1.
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From the viewpoint of economics, your college education can be thought of as an investment in a factor of production. Which factor is most appropriate?
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| natural resources |
| labor |
| physical capital |
| human capital |
| entrepreneurship |
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2.
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A Production Possibilities Curve (PPC) illustrates the concept of scarcity. Which item will be most likely to result in a shift of the PPC outward, indicating the ability to produce more goods?
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| an increase in population |
| a decrease in the price of steel |
| reducing the federal debt |
| signing a trade agreement with China |
| making more consumption goods |
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3.
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Which of the following questions is outside the scope of economics?
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| What is the likely impact of the transfer of Hong Kong back to the Chinese? |
| When a paper mill closes in a small southern town, who is most likely to be out of work for a long time? |
| When you graduate from college, how might you best go about choosing a job? |
| How should society balance the needs of the environment against the needs of industry? |
| None of the above; all are within the scope of economic study. |
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4.
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The study of economics is generally divided into two major sub-divisions: macroeconomics and microeconomics. Which statement is correct about the division?
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| Macroeconomics deals with unemployment, inflation, the budget deficit, and the trade deficit. |
| Microeconomics deals with unemployment, inflation, the budget deficit, and the trade deficit. |
| All the topics in macroeconomics are bigger than those in microeconomics. |
| Microeconomics is limited to the study of individual choices while macroeconomics deals with group decisions. |
| Only macroeconomics deals with prices. |
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5.
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Which of the following is not a way we can use the study of macroeconomics?
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| to understand how a national economy works |
| to understand the grand debates over economic policy |
| to decide between two types of automobiles when we are buying a new car |
| to make informed business decisions |
| to help decide which candidate for office is most likely to have a successful economic policy |
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6.
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Which of the following is not a way we can use the study of microeconomics?
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| to understand how markets work |
| to understand the full impact of our trade deficit with Japan |
| to make personal or managerial decisions |
| to evaluate the merits of specific public policies |
| to help decide between two automobiles when we are buying a new car |
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7.
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The process of "thinking like an economist" involves three basic items. Which of the following five does not belong?
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| Economists use assumptions to simplify matters. |
| Economists deal only in items which have prices. |
| Economists explore the relaltionship between two variables, holding other variables fixed. |
| Economists think in marginal terms. |
| Economists consider opportunity costs. |
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8.
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If a society is operating on its Production Possibilities Curve (PPC)with respect to thousands of computers and numbers of space missions, and is producing 300,000 computers and 5 space missions, in order to increase the number of space missions it must
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| give up some computers. |
| produce more computers as well. |
| pay scientists more. |
| shift federal spending from military to science. |
| develop a new type of rocket. |
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9.
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The problem of scarcity,
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| exists only in market economies. |
| could be eliminated if we could force prices to fall. |
| means that there are shortages of some goods. |
| exists because human wants exceed available resources. |
| can be eliminated by government intervention |
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10.
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If Josiah is producing inside his Production Possibilities Curve (PPC) then he
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| can increase production of goods with no increase in resources. |
| is fully using his resources. |
| is optimizing. |
| is unaffected by costs and technology. |
| can do no better than he is currently doing. |
