University of the People BUS 1104 BUS1104 PRACTICE EXAM. 45 Q&As.

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Economics, generally speaking, is primarily concerned with __________ Select one: a. the operation of the bond and stock markets. b. the issues of income inequality or income equality. c. how peop... le choose among the alternatives available to them. d. ceteris paribus, the scientific method, and the margin. Feedback how people choose among the alternatives available to them. Question 2 Incorrect Flag question Question text Which of the following is possible with international trade? I. Countries that engage in trade can consume at a point outside their respective production possibilities curve. II. Global production will be increased. III. World resources will be used more efficiently. Select one: a. I, II, and III b. I and II only c. I and III only d. II and III only Feedback I and II only Question 3 Incorrect Flag question Question text Disposable personal income is __________ Choose one answer. Select one: a. the income households receive after paying personal taxes and personal debt. b. the income households earn from supplying labor services for the production of aggregate output. c. the income households receive after paying personal taxes. d. the income households have leftover after paying personal taxes and purchasing necessities. Feedback the income households receive after paying personal taxes. Question 4 Correct Mark 1.00 out of 1.00 Flag question Question text An increase in the U.S. dollar exchange rate means foreigners must pay __________ Select one: a. more for dollars and more for U.S. exports. b. less for dollars and more for U.S. imports. c. more for dollars and less for U.S. exports. d. less for dollars and less for U.S. exports. Feedback more for dollars and more for U.S. exports. Question 5 Correct Mark 1.00 out of 1.00 Flag question Question text Prior to the Great Depression of the 1930s, macroeconomics was dominated by __________ Choose one answer. Select one: a. Keynesian economics b. monetarism c. classical economics d. supply-side economics Feedback classical economics Question 6 Correct Mark 1.00 out of 1.00 Flag question Question text The Communist Manifesto was written by __________ Select one: a. Karl Marx and Friedrich Engels. b. David Ricardo and Thomas Malthus. c. John Stuart Mill and Alfred Marshall d. Vladimir Lenin and Joseph Stalen Feedback Karl Marx and Friedrich Engels. Question 7 Correct Mark 1.00 out of 1.00 Flag question Question text Economics is a __________ Select one: a. social science that deals with making choices among alternatives. b. natural science that concerns itself with allocating relatively scarce resources among alternative ends. c. science that has no theories or models based on the scientific method. d. humanities course that mainly concerns itself with limited wants versus unlimited resources. Feedback social science that deals with making choices among alternatives. Question 8 Incorrect Flag question Question text Demand is best defined as the __________ Select one: a. amount of a commodity that buyers would be willing and able to purchase at a specific price. b. price that buyers would be willing and able to pay for a specific quantity of a good. c. relationship between the price of a good and the quantity people are able to purchase and the independent variables that determine quantity. d. relationship between the price of a good and the quantity people are willing and able to purchase and the independent variables that determine quantity. Feedback relationship between the price of a good and the quantity people are willing and able to purchase and the independent variables that determine quantity. Question 9 Correct Mark 1.00 out of 1.00 Flag question Question text The income households receive less the personal income taxes they pay is __________ Choose one answer. Select one: a. net savings. b. disposable personal income. c. gross private domestic investment. d. Personal consumption. Feedback disposable personal income. Question 10 Correct Mark 1.00 out of 1.00 Flag question Question text A curve that relates an economy’s total output to the total amount of labor employed, holding all other determinants of output constant, is called __________ Select one: a. an input-output matrix. b. an average output function. c. a marginal product function. d. an aggregate production function. Feedback an aggregate production function. Question 11 Correct Mark 1.00 out of 1.00 Flag question Question text Potential output is __________ Select one: a. the level of real GDP that exists when the economy is experiencing only cyclical and structural unemployment. b. the level of real GDP that exists when the quantity of labor supplied is equal to the quantity of labor demanded. c. the level of real GDP that exists when the actual rate of unemployment is zero. d. the level of real GDP that exists when the economy is experiencing only frictional and cyclical unemployment. Feedback the level of real GDP that exists when the quantity of labor supplied is equal to the quantity of labor demanded. Question 12 Correct Mark 1.00 out of 1.00 Flag question Question text GDP measures the value of final goods and services. Consider a pizza parlor that buys flour to make pizzas. Which of the following statements is true? Select one: a. The value of the pizza and the flour used to make the pizza are counted as part of GDP. b. Only the value of the pizza is counted in GDP to avoid double counting. c. Only the value of the flour used to make the pizza is counted in GDP to avoid double counting. d. Only the difference between the value of the pizza and the value of the flour is counted in GDP. Feedback Only the value of the pizza is counted in GDP to avoid double counting. Question 13 Correct Mark 1.00 out of 1.00 Flag question Question text In the 1960s, despite the successful application of expansionary fiscal policy in the United States, Milton Friedman argued that __________ Choose one answer. Select one: a. Keynesian supply-side policies were more effective at stimulating aggregate demand than expansionary fiscal policies. b. aggregate demand is affected by money and not by fiscal policy, and therefore only monetary policy should not be used to move the economy back to its potential output. c. aggregate demand is affected by money and not by fiscal policy, which is why policymakers should institute a policy of steady money growth and allow the economy to reach full employment through a process of self-correction. d. fiscal policy must be combined with monetary policy to move the economy back to its potential output, without increasing inflationary pressure. Feedback aggregate demand is affected by money and not by fiscal policy, which is why policymakers should institute a policy of steady money growth and allow the economy to reach full employment through a process of self-correction. Question 14 Correct Mark 1.00 out of 1.00 Flag question Question text Since the late 1970s, the United States __________ Select one: a. has experienced only moderate inflation, usually between 2 to 3 percent. b. has seen a steadily increasing rate of inflation. c. has experienced low inflation, except for a seven-year period between 1979 and 1986. d. has experienced high inflation followed by a long period of deflation. Feedback has experienced low inflation, except for a seven-year period between 1979 and 1986. Question 15 Correct Mark 1.00 out of 1.00 Flag question Question text What are the four sources of aggregate demand? Select one: a. consumption, private investment, taxes, and expenditures b. consumption, private investment, wage increases, and government expenditures c. consumption, private investment, expenditures, and net exports d. consumption, private investment, government purchases, and net exports Feedback consumption, private investment, government purchases, and net exports Question 16 Correct Mark 1.00 out of 1.00 Flag question Question text Which of the following is false about potential output? Select one: a. It is the level of output an economy can achieve when labor is employed at its natural level. b. It is the long run output level that guarantees price stability. c. It is also called the natural level of real GDP. d. If a country is producing its potential output, then it is producing at a point on its production possibilities frontier. Feedback It is the long run output level that guarantees price stability. Question 17 Correct Mark 1.00 out of 1.00 Flag question Question text Financial markets are __________ Choose one answer. Select one: a. markets where money is traded between the Fed and economic agents. b. markets where funds accumulated by one group are made available to another group. c. banks interact to lend and borrow reserves. d. the market where capital goods are traded. Feedback markets where funds accumulated by one group are made available to another group. Question 18 Correct Mark 1.00 out of 1.00 Flag question Question text Which of the following statements is true? I. Small differences in rates of economic growth can lead to large differences in levels of potential output over time. II. From the perspective of the rule of 72, small differences in rates of economic growth between two countries will not significantly affect their respective standards of living. III. Countries that have higher population growth rates are likely to see higher economic growth rates because increases in population lead to increases in the size of the labor force. Select one: a. I and III b. II and III c. I only d. II only e. III only Feedback I only Question 19 Correct Mark 1.00 out of 1.00 Flag question Question text The __________ a Lorenz curve lies to (from) the 45-degree line, the __________ the distribution of income. Select one: a. further; more equal b. closer; less equal c. further; more unequal d. closer; better as far as economists are concerned. Feedback further; more unequal Question 20 Correct Mark 1.00 out of 1.00 Flag question Question text True or False? For investment to occur, saving must also occur. Select one: True False Feedback The correct answer is 'True'. Question 21 Correct Mark 1.00 out of 1.00 Flag question Question text Scarcity in economics means __________ Select one: a. not having sufficient resources to produce all the goods and services we want. b. the wants of people are limited. c. there must be poor people in rich countries. d. economists are clearly not doing their jobs. Feedback not having sufficient resources to produce all the goods and services we want. Question 22 Correct Mark 1.00 out of 1.00 Flag question Question text Which of the following is true about the Great Depression? Select one: a. Following the Great Depression of 1929, the economy did not regain its potential output until the early 1940s when the pressures of WWII sharply increased aggregate demand. b. Expansionary monetary and fiscal policies successfully moved the economy from the Great Depression of 1929 within three to five years. c. The Great Depression of 1929 was considered to be a normal stage of business cycles. d. The Great Depression could be explained by classical economic theory. Feedback Following the Great Depression of 1929, the economy did not regain its potential output until the early 1940s when the pressures of WWII sharply increased aggregate demand. Question 23 Correct Mark 1.00 out of 1.00 Flag question Question text What is the fundamental argument in Malthus’ An Essay on the Principle of Population? Select one: a. Ultimately, population growth rate would outpace growth in real GDP leading to declining standards of living. b. Population growth tends to undermine global stability which is a stimulus for future wars and conflicts. c. Population would increase at a geometric rate and the food supply at an arithmetic rate and that this disharmony would lead to forced return to subsistence-level conditions. d. Population growth is the root cause of hunger, poverty, environmental destruction, disease, and social unrest. Feedback Population would increase at a geometric rate and the food supply at an arithmetic rate and that this disharmony would lead to forced return to subsistence-level conditions. Question 24 Correct Mark 1.00 out of 1.00 Flag question Question text Which of the following is classified as spending on investment? I. new residential construction II. business spending on new equipment III. business spending on structures such as office buildings IV. purchase of government bonds Select one: a. II and III only b. II, III, and IV only c. I, II, and III only d. I, II, III, and IV Feedback I, II, and III only Question 25 Correct Mark 1.00 out of 1.00 Flag question Question text Over the past two decades, the share of income going to the rich has __________ and the share going to the poor has __________. Select one: a. risen; fallen b. fallen; risen c. stayed about the same; risen d. risen; risen Feedback risen; fallen Question 26 Correct Mark 1.00 out of 1.00 Flag question Question text Economic data that are adjusted for price-level changes are said to be expressed in terms of __________ Choose one answer. Select one: a. historical dollars. b. variable dollars. c. nominal dollars. d. real dollars. Feedback real dollars. Question 27 Incorrect Flag question Question text Demand is defined as __________ Choose one answer. Select one: a. an amount that is purchased at a specific price, given supply b. a schedule that establishes the price of a good. c. a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged. d. the amount that will be bought at a specific price. Feedback a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged. Question 28 Incorrect Flag question Question text Which of the following statements is true? Select one: a. According to the World Bank, in 2005 about 1.4 billion people, about a quarter of the population of developing countries was poor, defined as living on less than $1.25 a day, the international poverty line. b. According to the World Bank, between 1980 and 2005, the number of people living below the international poverty line, defined as living on less than $1.25 a day, has decreased significantly. c. According to the World Bank, poverty reduction in sub-Saharan Africa has been phenomenal over the last 25 years. d. According to the World Bank, the majority of the world’s poor are in the Indian sub-continent and in China. Feedback According to the World Bank, in 2005 about 1.4 billion people, about a quarter of the population of developing countries was poor, defined as living on less than $1.25 a day, the international poverty line. Question 29 Correct Mark 1.00 out of 1.00 Flag question Question text What is a sub-prime mortgage? Select one: a. It is a mortgage loan which carries an interest rate below the prime lending rate. b. It is a loan made to a homeowner by an insolvent lender. c. It is a mortgage loan made to a buyer whose credit or income would not ordinarily qualify for a mortgage loan. d. It is a mortgage loan made to a buyer whose outstanding credit score earns the buyer a preferential interest rate. Feedback It is a mortgage loan made to a buyer whose credit or income would not ordinarily qualify for a mortgage loan. Question 30 Correct Mark 1.00 out of 1.00 Flag question Question text True or False? Poverty can be defined either in absolute terms or in relative terms. Select one: True False Feedback The correct answer is 'True'. Question 31 Incorrect Flag question Question text 1. Which of the following characterizes the relationship between inflation and unemployment in the United States? I. There have been periods in which a clear tradeoff between inflation and unemployment seem to exist. II. There have been periods in which inflation and unemployment rose together. III. There have been periods in which inflation and unemployment fell together. Select one: a. I, II, and III b. I and II c. I and III d. I only Feedback I, II, and III Question 32 Correct Mark 1.00 out of 1.00 Flag question Question text A decrease in the price of eggs, all other things unchanged, will result in __________ Select one: a. an increase in the demand for eggs. b. an increase in the supply of eggs. c. a decrease in the demand for eggs. d. a decrease in the supply of eggs. Feedback an increase in the demand for eggs. Question 33 Incorrect Flag question Question text Which of the following statements is true of the U.S. experience with regards to the Phillips curve hypothesis? I. Values of inflation and unemployment rates during the 1960s are atypical in that they generally conformed to the tradeoff implied by the Phillips curve. II. Annual observations of inflation and unemployment from 1961 to 2008 do not seem consistent with a Phillips curve. III. Annual observations of inflation and unemployment from 1961 to 2008 seem consistent with a Phillips curve. Select one: a. I only b. II only c. I and II only d. III only Feedback I and II only Question 34 Correct Mark 1.00 out of 1.00 Flag question Question text Which of the following statements is true? Select one: a. Investment subtracts from the natural resource base and depreciation adds to it. b. Investment adds to the natural resource base and depreciation reduces it. c. Investment and depreciation add to the capital stock. d. Investment adds to capital stock and depreciation reduces it. Feedback Investment adds to capital stock and depreciation reduces it. Question 35 Correct Mark 1.00 out of 1.00 Flag question Question text Socialism, as an organizing principle for a national economy, is in large part the product of the ideas of __________ Select one: a. Adam Smith. b. Karl Marx. c. David Ricardo. d. Thomas Malthus. Feedback Karl Marx. Question 36 Incorrect Flag question Question text The government purchases component of aggregate demand includes I. all purchases by government agencies of goods and services produced by firms. II. direct production by government agencies themselves. III. government expenditures on transfer payments. Select one: a. I only b. I and II only c. I and III only d. I, II, and III Feedback I and II only Question 37 Correct Mark 1.00 out of 1.00 Flag question Question text Comparative advantage in production of a good occurs __________ Select one: a. when a country can produce that good using fewer resources than could other countries. b. when a country can produce that good at a greater opportunity cost than could other countries. c. when a country can produce that good at a lower opportunity cost than could other countries. d. when a country has a greater supply of natural resources required to produce that good, compared to other countries. Feedback when a country can produce that good at a lower opportunity cost than could other countries. Question 38 Correct Mark 1.00 out of 1.00 Flag question Question text Historical actions indicate that the Fed’s primary goal of monetary policy over the past 20 years has been to __________ Select one: a. maintain high interest rates. b. keep employment rates low. c. limit the availability of consumer credit. d. prevent high rates of inflation. Feedback prevent high rates of inflation. Question 39 Correct Mark 1.00 out of 1.00 Flag question Question text True or False? Investment contributes to economic growth. Select one: True False Feedback The correct answer is 'True'. Question 40 Correct Mark 1.00 out of 1.00 Flag question Question text Economic growth I. is represented by an outward shift of the production possibilities curve. II. is defined in terms of a series of events that increase the economy’s ability to produce goods and services. III. refers to a process that increases potential output. IV. occurs when the economy operates on its production possibilities frontier. Select one: a. I and IV only b. I, II, and III c. I, III, and IV d. I, II, III, and IV Feedback I, II, and III Question 41 Correct Mark 1.00 out of 1.00 Flag question Question text The bulk of aggregate demand in the United States consists of __________ Choose one answer. Select one: a. consumption. b. investment. c. government spending. d. net exports. Feedback consumption. Question 42 Correct Mark 1.00 out of 1.00 Flag question Question text The marginal propensity to consume is given by __________ Choose one answer. Select one: a. the change in consumption divided by the change in saving. b. the change in consumption divided by the change in disposable personal income. c. consumption divided by the change in disposable personal income. d. consumption divided by disposable income. Feedback the change in consumption divided by the change in disposable personal income. Question 43 Correct Mark 1.00 out of 1.00 Flag question Question text What is the difference between economic growth and economic development? Select one: a. Economic growth examines qualitative changes in the processes by which potential output increases over time, whereas economic development economic development examines how a country moves from one point on its production possibility curve to another point on the curve. b. Economic growth implies qualitative changes in productive processes whereas economic development requires quantitative change in virtually every aspect of life. c. Economic growth implies quantitative changes in productive processes whereas economic development requires widespread structural changes in the way people live. d. There is no difference between the two terms. Feedback Economic growth implies quantitative changes in productive processes whereas economic development requires widespread structural changes in the way people live. Question 44 Incorrect Flag question Question text The study of how people choose among the alternatives available to them is the __________ Select one: a. definition of economics. b. model of demand. c. theory of opportunity costs. d. method of distinguishing between microeconomics and macroeconomics. Feedback theory of opportunity costs. Question 45 Correct Mark 1.00 out of 1.00 Flag question Question text True or False? In the long run, the major cause of inflation is excessive government spending. Select one: True False Feedback [Show More]

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