Which statement is false about the circular-flow diagram?
A. Households are the primary demanders of goods and services.
B. Firms are the primary suppliers of goods and services.
C. Money flows from households to firms as households offer factors
of production for sale.
D. Money flows in the direction opposite to goods and services and
factors of pro-duction. - ANSWER -C
The total value of all final goods and services produced in a given
year, calculated with the prices current in the year in which the output
is produced, is: A. real GDP. B. nominal GDP.
C. net exports.
D. consumption spending. - ANSWER -B
Stock in a company is:
A. a share of ownership of the company.
,B. an IOU that pays interest.
C. a portion of a firm's profits paid to shareholders.
D. a component of private savings. - ANSWER -A
Technological improvements will:
A. leave the production possibility frontier unchanged.
B. shift the production possibility frontier inward.
C. shift the production possibility frontier outward.
D. necessarily lead to increased unemployment. - ANSWER -C
Goods and services that are produced in a foreign country
but consumed domestically are called: A. exports. B.
imports.
C. investment goods.
D. consumer durables. - ANSWER -B
If an economy is producing a level of output that is on its production
possibility frontier, the economy has: A. idle resources.
,B. idle resources but is using resources efficiently.
C. no idle resources but is using resources inefficiently.
D. no idle resources and is using resources efficiently. - ANSWER -D
Which statement is normative?
A. Government has grown too large and should be reduced.
B. The rate of inflation has increased.
C. Government is subject to the same rules as all other institutions.
D. The money supply grew by 3% last year. - ANSWER -A
The point on a business-cycle when real GDP stops falling and
begins rising is a(n): A. peak. B. expansion.
C. trough.
D. recession. - ANSWER -C
In the circular-flow diagram, firms: A.
demand goods.
B. demand services.
, C. supply resources.
D. demand resources. - ANSWER -D
Who wrote The Wealth of Nations, a book that many credit with
establishing economics as a discipline?
A. Karl Marx
B. David Ricardo
C. Adam Smith
D. John Maynard Keynes - ANSWER -C
Which two types of policy are considered to be macroeconomic?
A. monetary and fiscal policy
B. monetary and regulation policy
C. fiscal and regulation policy
D. fiscal policy and price controls - ANSWER -A
If the value of beach-front property in Beach City decreases, the
people of BeachCity will likely spend__________, causing incomes in
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