Econ 102 - Principles of Macroeconomics » Fall 2022 » Circular Flow and PPF Quiz

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Question #1
In a market economy, the decision regarding allocation of resources is made by
A.   Central planners
B.   Automatic forces of supply and demand
C.   Authorities in Washington, D.C.
D.   Committees from a variety of economic interest groups
Question #2
Economists define efficiency as
A.   Output maximization
B.   The absence of waste
C.   The presence of surplus
D.   Input minimization
Question #3
The problem of scarcity
A.   Exists because resources are limited relative to wants
B.   Is solved by promoting economic growth
C.   Is caused by artificially high prices
D.   Has been "cooked up" by disenchanted anti-capitalists
Question #4
An economy that wants to experience growth should
A.   Increase production of capital goods and increase consumption
B.   Decrease current consumption and reduce production of capital goods
C.   Increase production of capital goods and reduce consumption
D.   Increase current consumption and reduce producing capital goods
Question #5
The concept of the "invisible hand" led Adam Smith to believe that
A.   If each person looks out for himself or herself, then chaos will inevitably ensue
B.   Traditional religion is an appropriate guide for human behavior
C.   Governmental rule actually results in greater good than is apparent at the time
D.   Pursuit of self-interest promotes economic well-being for society as a whole
Question #6
The central question in economics is how to
A.   Induce people to want less
B.   Use government agencies
C.   Make the best use of scarce resources
D.   Increase human knowledge
Question #7
Because of scarcity, every economic decision involves
A.   A money payment
B.   A free good
C.   A tradeoff or choice
D.   An increasing cost
Question #8
Because resources tend to be specialized, increased production of military goods tends to
A.   Increase the opportunity cost of more non-military goods.
B.   Change the slope of the production possibilities frontier (PPF)
C.   Increase the opportunity cost of more military goods.
D.   Decrease the opportunity cost of more military goods.
Question #9
Specialization in the labor market or Division of Labor, usually refers to splitting
A.   Political leaders into radical and conservative camps each year.
B.   The three coordination decisions among different sets of planners
C.   The production of consumption goods and capital goods among different workers
D.   The parts of a complex task among different workers

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