200810021149140 - Macroeconomics Testbank 1(Hubbard/O'Brien...

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Macroeconomics – Testbank 1, (Hubbard/O’Brien) Chapter 2: Trade-Offs, Comparative Advantage, and the Market System MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) What is the economic impact of Smith's invisible hand? A) Law breakers are captured and punished. B) The market provides consumers with what they want. C) Some people are able to take advantage of others and earn large incomes. D) Chaos in a market not controlled by the government. Answer: B Diff: 6 Topic: Invisible hand 2) A successful market economy requires well defined property rights and A) adequate and balanced supplies of all factors of production. B) the willingness to take risks. C) a high level of technology. D) an independent court system and judges making impartial decisions on the basis of law. Answer: D Diff: 5 Topic: Property rights 3) In producing goods, which input is the last to be paid? A) labor B) capital owners C) entrepreneurs D) land owners Answer: C Diff: 7 Topic: Entrepreneurs 4) The production possibilities frontier model can be applied to which of the following? A) the whole economy B) an individual C) a firm D) all of these Answer: D Diff: 4 Topic: Production possibilities 5) Which of the following is correct about a simple circular flow model? A) Households are sellers in the product market. B) Producers are buyers in the factors market. C) Producers are neither buyers nor sellers in the product market. D) None of these are correct. Answer: B Diff: 4 Topic: Circular flow 6) In which of the following markets would you able to hire a worker? A) product market B) factor market C) any of these
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D) none of these Answer: B Diff: 3 Topic: Markets 7) During the 1930s, the U.S. experienced the Great Depression with a larger number of workers and factories unemployed. Which of the following points on a production possibilities frontier model would represent this experience? A) A point on the frontier. B) A point outside the frontier. C) A point inside the frontier. D) None of these describes that experience. Answer: C Diff: 4 Topic: Production possibilities 8) Which of the following U.S. Constitutional amendments protects private property rights? A) 5th and 12th B) 5th and 14th C) 12th and 15th D) 1st and 3rd Answer: B Diff: 4 Topic: Property rights 9) If the best lawyer in town is also the best at operating a word processor, what should this person do? A) Flip a coin, there is no clear choice between the two careers. B) Specialize in being a lawyer because its opportunity cost is lower. C) Split time evenly between being a lawyer and a word processor. D) Do any of these.
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200810021149140 - Macroeconomics Testbank 1(Hubbard/O'Brien...

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