ECON 2000 Chapter Notes -Capital Accumulation, Investment Goods, Production Function
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Q1. Import quotas are a. methods for reducing imports by limiting the quantity of goods that can enter the country each year b. voluntary agreements by exporting countries to limit sales in a foreign country c. subsidies to foreign producers to encourage them to trade d. none of these Q2. Devices that set up multiple exchange rates between the currencies of two nations are known as a. tariff quotas b. export subsidies c. exchange controls d. variable currencies Q3. The international organization that replaced the General Agreement on Tariffs and Trade (GATT) is the a. World Bank b. Export-Import Bank c. World Trade Organization d. International Monetary Fund Q4. Dumping refers to the practice of a. flooding a foreign market with large quantities of a good b. selling a product abroad at a price below cost or below the domestic price c. exporting inexpensive products to foreign countries d. selling surplus goods abroad with counterfeit brand names Q5. Countries engage in trade because a. the exchange is mutually beneficial b. governments force industries to exchange c. international law dictates that exchange must take place d. all of these Q6. According to the U. S. Department of Commerce, all persons, unrelated or related, who occupy a housing unit comprise a. a family unit b. a household c. an extended family unit d. group living Q7. A country with an equal distribution of income will have a higher standard of living than a country with a more unequal distribution of income. a. true b. false Q8. Welfare caseloads tend to fluctuate with a. business cycles b. weather c. stock markets d. minimum wage rates Q9. The official poverty threshold line is adjusted annually for a. income taxes b. inflation c. average household size d. average family size Q10. For many welfare recipients, taking a job reduces income. a. true b. false Q11. It is true that a stable economy occurs when a. total injections into the circular flow are large enough to make up for government tax leakages b. total leakages from the circular flow are great enough to offset the effects of government spending c. total planned leakages from the circular flow are exactly equal to total planned injections into the circular flow d. actual saving is equal to planned investment Q12. The measure of income received by persons from all sources is known as a. personal income b. national income c. gross domestic product d. net national product Q13. Discharges of chemicals from a paper plant that pollute a nearby river represent an example of a. internal costs b. the underground economy c. social costs d. transfer costs |
A bowed out PPF reflects which of the following ideas?
i.increasing opportunity cost
ii. resources are not equally productive in all activities
iii. prices of goods increase over time
I only |
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I and iii |
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ii and iii |
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I and ii |
1 point
QUESTION 2
With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.
can; cannot |
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cannot; can |
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cannot; cannot |
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can; can |
1 point
QUESTION 3
If the production possibilities frontier between two goods is a straight line, then the
the line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. |
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opportunity cost is not a ratio. |
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increasing opportunity costs. |
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resources are equally productive in both goods. |
1 point
QUESTION 4
As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?
It might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
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It decreases. |
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It increases. |
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It remains constant. |
1 point
QUESTION 5
"Comparative advantage" is defined as a situation in which one person can produce
more of a good than another person. |
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a good for a lower dollar cost than another person. |
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a good for a lower opportunity cost than another person. |
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more of all goods than another person. |
1 point
QUESTION 6
When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost
increases. |
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decreases. |
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might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
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remains constant. |
1 point
QUESTION 7
A bowed out production possibility frontier shows that the
opportunity cost relationship is linear. |
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the opportunity cost of a good is constant as more of the good is produced. |
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the opportunity cost of a good increase as more of the good is produced. |
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the opportunity cost of a good decrease as more of the good is produced. |
1 point
QUESTION 8
Which of the following statements is correct?
The production possibilities frontier shows that there are no limits to production. |
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Any point on or within the PPF is production efficient. |
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If capital is idle, the economy is producing at its full potential. |
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A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. |
1 point
QUESTION 9
A major earthquake occurs in the central part of the United States. What impact would this have on the nation's production possibilities frontier and why?
A tradeoff would occur to replace the resources and goods destroyed. |
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It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. |
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It would shift outward because unemployment would be reduced. |
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Nothing would happen because the nation would still have the same capabilities. |
1 point
QUESTION 10
When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods
must increase. |
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must decrease. |
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must remain the same. |
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must change but they might increase or decrease. |
1 point
QUESTION 11
Moving along a country's PPF, a reasonable opportunity costs increase is that
unemployment increases as a country produce more and more of one good. |
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unemployment decreases as a country produces more and more of one good. |
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some resources are better suited for producing one good rather than the other. |
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technology declines as a country produce more and more of one good. |
1 point
QUESTION 12
A reason the production possibilities frontier exists is
scarcity of resources and unlimited technology. |
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unemployment. |
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scarcity of resources. |
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unlimited resources and technology. |
1 point
QUESTION 13
Moving from one point to another on a production possibilities frontier implies
increasing the production of one good and decreasing the production of another. |
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increasing the production of both goods. |
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decreasing the production of both goods. |
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holding the production levels of both goods constant. |
1 point
QUESTION 14
Specialization and trade make a country better off because with trade the country can consume at a point
outside its production possibilities frontier. |
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on its trading partner's production possibilities frontier. |
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inside its production possibilities frontier. |
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on its production possibilities frontier. |
1 point
QUESTION 15
The production possibilities frontier is the
the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. |
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the minimum output that can be produced when resources are used inefficiently. |
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the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. |
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maximum output that can be produced at an opportunity cost of zero. |
1 point
QUESTION 16
The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.
decreased current consumption; decreased future consumption |
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decreased current consumption; increased future consumption |
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increased current consumption; increased future consumption |
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increased current consumption; decreased future consumption |
1 point
QUESTION 17
In terms of a nation's production possibilities frontier, what impact does international trade have?
International trade shifts the nation's production possibilities frontier outward. |
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International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. |
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International trade shifts the nation's production possibilities frontier inward. |
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International trade allows the nation to consume at a point outside its production possibilities frontier. |
1 point
QUESTION 18
The production possibilities frontier illustrates the
goods and services that people want. |
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limits to people's wants. |
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resources the economy possesses, but not it is the level of technology. |
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maximum combinations of goods and services that can be produced. |
1 point
QUESTION 19
As we move along the production possibilities frontier,
the possibilities of tradeoffs diminish. |
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the production of one good increases as the production of the other good decreases. |
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more of both goods can be produced. |
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a tradeoff is not possible because nations need all goods. |
1 point
QUESTION 20
What is the opportunity cost of economic growth?
Eliminate scarcity |
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Land. |
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Capital goods. |
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Consumption of goods. |
1 point
QUESTION 21
Which of the following statements is correct?
i.As the economy grows, the opportunity costs of economic growth decrease.
ii. Economic growth has no opportunity cost.
iii. The opportunity cost of economic growth is current consumption forgone.
ii only |
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iii only |
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I only |
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I and iii |
1 point
QUESTION 22
Does economic growth depend upon which of the following?
i. Increasing the quantity of labor.
ii. Lowering the prices of goods and services.
iii. Advancing technology.
ii only. |
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I only. |
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I and iii. |
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iii only. |
1 point
QUESTION 23
When drawing a production possibilities frontier, which of the following is held constant?
the amount of money in the economy |
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the prices of goods and services |
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the quantity of the goods and services that are produced |
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the available factors of production and the state of technology |
1 point
QUESTION 24
To increase its economic growth, a nation should
encourage spending on goods and services. |
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increase in current consumption. |
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encourage education because that increases the quality of labor. |
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limit the number of people in college because they produce nothing. |
1 point
QUESTION 25
The opportunity cost of one more slice of pizza in terms of sodas is the
some pizza slices we have to give up to get one extra soda. |
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the total number of sodas that we have divided by the total number of pizza slices that we have. |
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the total number of pizza slices that we have divided by the total number of sodas that we have. |
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the number of sodas we have to give up to get one extra pizza slice. |