Exam%20I%20Practice

Exam%20I%20Practice - THE KEY TO THIS PRACTICE TEST (AND...

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THE KEY TO THIS PRACTICE TEST (AND ALL TESTS WE WILL HAVE THIS SEMESTER) IS EMBEDDED IN THE DOCUMENT AS HIDDEN TEXT. AN ASTERISK (*) WILL APPEAR BY EACH RIGHT ANSWER. You will benefit most from this practice exam if you take it first, THEN reveal the key! To reveal “Hidden Text:” Microsoft Office 2003: In the document, go to the Tools menu, click Options , and then click the View tab. Under formatting , make sure the Hidden text box is checked. To print hidden text, click the Print tab . Under Include with document , make sure the Hidden text box is checked. Microsoft Office 2007: In the document, click on the Microsoft Office Button , click Word Options , and then click Display . Under Always show these formatting marks on the screen , select the Hidden text .
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QUESTIONS 1 - 4 REFER TO THE SHIFTS IN PRODUCTION POSSIBILITIES SHOWN BELOW: 1. The impact of a decrease in the stock of capital on the production possibilities frontier is best represented by graph: a) A b) B c) C d) D 2. The impact of an economy entering a recession, with rising unemployment of labor, on the a) A b) B c) C d) D 3. The impact of an increase in the labor force on the production possibilities frontier is best represented by graph: a) A b) B c) C d) D 4. The impact of shift in consumer preferences away from guns to butter on the production possibilities frontier is best represented by graph: a) A b) B c) C d) D 5. Given the production possibilities frontier shown here we can conclude that the opportunity cost in production of Guns is greatest at basket: a) A b) B c) C d) D 6. This economy is experiencing unemployment, or is using its resources inefficiently at basket: a) A b) B c) C d) D 7. The opportunity cost in production of Guns for this society Guns Butter Guns Butter Guns Butter Guns Butter A: C: B: D: D A C Guns Butter B
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is smallest at basket: a) A b) B c) C d) D 8. The existence of scarcity confronting this society is best represented by basket: a) A b) B c) C d) D 9. The word “economy” comes from the Greek work oikonomos , which means a) “environment” b) “production” c) “one who manages a household” d) “one who makes decisions” 10. Which of the following words or phrases best captures the notion of equity ? a) minimum waste c) sameness b) maximum benefit d) fairness 11. When the government redistributes income from the wealthy to the poor, a) efficiency is increased, but equity is not. b) both wealthy people and poor people benefit directly. c) people work less and produce fewer goods and services. d) wealthy people consume fewer goods, but poor people consume more goods, resulting in no real change. 12. The term “invisible hand” was coined by: a) Adam Smith b) David Ricardo c) Karl Marx d) Greg Mankiw 13. An example of an externality is the impact of: a) bad weather on the income of farmers.
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Exam%20I%20Practice - THE KEY TO THIS PRACTICE TEST (AND...

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