Economics 1

Front

When a firm increases all its inputs by 300%, its output increases by 400%. What does this illustrate?

Back

increasing returns to scale

Front

Which is an example of an external diseconomy?

Back

increased traffic congestion as industries expand

Front

What makes it easier for a small firm to compete against large firms in the same industry?

Back

The product specification demanded by each customer is different.

Front

During a year, a country’s national income in money terms increased by 5%, prices increased by 4% and the total population increased by 2%. What was the approximate change in real income per head?

Back

a decrease of 1%

Front

Which represents an injection into an economy’s circular flow of income?

• a balance of trade deficit
• a government budget deficit
• household saving
• the retained profits of private companies

Back

a government budget deficit

Front

In a closed economy with no government sector, investment is increased by $100 million and real income increases by $500 million. What is the marginal propensity to consume?

Back

0.8

Front

The income velocity of circulation is equal to 2.0. If the rate of growth of the money supply is 8% and the average price level increases by 4%, what will be the change in real output (transactions)?

Back

+4%

Front

What will be most likely to decrease a country’s national output in the short-run but to increase its potential for long-run growth? Options: a decrease in the level of import tariffs, a decrease in the rate of immigration, an increase in female participation in the labour force, an increase in the money supply.

Back

a decrease in the level of import tariffs

Front

Which change would best indicate that a country has experienced economic development?

Back

an improvement in the average citizen’s quality of life

Front

What is the best measure of the economic cost of an increase in unemployment?

Back

the output the unemployed workers could have produced