the economy.
involvement of the government in the entire economy.
choices and decision making of individuals and firms.
The patent system
acts as a direct positive incentive.
acts as a direct negative incentive.
acts as an indirect positive incentive.
acts as an indirect negative incentive.
does not provide an incentive.
A parent that pays a child an allowance for doing chores is providing a(n) ________ incentive.
positive
negative
neutral
complementary
unintended
The government has been trying to encourage the use of fuel-efficient cars. One way it has been doing this has been by allowing fuel-efficient cars to use a separate highway lane. This encourages people to use fuel-efficient cars because
those who place a high value on their scarce time may be encouraged to buy a fuel-efficient car to take advantage of the separate highway lane.
those who place a low value on their scarce time may be encouraged to buy a fuel-efficient car to take advantage of the separate highway lane.
those who are more concerned about the environment are also those who happen to place a high value on their time.
those who purchase a fuel-efficient car are forced to pay more for a new car, and the use of the separate highway lane compensates them for this.
those who purchase a fuel-efficient car are likely to be unhappy because it is less powerful or more cramped inside; use of the separate highway lane compensates them for this.
Instead of taking an economics course, Adam could have taken a history course that meets at the exact same time. The total cost of taking the economics course would be
the tuition cost for the economics course.
the fact that Adam could not take the history course at the same time.
the tuition cost for the economics course plus the price of the textbook and a notebook for the economics course.
the tuition cost, the cost of the textbook and notebook, and the fact that Adam could not take the history course at the same time.
the price of the textbook and a notebook for the economics course.
The term ________ means “additional.”
marginal
comparative
incentive
opportunity cost
trade-off
Many stores are open 24 hours a day. When store managers make the decision to stay open
24 hours, it must be the case that
the marginal benefit of staying open all day and the marginal cost to remaining open all day are at least equal.
the marginal benefit of staying open all day must always be greater than the marginal cost to remaining open all day.
the marginal cost of staying open all day must always be greater than the marginal benefit to remaining open all day.
the calculation of marginal benefits or marginal costs of remaining open all day plays no role.
the marginal benefit of remaining open all day is zero.
When trade is voluntary, who benefits?
the seller
the buyer
no one benefits
both the buyer and the seller
Trade is never voluntary.
Low prices for water in the developed world may lead individuals to believe it is NOT a ________ resource.
desired
scarce
plentiful
controlled
economic
A recession has crippled the national economy, producing a high rate of unemployment.
Which of the following would be a microeconomic decision?
Congress decides to institute a tax cut and encourage consumer spending.
The United States negotiates a new trade agreement with Japan, hoping to bolster exports.
The federal government extends the duration of unemployment benefits.
A Congresswoman decides to delay the purchase of a new car.
The Federal Reserve lowers interest rates in an effort to stimulate business activity.
Which of the following is a positive statement?
An economist should test every theory at least twice.
Increases in the minimum wage cause unemployment.
We ought to deregulate the mortgage market.
The government must provide unlimited health care to citizens.
We should forgo some current consumption in order to invest in the future.
Which of the following is a normative statement?
One should wear a helmet when cycling.
The sky is blue.
A bicycle has two wheels.
A unicycle has five wheels.
Electricity follows the path of least resistance.
If the consumption of soft drinks and winning the lottery are correlated, then consuming soft drinks must cause people to win more lottery.
True
False
Consider the following data, where gross domestic product (GDP) values are measured in millions of dollars, to answer the following questions:
What is the value of nominal gross domestic product (GDP) in 2009?
$50,000 million
$500 million
$400 million
$600 million
$100 million
An index of the average prices of all goods and services throughout the economy is called
the inflation rate.
the GDP deflator.
the interest rate.
the consumer price index.
nominal GDP.
The consumption category includes all purchases
made by consumers.
of goods and services made by consumers.
of final goods and services made by consumers.
of final goods and services made by consumers except new houses.
of final goods and services made by consumers except new houses and new cars.
The four major expenditure categories of gross domestic product (GDP) are
consumption, imports, exports, and government purchases.
consumption, government purchases, taxes, and investment.
consumption, investment, government purchases, and net exports.
consumption, investment, government purchases, and stocks.
consumption, investment, taxes, and net exports.
Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the following questions:
The market value of pizza is
$25 million.
$10 million.
$2.5 million.
$250 million.
$750 million.
When an unemployed worker receives a payment from the government as a result of being unemployed, it is
included in the consumption category of GDP.
included in the investment category of GDP.
included in the government purchases category of GDP.
included in the net export category of GDP.
not included in any of the expenditure categories.
Country A has a gross domestic product (GDP) of $200,000 and a population of 1,000. Country B has a GDP of $400,000 and a population of 4,000. Which of the following is true?
The value of output is higher in country A.
The value of income is higher in country A.
The value of GDP per capita is higher in country A.
The value of GDP per capita is higher in country B.
The average living standard is higher in country B.
To determine living standards for the average person, we calculate
GDP.
per capita GDP.
the average level of prices in the country.
the length of time the average person is unemployed.
the growth rate of GDP.
When John buys new tires for his car it ________, and when Ford buys tires to put on new cars it ________.
does not count toward GDP; does not count toward GDP
does not count toward GDP; counts toward investment
counts toward consumption; counts toward investment
counts toward consumption; does not count toward GDP
counts toward investment; counts toward investment
Company X sells leather to company Y for $60,000. Company Y uses the leather to make shoes, selling them to consumers for $180,000. The total contribution to gross domestic product (GDP) is
$240,000.
$180,000.
$60,000.
$120,000.
$30,000.
Which of the following is included in the government purchases category of gross domestic product (GDP)?
Social Security payments
welfare payments
payments to people in the military
interest on the national debt
payments to unemployed workers
You bought a popular video game last year for $75 and sold it to a store this year for $20. The store sells the used game to a consumer for $40. When you sell your game to the store, how is this included in gross domestic product (GDP)?
as consumption
as investment
as government purchases
as net exports
This does not count in GDP.
Consider the following data, where gross domestic product (GDP) values are measured in millions of dollars, to answer the following questions:
What is the value of real gross domestic product (GDP) in 2010? Round to the nearest second decimal.
$58,427.20 million
$584.27 million
$520.00 million
$445.20 million
$657.20 million
If real gross domestic product (GDP) equals nominal GDP, then
output did not grow.
there was no inflation.
the current year is the base year.
the growth in output was equal to the growth in the price level.
the growth in output was greater than the growth in the price level.
Real gross domestic product (GDP) is GDP adjusted for changes in
overall employment levels.
overall price levels.
overall output levels.
the level of the interest rate.
the level of unemployment.
Inflation occurs when
all prices in the economy rise.
the prices of some goods rise and prices of some goods fall, but more goods have price increases than decreases.
the prices of some goods rise and prices of some goods fall, but fewer goods have price increases than decreases.
the overall level of prices rises.
all prices in the economy fall.
Refer to the figure when answering the following questions:
According to the figure, deflation was occurring
between 2003 and 2004.
from 1996 until 1999.
from 1996 through 1999 and between 2003 and 2004.
in none of the years shown.
in all of the years shown.
The value of the consumer price index (CPI) in 2011 was 229 compared to the base period’s, which will always have the value of
1
50
100
150
229
The agency that measures the consumer price index (CPI) in the United States is the
Bureau of Economic Analysis.
Bureau of Labor Statistics.
Economic Adjustment Agency.
Department of Commerce Price Index Office.
Department of Vital Statistics.
Typically the consumer price index (CPI) is calculated by checking the prices of
all goods in 38 geographic locations.
only consumer goods in all populated places in the United States (using the Census Bureau’s definition of a populated place).
about 8,000 goods in about 38 locations across the United States.
about 8,000 goods in about 38 locations in North America.
about 10,000 goods in about 75 locations in the United States.
According to the consumer price index (CPI), in a particular year, the price of gasoline rises in the United States by 22 percent; simultaneously, the price of all food items falls by 8 percent. Which statement is correct?
If gasoline prices rise in more of the 38 geographical locations than those in which it stays the same or falls, the food price changes are irrelevant.
This means that the price of gasoline must have increased in more of the 38 geographical locations where the CPI is measured and food prices must have fallen in more of those 38 locations.
Based solely on the information given, we cannot conclude what happened to the CPI.
This means that the price of gasoline and food rose in every geographic location where the CPI is measured.
This means that the price of gasoline and food rose in every place where gasoline and food were sold in the United States during that year.
Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been chosen as the base year. In 2002, the basket’s cost was $76.00; in 2004, the basket’s cost was $79.50; and in 2006, the basket’s cost was $85.00. The value of the CPI was
100 in 2002.
108 in 2004.
120 in 2006.
at least 118 in 2007.
no more than 90 in 2001.
The concept of a price index is that it is a(n)
measure of how the items included in the typical basket of goods have changed over time; it also includes price changes over time.
measure of how the items included in the typical basket of goods have changed over time, while holding price changes constant.
measure of how the prices included in the typical basket of goods have changed over time, holding the items in the consumption bundle constant.
index of how much gasoline prices have increased, because all prices follow the price of gasoline.
index of how much housing prices have changed, because housing is the most important item in the consumption bundle.
Consider a nation in which the price index was 150 last year and this year it is 130. Which statement is correct?
Inflation was 20 percent this year.
Deflation was 20 percent this year.
Housing prices must have fallen.
Inflation was 13.33 percent this year.
Deflation was 13.33 percent this year.
Refer to the figure to answer the following questions:
Based on the figure, one could correctly state that
typically, U.S. inflation was greater than E.U. inflation, with some very brief exceptions.
typically, E.U. inflation was greater than U.S. inflation, with some very brief exceptions.
there is no consistent relationship between U.S. and E.U. inflation.
typically, U.S. and E.U. inflation move together, but E.U. inflation had a much larger variance than that experienced in the United States.
typically, U.S. and E.U. inflation move in opposite directions and U.S. inflation had a much larger variance than that experienced by the European Union.
If the value of the consumer price index (CPI) in 2013 was 135 and the value of the CPI in 2012 was 117, we could correctly say that the
typical basket of goods was about 18 percent more expensive in 2013 than in 2012.
typical basket of goods was about 18 percent less expensive in 2013 than in 2012.
typical basket of goods was about 15.4 percent more expensive in 2013 than in 2012.
average price of all items included in gross domestic product (GDP) was about 18 percent more expensive in 2013 than in 2012.
average price of all items included in gross domestic product (GDP) was about 15.4 percent more expensive in 2013 than in 2012.
If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32, and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99, then the inflation-adjusted price of Oreos today is
almost exactly the same (within 10 percent) as in 1922.
much higher (twice or more) than in 1922.
much lower (half or less) than in 1922.
a bit higher than in 1922.
a bit lower than in 1922.
One improvement of the chained consumer price index (CPI) over the traditional CPI is that the
chained CPI more quickly takes into account new goods.
chained CPI accounts for substitution between goods.
chained CPI is “progressive,” whereas the traditional CPI is “regressive.”
traditional CPI accounts only for the prices of goods, whereas, the chained CPI accounts for the prices of services, as well.
chained CPI more easily accounts for deflation.
If cheeseburgers become more expensive and consumers switch their purchases away from cheeseburgers but the consumer price index (CPI) still assumes they buy the same amount, then
the CPI will reflect upward bias.
the CPI will reflect downward bias.
consumers will experience money illusion.
consumers will experience a price confusion problem.
deflation will occur because consumers no longer buy cheeseburgers.
Inflation is occurring in a nation; the implication(s) of this is/are
that both real and nominal wages are rising.
that both real and nominal wages are falling.
almost none, because most wages increase at about the same rate as inflation.
that holding nominal wages constant, the real wage would rise.
that holding nominal wages constant, the real wage would fall.
At full employment, a society produces
somewhere within its production possibilities frontier (PPF).
somewhere outside its PPF.
at the origin on its PPF graph.
on its PPF.
only one good
Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can only increase the production of one good by
also increasing the production of the second good.
decreasing the production of the second good.
increasing the price of the second good.
decreasing the price of the second good.
reducing the resources available for production.
Refer to the figure to answer the following questions.
Which point in the corresponding figure represents a combination of smoothies and milk shakes that society CANNOT currently produce?
point A
point B
point C
point D
point E
Suppose someone is studying a production possibilities frontier (PPF) that has a bowed-out shape relative to the origin. What causes this shape?
economic growth
the law of increasing relative cost
absolute advantage
normative economics
more resources
The movie Saving Private Ryan is about a military mission to find and recover a particular soldier—Private Ryan. The movie is predominantly about how much was given up in an effort to save this one particular soldier. The main economic theme of the movie is
absolute advantage.
opportunity cost.
normative analysis.
comparative advantage.
positive advantage.
Mikhail and Stefan are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the following questions.
What is Mikhail’s opportunity cost of a sculpture?
2 paintings
1/2 painting
3 paintings
1/3 sculpture
1/2 sculpture
Mikhail and Stefan are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the following questions.
Based on the table, does Mikhail or Stefan have a comparative advantage?
Yes, Mikhail has a comparative advantage in both sculptures and paintings.
Yes, Stefan has a comparative advantage in both sculptures and paintings.
Yes, Mikhail has a comparative advantage in paintings, and Stefan has a comparative advantage in sculptures.
Yes, Mikhail has a comparative advantage in sculptures, and Stefan has a comparative advantage in paintings.
No, neither has a comparative advantage.
Refer to the figure for the following questions.
The opportunity cost of increasing production of blueberry pies from 7 to 11 pies is ________ pies.
2 blueberry
14 apple
7 blueberry
4 apple
2 apple
An increase in the labor force would be reflected in a society’s production possibilities frontier (PPF) by an
increase in opportunity cost.
inward shift of the PPF.
outward shift of the PPF.
outward rotation along the x axis.
outward rotation along the y axis.
Refer to the figure to answer the following questions.
Which of the following represents a point that is unattainable with current resources and technology?
point B
point C
point D
point E
point F
Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the following questions.
Suppose the plow is invented and agricultural productivity greatly increases. Which of the following graphs best depicts how this would affect the PPF?
Specialization and trade allow individuals to
consume outside their own production possibilities frontiers (PPFs).
shift their PPFs outward.
produce more goods with less technology.
eliminate scarcity.
produce fewer goods with less technology.
When one producer can create more of a good than another producer using the same quantity of resources, the first producer has
a zero-sum game.
gains from trade.
an absolute advantage.
a comparative advantage.
increasing relative costs.
Someone has a comparative advantage in producing a good whenever
one enjoys producing that good.
one can produce more of the good than someone else using the same resources.
one’s opportunity cost is constant.
one’s opportunity cost of producing that good is lower than that of other producers.
one has specific training in the production of that good.
For both parties to benefit from specialization and trade, the trading parties must agree on
a price somewhere between their opportunity costs of production.
a plan not to trade with other parties.
who has the absolute advantage in production.
the appropriate level of investment for the future.
the source of comparative advantage.
The most recent wave of globalization is mainly fueled by
population growth
advances in transportation and communication technologies
discovery of natural resources like oil and minerals
increased production of goods and services
all of the above
Which of the following refers to an increase in economic transactions between countries?
Globalization
Internationalization
Privatization
Liberalization
Liberalization does not include
liberal policies
lowering import tax rate
quota system
removing trade barriers
The KOF Globalization index is a/n/the measure of globalization.
efficient
best
highest
bad
proxy
Social Globalization includes the following EXCEPT
Embassies
Patent applications
Movies
Social Media
Tourism
Consider the following graph below to answer the next question.
In the figure above, between 1970 and 2000, Economic Globalization
increased by twenty percent
did not change at all
Decreased by ten percent
increased by more than ten points
Consider the top 10 globalized countries table below to answer the next question.
Based on the table, which country would be worse off if there was no Economic globalization?
Netherlands
Estonia
Hungary
Not enough information
What is one good effect of globalization for the environment?
cheaper goods and services
over dependence on cash crops
environmental management
deforestation
increased emissions
Globalization increases income inequality within a country.
True
False
Why do multinational companies engage in transfer pricing?
to follow global rules as a multinational company
to evade taxes
to smooth the supply of goods and services
to reduce the costs of inputs required for production
help customers with discount coupons
Currency ________ occurs when a currency increases in value relative to other currencies.
devaluation
dismissal
depreciation
appreciation
representation
The following table shows the number of U.S. dollars required to buy one Mexican peso and the number of U.S. dollars required to buy one Japanese yen between June 1, 2016, and September 1, 2016. Use this table to answer the following questions.
On August 1, 2016, Carlos paid 800,000 Japanese yen for a solid gold iPhone case in Fukushima, Japan. Because he only had Mexican pesos, he needed to exchange his pesos at a nearby bank in order to get the 800,000 yen he used to pay for the iPhone case. The bank is able to buy and sell U.S. dollars, Mexican pesos, and Japanese yen at the exchange rates shown in the table. Approximately how much did the iPhone case cost Carlos in terms of Mexican pesos?
8,584
11,333
146,396
171,118
4,371,717
When demand for Canada’s exports rises,
demand for the Canadian dollar in the foreign exchange market falls.
demand for the Canadian dollar in the foreign exchange market rises.
the Canadian dollar depreciates against all other currencies.
supply of the Canadian dollar in the foreign exchange market falls.
supply of the Canadian dollar in the foreign exchange market rises.
The claim that the quantity of euros demanded by U.S. consumers will fall when the price of euros in terms of U.S. dollars rises is best referred to as the
law of increasing marginal costs.
hot-hand fallacy.
law of supply.
exchange rate–inflation fallacy.
law of demand.
The following table shows the number of U.S. dollars required to buy one British pound between February 1, 2016, and September 1, 2016. Use this table to answer the following questions.
On February 1, 2016, the price of a skateboard at JJ’s Beach Shop was 120 U.S. dollars in La Jolla, California. On April 1, 2016, the price of a skateboard was 130 U.S. dollars. Using the exchange rates in the table, between February 1, 2016, and April 1, 2016, the price of a skateboard at JJ’s Beach Shop increased by approximately ________ in terms of U.S. dollars and ________ in terms of British pounds. (Round the percentage changes to the first decimal point.)
7.7 percent; 2.3 percent
7.7 percent; 12.8 percent
8.3 percent; 2.3 percent
8.3 percent; 8.1 percent
8.3 percent; 7.7 percent
The following table shows the number of U.S. dollars required to buy one Mexican peso and the number of U.S. dollars required to buy one Japanese yen between June 1, 2016, and September 1, 2016. Use this table to answer the following questions.
Between June 1, 2016, and July 1, 2016, the number of U.S. goods exported to Mexico likely
increased because U.S. goods became more expensive to consumers in Mexico.
decreased because U.S. goods became more expensive to consumers in Mexico.
increased because U.S. goods became less expensive to consumers in Mexico.
decreased because U.S. goods became less expensive to consumers in Mexico.
did not change because exchange rates do not affect trade.
The arrows in Figures A–D represent possible movements of the exchange rate (euros per U.S. dollar) and the quantity of U.S. dollars buyers are willing and able to buy. Use these figures to answer the following questions.
A depreciation of the euro against the U.S. dollar is represented by Figure ________, and a depreciation of the U.S. dollar against the euro is represented by Figure ________.
A; C
C; A
B; D
D; B
A; D
If a currency becomes ________ valuable in world markets, then its price falls, and this decrease is called a(n) ________.
more; approximation
less; depreciation
less; appreciation
more; depreciation
more; appreciation
The following table shows the number of various foreign currencies required to buy a U.S. dollar in April 2011 and April 2016. Use this table to answer the following questions.
In April 2011, a haircut in Japan cost 2,000 yen. Using the exchange rates in the above table, that haircut cost approximately ________ U.S. dollars or ________ euros.
24.04; 16.62
20.08; 19.03
203,080.00; 189,140.36
21.15; 2,147.40
9.82; 10.54
The following table shows the number of various foreign currencies required to buy a U.S. dollar in April 2011 and April 2016. Use this table to answer the following questions.
Between April 2011 and April 2016, the U.S. dollar depreciated against the
euro.
Chinese yuan.
Indian rupee
Japanese yen.
British pound
