1. All other things being equal, an additional unit of capital invested in a capital-rich economy will lead to _____ increase in output as compared with a unit of capital invested in a capital-poor economy. (Points : 5)
a smaller
a larger
about the same sized
an unknowable
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2. Foreign investment _____ (Points : 5)
is very beneficial to an economy, by increasing the amount of capital available.
is a tool of imperialism and colonialism.
decreases the amount of capital available and increases local interest rates.
none of the above
3. Bonds are _____ (Points : 5)
money posted by politicians and corporate executives to stay out of jail.
financial ties that prevent wealthy individuals from expatriating.
debt issued by firms and governments, when they borrow money from the public.
money placed in escrow by corporations as insurance against lawsuits.
4. Stock is _____ (Points : 5)
a share of ownership in a corporation.
another name for bond.
a legal fiction created by capitalists to deprive workers of the fruits of their labors.
a very large amount of cash.
5. Financial intermediaries include _____ (Points : 5)
salesmen and brokers.
regulatory agencies.
depository institutions and investment funds.
none of the above
6. Saving is _____ (Points : 5)
the source of the supply of loanable funds.
the source of the demand for loanable funds.
not a relevant macroeconomic topic, because it is related to microeconomic decision making by individuals and households.
none of the above
7. Investment is _____ (Points : 5)
the source of the supply of loanable funds.
the source of the demand for loanable funds.
not a relevant macroeconomic topic, because it is related to microeconomic decision making by individuals and households.
none of the above
8. The Consumer Price Index is _____ (Points : 5)
a measure of stock market activity that investors use to help make investment decisions.
a measure of the aggregate price level that is used to estimate the rate of inflation.
set by the Bureau of Labor Statistics as a signal to producers, telling them how much to supply.
none of the above
9. What important concept is illustrated with the Production Possibilities Frontier (PPF)? (Points : 5)
Limited resources
Opportunity cost
Comparative Advantage
All of the above
10. All other things being equal, when the demand for money decreases _____ (Points : 5)
interest rates decrease.
interest rates increase.
the government prints more money.
the government takes money out of circulation.
11. The principle of comparative advantage states that individuals, firms, and national economies should produce _____ (Points : 5)
what they are able to produce most efficiently.
only those things that they can produce more efficiently than anyone else.
whatever they want for their own consumption.
enough necessities to ensure self-sufficiency.
12. Tastes affect prices, because _____ (Points : 5)
changes in taste lead to changes in demand.
people with superior taste are role models for individuals who have inferior taste.
marginal utility increases as more individuals embrace new fashions.
taste is subjective and cannot be compared between any two individuals.
13. GDP _____. (Points : 5)
is the Gross Domestic Price index
measures the total output of final goods and services produced in the US in a given year
measures the cost of inputs to factories in a given year
measures the unemployment rate
14. The largest component of a country’s GDP is _____. (Points : 5)
Private investment
Government spending
Trade deficit
Private consumption
15. Government budget deficits tend to ________ (Points : 5)
Increase the interest rates
Decrease the interest rates
Decrease employment
Decrease prices
16. When doing research, Economists _______ (Points : 5)
Follow the scientific method: observation, theory, and more observation
Cannot use experiments, as they are often done in areas like Physics and Chemistry.
Have to use whatever data the world happens to give them
All of the above
17. Economics studies ______ (Points : 5)
How society manages its scarce resources
Social welfare
Ethical use of resources
Pprotection of workers’ rights
18. Everything else held constant, when the price of a product increases _______ (Points : 5)
The quantity demanded decreases
The quantity demanded increases
The quantity supplied decreases
The quantity supplied stays the same
19. When the demand of a product increases ______ (Points : 5)
The equilibrium price and
