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Final
Name: MATTHEW DICE Attempt: 1 / 1 Out of: 300
Started: December 9, 2007 Finished: December 9, 2007 Time spent: 1 hr, 45
4:49pm 6:34pm min., 36 sec.
Student finished 3 hr, 14 min., 24 sec. ahead of the 300 min. time limit.

Question 1 (6 points)
Economics is
Student response: Student Answer Choices
Response
a. a hard science that studies choices as
agents cope with scarcity.
b a social science that studies choices as
. agents cope with scarcity.
c. the decisions of households and firms
aggregated across the economy.
d the decisions of individual households
. and firms.
e. the study of the global financial market.

Score: 6/6

Question 2 (6 points)
Each of the following is a factor of production except
Student response: Student Answer Choices
Response
a. entrepreneurial ability.
b. a farmer.
c. water.
d. the government.
e. machinery in a factory.

Score: 0/6

Question 3 (6 points)
"Inflation is currently 4 percent in the United States." This statement is an example of
Student response: Student Answer Choices
Response
a. microeconomics.
b. macroeconomics.
c. the fallacy of composition.
d. a positive statement.
e. a normative statement.

Score: 6/6

Question 4 (6 points)
A production possibilities curve shows that more of one type of good can be produced
only by
Student response: Student Answer Choices
Response
a. increasing the quantity of other types of
goods that are produced.
b increasing the quantity of both types of
. goods that are produced.
c. decreasing employment.
d government intervention.
.
e. decreasing the quantity of other types of
goods that are produced.

Score: 6/6

Question 5 (6 points)
The opportunity cost of studying for economics tonight at the library may not include
Student response: Student Answer Choices
Response
a. the good time you could be having by
going out with your friends.
b time that you could be spending studying
. for your history class.
c. lost sleep.
d time you could be spending listening to
. music or watching television.
e. the higher grade you might earn on the
next economics test.

Score: 6/6

Question 6 (6 points)
What accounts for specialization?
Student response: Student Answer Choices
Response
a. People specialize where opportunity costs
are at a maximum.
b People specialize where their opportunity
. costs are lowest.
c. People do not specialize.
d People specialize in the activity that pays
. the highest wage.
e. People specialize in the activity that they
enjoy the most, no matter what the salary
is.

Score: 0/6

Question 7 (6 points)
In a market-based economy, society's scarce resources are allocated in such a way as to
Student response: Student Answer Choices
Response
a. guarantee that all members of society are
treated fairly.
b assure that all members of society always
. get what they want.
c. provide incentives for quantities of scarce
goods to increase.
d make certain that all members of society
. always get what they need.
e. guarantee that there will never be any
shortages of any good or service.
Score: 6/6

Question 8 (6 points)
Barter requires a double coincidence of wants. This means that
Student response: Student Answer Choices
Response
a. individual A and individual B both want
the same commodity.
b individual A and individual B both want
. money.
c. if individuals A and B are to exchange a
commodity, A must want what B has and
B must want what B has.
d if individuals A and B are to exchange a
. commodity, B must want what B has and
A must want what A has.
e. if individuals A and B are to exchange a
commodity, A must want what B has and
B must want what A has.

Score: 6/6

Question 9 (6 points)
According to the law of demand, if the price of movie rentals decreased, ceteris paribus,
Student response: Student Answer Choices
Response
a. the demand for movie rentals would
increase.
b the quantity demanded of movie rentals
. would decrease.
c. the quantity demanded of movie rentals
would increase.
d the demand for movie rentals would
. decrease.
e. the quantity demanded of movie rentals
would not change.

Score: 6/6

Question 10 (6 points)
Which of the following will not cause an outward shift in the demand curve for steaks at
the supermarket?
Student response: Student Answer Choices
Response
a. A report by the American Medical
Association concluding that the
consumption of a 4-ounce steak at least
three times a week reduces the risk of
cardiovascular disease.
b A doubling of the price of chicken
.
c. The price of steaks is cut in half.
d A doubling of income levels
.
e. The expectation that the price of steaks
will double within two months

Score: 0/6

Question 11 (6 points)
According to the law of supply, if the price of electric ranges increased, everything else
held constant,
Student response: Student Answer Choices
Response
a. the supply of electric ranges would
decrease.
b the demand for gas ranges would
. decrease.
c. the demand for electric ranges would
increase.
d the supply of dishwashers would increase.
.
e. the quantity supplied of electric ranges
would increase.

Score: 0/6

Question 12 (6 points)
When a shortage exists in a market,
Student response: Student Answer Choices
Response
a. the actual price is lower than the
equilibrium price.
b there is an excess quantity supplied.
.
c. consumers increase the quantities they are
willing and able to purchase.
d suppliers will quit producing until the
. shortage disappears.
e. the actual price is greater than the
equilibrium price.

Score: 6/6

Question 13 (6 points)
The interaction of demand and supply determines the price and quantity in that market.
Student response: Student Answer Choices
Response
a. True.
b. False.

Score: 6/6

Question 14 (6 points)
In economics, the invisible hand is not
Student response: Student Answer Choices
Response
a. the self-interest that drives firms to
provide what consumers want to buy.
b what leads consumers to use their limited
. incomes to buy the goods and services
that give them the most satisfaction.
c. what induces resource owners to supply
resource services where they are most
highly valued.
d a term attributed to Adam Smith.
.
e. government intervention in the economy.
Score: 6/6

Question 15 (6 points)
The circular flow model
Student response: Student Answer Choices
Response
a. explains the effect of government
imposed price controls.
b demonstrates the relationship between
. agents, markets, and flows.
c. focuses on economic policy.
d illustrates the consequences of
. minimum-wage legislation.
e. ignores the role of international trade.

Score: 6/6

Question 16 (6 points)
When Ford Motor Company buys door locks to put on the vehicles it produces, the door
locks are considered
Student response: Student Answer Choices
Response
a. a final good.
b an intermediate good.
.
c. a resale good.
d an underground economy good.
.
e. a good that provides no value in the
production process.

Score: 6/6

Question 17 (6 points)
GDP does not include
Student response: Student Answer Choices
Response
a. the resale of used textbooks.
b the purchase of a new Porsche.
.
c. the sale of meat at the local grocery store.
d the government purchase of an F-14
. fighter plane.
e. the salary paid to a company CEO.

Score: 6/6

Question 18 (6 points)
Gross domestic product is the sum total of
Student response: Student Answer Choices
Response
a. consumption spending, investment
spending, government purchases, and net
exports.
b the value of output produced at all stages
. of production, including intermediate
goods.
c. consumption spending, saving,
investment, and net exports.
d consumption spending, saving,
. investment, government spending, taxes,
and net exports.
e. the value of all monetary transactions in
the economy.

Score: 6/6

Question 19 (6 points)
Real GDP is calculated in constant dollars.
Student response: Student Answer Choices
Response
a. True.
b. False.

Score: 6/6
Question 20 (6 points)
Real GDP measures
Student response: Student Answer Choices
Response
a. personal income adjusted for taxes paid to
the government.
b national output adjusted for changes in
. the quality of products.
c. national output adjusted for price level
changes.
d nominal output adjusted for changes in
. national income because of economic
booms.
e. national output adjusted for
unemployment.

Score: 6/6

Question 21 (6 points)
The foreign exchange market
Student response: Student Answer Choices
Response
a. is located at the New York Stock
Exchange.
b depends on the actual movement of
. currency.
c. is based exclusively on the exchange of
bank notes.
d is a global market in which
. foreign-currency-denominated deposits
are traded.
e. is a currency exchange system limited to
tourism and illegal transactions.

Score: 6/6

Question 22 (6 points)
The four phases of a business cycle are peak, recession, trough, expansion.
Student response: Student Answer Choices
Response
a. True.
b. False.

Score: 6/6

Question 23 (6 points)
The Labor Force consists of
Student response: Student Answer Choices
Response
a. Underemployed workers.
b Retired citizens.
.
c. the number of employed plus the number
of unemployed in the economy.
d The underground economy.
.
e. Those who have given up looking for
work.

Score: 6/6

Question 24 (6 points)
To be considered unemployed a person must
Student response: Student Answer Choices
Response
a. be a volunteer at a non-profit
organization.
b be working at the time.
.
c. not be working currently, but is actively
seeking employment.
d have given looking for work.
.
e. be in the unpaid labor force.

Score: 6/6

Question 25 (6 points)
The natural rate of unemployment ranges between 4% to 6% and includes only the sum
of frictional and structural unemployment in an economy.
Student response: Student Answer Choices
Response
a. True.
b. False.

Score: 0/6

Question 26 (6 points)
A person who loses their job as a Christmas present wrapper after the Christmas season
ends is an example of
Student response: Student Answer Choices
Response
a. seasonal unemployment.
b. a discouraged worker.
c. a disgruntled worker.
d. a cyclically unemployed worker.
e. an underemployed worker.

Score: 6/6

Question 27 (6 points)
Ford Motor Company workers in a Michigan plant that are laid off due to a reduction in
aggregate demand in the economy are considered
Student response: Student Answer Choices
Response
a. discouraged workers.
b. seasonal workers.
c. frictionally unemployed.
d. structurally unemployed.
e. cyclically unemployed.

Score: 6/6

Question 28 (6 points)
US Copper mining and smelting workers that are laid off when the company moves its
production South across the border to Mexico are considered
Student response: Student Answer Choices
Response
a. discouraged workers.
b. seasonal workers.
c. frictionally unemployed.
d. structurally unemployed.
e. cyclically unemployed.

Score: 6/6

Question 29 (6 points)
During periods of inflation,
Student response: Student Answer Choices
Response
a. everyone's real income falls.
b those people who have fixed incomes
. benefit.
c. those people whose real income rises
faster than the general price level benefit.
d those people who enter long term wage
. agreements benefit.
e. those people who hold a lot of cash
benefit.

Score: 0/6

Question 30 (6 points)
Cost-push inflation results when the economy experiences a decrease in the availability
of supply and/or the increase in the price of a resource that is significant in the production
process.
Student response: Student Answer Choices
Response
a. True.
b. False.

Score: 6/6
Question 31 (6 points)
The OPEC oil embargo of the US in the 1970s resulted in
Student response: Student Answer Choices
Response
a. a shift outward of the PPF curve.
b a shift outward of the Aggregate Demand
. (AD) curve.
c. a shift outward of the Aggregate Supply
(AS) curve.
d Demand-pull inflation.
.
e. Cost-push inflation.

Score: 6/6

Question 32 (6 points)
Other things equal, a natural disaster that decreases the value of assets owned by a
household will lead to
Student response: Student Answer Choices
Response
a. a decrease in aggregate production.
b a decrease in aggregate demand.
.
c. an increase in international trade.
d an increase in aggregate expenditures.
.
e. a movement down along the aggregate
demand curve.

Score: 6/6

Question 33 (6 points)
Because demand-pull inflation is caused by an increase in the demand for output, in
general, most economists say that this type of inflation is actually good for an economy
because it reflects a growth and expansion in the economy.
Student response: Student Answer Choices
Response
a. True.
b. False.

Score: 6/6

Question 34 (6 points)
Which of the following occurs when the price level falls?
Student response: Student Answer Choices
Response
a. The purchasing power of money
increases.
b The purchasing power of money remains
. the same.
c. The purchasing power of money falls.
d All of the above are correct.
.
e. None of the above are correct.

Score: 6/6

Question 35 (6 points)
Optimistic consumer expectations about the economy can be illustrated by
Student response: Student Answer Choices
Response
a. a movement to the right along the
aggregate demand curve.
b a rightward shift of the aggregate demand
. curve.
c. a leftward shift of the aggregate demand
curve.
d a movement to the left along the
. aggregate demand curve.
e. a flatter slope of the aggregate demand
curve.

Score: 0/6

Question 36 (6 points)
The consumption function illustrates that
Student response: Student Answer Choices
Response
a. saving increases as disposable income
decreases.
b consumption increases as saving
. increases.
c. consumption increases as disposable
income increases.
d consumption increases as disposable
. income decreases.
e. consumption increases as investment
increases.

Score: 6/6

Question 37 (6 points)
The marginal propensity to save equals
Student response: Student Answer Choices
Response
a. the change in disposable income divided
by the change in saving.
b the change in saving minus the change in
. disposable income.
c. saving divided by disposable income.
d 1 minus the marginal propensity to
. consume.
e. 1 plus the marginal propensity to
consume.

Score: 0/6

Question 38 (6 points)
The multiplier effect means that a given change in autonomous expenditures
Student response: Student Answer Choices
Response
a. will change equilibrium income by an
amount greater than the initial change in
autonomous expenditures.
b will change equilibrium by an amount
. less than the initial change in autonomous
expenditures.
c. will change equilibrium income by an
amount equal to the initial change in
autonomous expenditures.
d will change the MPC by a multiple of the
. initial change in autonomous
expenditures.
e. will change the MPS by a multiple of the
initial change in autonomous
expenditures.

Score: 6/6

Question 39 (6 points)
Fiscal policy refers to
Student response: Student Answer Choices
Response
a. the use of fines to penalize unfair
business practices.
b the purchase and sale of U.S. government
. securities to regulate the money supply.
c. the adjustment of the GDP for inflation.
d a policy action by Congress to overrule
. unpopular budget cuts by the president.
e. the use of government spending and
taxation to influence the level of
economic growth and inflation.

Score: 6/6

Question 40 (6 points)
If the government wants to redirect the economy onto an expansionary path by imposing
expansionary policy to close a GDP gap, it should
Student response: Student Answer Choices
Response
a. raise government spending, thereby
shifting the aggregate demand curve to
the left.
b lower taxes, thereby shifting the
. aggregate demand curve to the right.
c. lower government spending, thereby
shifting the aggregate supply curve to the
left.
d raise taxes, thereby shifting the aggregate
. supply curve to the right.
e. raise both government spending and taxes
by the same amount, thereby shifting the
aggregate demand curve to the left.

Score: 6/6

Question 41 (6 points)
Which of the following is the most liquid asset in the U.S. economy?
Student response: Student Answer Choices
Response
a. U.S. Treasury bonds.
b. Savings accounts.
c. Demand deposits.
d. U.S. currency.
e. Travelers' checks.

Score: 6/6

Question 42 (6 points)
The money on the Island of Yap
Student response: Student Answer Choices
Response
a. has its value based upon the stone's
history.
b are large, round, limestone stones from
. other islands.
c. becomes more valuable as stones are
destroyed or leave the island to become
part of museum exhibits.
d experienced inflation when the Irish
. sailor, David O'Keefe helped the Yapese
to obtain stones using more efficient
techniques increasing the money supply
rapidly.
e. All of the above are correct.

Score: 6/6

Question 43 (6 points)
M2 includes all the following except
Student response: Student Answer Choices
Response
a. demand deposits.
b. U.S. government securities.
c. savings deposits.
d. money market deposits.
e. certificates of deposit.

Score: 6/6

Question 44 (6 points)
Which of the following is not a function of the Fed?
Student response: Student Answer Choices
Response
a. Printing money.
b Making loans to banks.
.
c. Regulating the money supply.
d Providing currency.
.
e. Acting as a banker for the federal
government.

Score: 6/6

Question 45 (6 points)
When the Fed buys and sells bonds to control bank reserves and the money supply it
performs operations known as
Student response: Student Answer Choices
Response
a. offer rate operations.
b. interest bearing operations.
c. open market operations.
d. bond yield operations.
e. government bond operations.

Score: 6/6

Question 46 (6 points)
Countries specialize their production and trade with other countries in accordance with
Student response: Student Answer Choices
Response
a. comparative advantage.
b. absolute advantage.
c. geographic superiority.
d. political advantage.
e. transportation advantages.

Score: 6/6

Question 47 (6 points)
In the US, a worker can produce 4 tons of coal or 2 tons of paper. In Canada, a worker
can produce 6 tons of coal or 1 ton of paper. What is the most the United States is willing
to pay for 1 ton of coal?
Student response: Student Answer Choices
Response
a. 1/6 ton of paper.
b. 1/2 ton of paper.
c. 4/5 ton of paper.
d. 6 tons of paper.
e. None of the above.

Score: 6/6

Question 48 (6 points)
According to the Leontief Paradox resolution,
Student response: Student Answer Choices
Response
a. The US should only import goods and
services.
b The US should export only low-skilled
. labor-intensive goods and services.
c. The US should export only high-skilled
labor-intensive goods and services.
d The US should export low-skilled
. labor-intensive and capital-intensive
goods and services.
e. The US should export high-skilled
labor-intensive and capital-intensive
goods and services.

Score: 0/6

Question 49 (6 points)
According to the Vernon Product Cycle Theory,
Student response: Student Answer Choices
Response
a. Outsourcing of production to
less-developed economies is a natural part
of a product's life cycle.
b Costs are less significant to the firm in the
. mature stage of the product's life cycle.
c. Research and development (R&D) are not
significant to advanced economy firms.
d Standardization of the product occurs
. when the product is produced and
consumed domestically only.
e. Products can avoid becoming obsolete.

Score: 6/6

Question 50 (6 points)
An example of protectionist policy is
Student response: Student Answer Choices
Response
a. The Greek governments imposing a ban
on banana imports.
b NAFTA opening trade between Canada,
. US, and Mexico.
c. European Union.
d GATT reducing tariffs and opening trade
. in the global economy after WWII.
e. The US government opening trade with
China.

Score: 6/6

Total score: 246 / 300 = 82.0%

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