Economic models are
A) always based on laboratory methods similar to natural sciences.
B) a simplified representations of the real world.
C) used only in microeconomic analysis by households.
D) used only in macroeconomic analysis by business firms.
Ques. 2Higher unemployment tends to be associated with
A) the classical model.
B) higher real GDP.
C) higher nominal GDP.
D) lower real GDP.
Ques. 3Which of the following statements is TRUE of static tax analysis?
A) A government receives lower tax revenues by raising the tax rate.
B) A government receives higher tax revenues by raising the tax rate.
C) A government cannot change it tax revenues by changing the tax rate.
D) A change in the tax rate can raise or lower tax revenues, depending on other factors.
Ques. 4Which of the following statements about a price system is TRUE? I. Prices ration goods and services. II. Prices indicate relative scarcity.
A) I only
B) II only
C) Both I and II
D) Neither I nor II
Ques. 5A production point that lies outside the Production Possibilities Curve (PPC)
A) denotes inefficiency.
B) indicates unemployment.
C) is currently not attainable.
D) can never be reached, even in future periods.
Ques. 6A one percentage point in the growth rate
A) does not make much difference in the long run per capita real GDP.
B) will not influence the real standard of living in a country.
C) can make a big difference in the per capita real GDP because of urban congestion.
D) can make a big difference in the per capita real GDP because of compounding.
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