1) To correct for inflation, GDP numbers must be converted using the price level in a given year known as the

 

 

 

Base year

 

Real year

 

Current year

 

Constant year

 

Inflation year

 

2) A production possibilities curve represents all of an economy's combinations for production that are

 

 

 

Unattainable

 

Possible and Efficient

 

Attainable

 

Inefficient

 

Desirable

 

Question 3

 

Which of the following is a technique used to determine the optimal level of an economic activity?

 

 

 

Cost/benefit analysis

 

Production possibilities curve analysis

 

GDP analysis

 

Opportunity cost analysis

 

Question 4

 

The bow shape of the production possibilities curve reflects

 

 

 

The opportunity cost concept

 

The concept of increasing opportunity costs

 

The concept of diminishing marginal returns

 

The marginal social cost/marginal social benefit principle

 

Question 5

 

Real per capita GDP is defined as

 

 

 

Population/real GDP

 

GDP/population

 

Real GDP/price index

 

Real GDP/population

 

Price index/GDP

 

Question 6

 

Marginal social cost refers to the

 

 

 

Cost incurred due to an action undertaken by society

 

Total expenditures by society on a good like a public park

 

Cost borne by society when 1 more unit of a good is produced

 

Cost to society of sub-standard production

 

Cost to society when an additional unit of a social good is produced

 

Question 7

 

If population in a country falls while GDP stays the same, the country's

 

 

 

Real GDP falls

 

Real GDP rises

 

Per capita GDP rises

 

Per capita GDP falls

 

Welfare falls

 

Question 8

 

With private property rights, the decision about how to use resources are made by

 

 

 

The government

 

Private firms

 

Individual resource owners

 

Resource committees

 

Question 9

 

The know-how and the means and methods of production available in an economy are known as

 

 

 

Technology

 

Capital

 

Human capital

 

Labor

 

Management

 

Question 10

 

The purpose of a base year when constructing a price index is:

 

 

Showing how the output values rise from year to year

 

Encourage inflation

 

Providing a means to compare the economy's output across different time periods

 

To show why expenditures on government goods and services need to increase

 

Indicate the progress in keeping prices low

 

Question 11

 

Economic reasoning would not be necessary if

 

Our wants were limited

 

Resources were expansive

 

Scarcity were decreased

 

We could have everything we wanted

 

Politicians were better at running the economy

 

 

 

Question 12

 

The fundamental economic problem involves

 

Overpopulation

 

Inflation and unemployment

 

Scarce resources and unlimited wants

 

Cheap foreign labor

 

Supply and demand

 

 

 

Question 13

 

Labor resources include

 

The equipment workers use to complete their work

 

Only non-management personnel

 

Any efforts of a person to produce goods

 

Only the physical efforts of an economy's people

 

 

 

Question 14

 

A country can shift out its production possibilities curve by

 

 

 

Improving its technology

 

Shifting its production from one good to another

 

Experiencing a population drop

 

Using its farmland more productively

 

 

 

Question 15

 

The means for satisfying wants are

 

Insatiable

 

Unlimited

 

Infinite

 

Scarce

 

Unavailable