test1_c - Name: _ Macroeconomics Fall 2010 Test #1 Version...

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Name: ________________________ Macroeconomics Fall 2010 Test #1 – Version C Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. For the United States, resources are a. scarce for households but plentiful for the economy. b. plentiful for households but scarce for the economy. c. plentiful for households and plentiful for the economy. d. scarce for households and scarce for the economy. . ____ 2. Senator Smith argues that replacing the income tax with a national sales tax would increase the level of output. Senator Wells objects that this policy would benefit the rich at the expense of the poor. Senator Smith’s argument is primarily one about ________, while Senator Wells’ argument is primarily one about ________. a. efficiency, efficiency. b. equality, efficiency. c. equality, equality. d. efficiency, equality. ____ 3. Christina pays $35 for a ticket to Six Flags and then spends the entire day there. If she did not attend six flags, she would have watched the grass grow outside. The opportunity cost of her decision was the foregone value a. from watching the grass grow outside. b. of the $35 spent on the ticket. c. from a job that she could have worked. d. Both A and B are correct. ____ 4. Each year, consumers are willing to pay more for a diamond than a bottle of water because a. the marginal cost of producing a diamond exceeds the marginal cost of producing a bottle of water. b. the marginal benefit of a diamond exceeds the marginal benefit of a bottle of water. c. producers of diamonds have a much greater ability to manipulate diamond prices. d. water prices are held artificially low by governments. ____ 5. One advantage market economies have over centrally-planned economies is that market economies a. solve the problem of scarcity. b. provide an equal distribution of goods and services to households. c. are more efficient. d. establish a significant role for government in the allocation of resources. ____ 6. Possible causes of market failure include a. positive externalities. b. goods that are excludable and rivalrous. c. foreign competition. d. Both A and B are correct.
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____ 7. The primary determinant of a country's standard of living is a. the average age of the country's labor force. b. the country’s ability to prevail over foreign competition. c. the country’s ability to produce goods and services. d. the total supply of gold in the economy. ____ 8. Suppose an economy is inflating at 3%. In the short run, which of the following rates of growth in the money supply is likely to lead to the highest level of unemployment in the economy? a. 1 percent per year b. 2 percent per year c. 4 percent per year d. 3 percent per year Figure 2-1 ____ 9. Refer to Figure 2-1 . Which arrow above represents the flow of rent payments? a.
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test1_c - Name: _ Macroeconomics Fall 2010 Test #1 Version...

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