Macro Midterm Units 1-3

Which of the following is an example of a factor of production?

• A want

• A bank

• A bond

• Capital

• Stock

Which of the following is the most fundamental issue that economics addresses?

• Choice of appropriate technology

• Reduction of unemployment

• Reduction of budget deficit

• Promotion of privatization

• Use of scarce resources

Scarcity exists because

• human wants exceed the productive capacity of the economy

• supplies of land and other natural resources are unlimited

• physical capital does not depreciate

• population and labor force growth are slowing

• innovation causes unemployment

Which of the following describes scarcity?

• Wants are limited.

• Wants exceed resources.

• Resources are unlimited.

• Resources are fully employed.

• Resources are allocated efficiently.

Any point inside a production possibilities curve is

• better than points on the production possibilities curve

• allocatively efficient but technologically inefficient

• 
  associated with inefficient use or unemployment of some resources

• associated with movements along the production possibilities curve

• associated with constant opportunity costs

On the basis of the diagram above showing an economy's production possibilities curve for two goods, which of the following statements must be true?

1. I. The opportunity cost of moving from point P to point R is 10 units of Y.

2. II. The opportunity cost of moving from point R to point P is 8 units of X.

3. III. The opportunity cost of moving from point Q to point R is 0 units of Y.

• I only

• III only

• I and II only

• II and III only

• I, II, and III

The concept of opportunity cost would no longer be relevant if

• poverty in an economy no longer existed

• 
  the supply of all resources were unlimited

• resources were allocated efficiently

• 
  real wages were flexible

• all current incomes were invested in technological research

The graph above shows the production possibilities curve for a small township that is deciding to build parks and gymnasiums. Which of the following combinations of parks and gymnasiums is unattainable given the township's available resources?

• 5 parks and 6 gymnasiums

• 5 parks and 8 gymnasiums

• 10 parks and 6 gymnasiums

• 15 parks and 4 gymnasiums

• 20 parks and 4 gymnasiums

The diagram above shows the production possibilities curve for an economy that produces only consumption and capital goods. All of the following statements about this economy are true EXCEPT:

• Producing at point Z results in the underutilization of resources.

• The combination represented by point Y is unattainable, given the scarcity of resources.

• Resources are fully utilized at points W and X.

• Producing at point X will result in greater economic growth than will producing at point W.

• Point X represents the most efficient combination of the two goods that can be produced by this economy.

The best combination of belts and coats for this economy to produce is

• 95 belts and 1 coat

• 85 belts and 2 coats

• 70 belts and 3 coats

• 40 belts and 4 coats

• indeterminate with the available information