Which of the following statements is true of a barter system?
a. In a barter system economy, no rates of exchange are defined.
b. In a barter system economy, there are as many different rates of exchange as there are pairs of goods to trade.
c. In a barter system economy, rates of exchange are expressed in goods per dollar.
d. In a barter system economy, rates of exchange are expressed in dollars per good.
e. In a barter system economy, rates of exchange are denominated in gold or silver.
QUESTION 2The production possibilities curve for capital and consumer goods is concave to the origin because:
a. of decreasing opportunity costs of production.
b. resources are not perfectly adaptable to the production of both goods.
c. both consumer goods and capital goods equally contribute to economic growth.
d. the level of technology along the frontier is assumed to vary.
e. of constant returns to scale.
QUESTION 3The Federal Trade Commission is charged with:
a. supervising cartels in the United States.
b. aiding small business in contract negotiations with foreign companies.
c. investigating unfair and deceptive trade practices.
d. approving contracts between businesses and government.
e. bringing criminal complaints.
QUESTION 4The greater the degree of specialization in the economy, the:
a. easier it is to discover a double coincidence of wants.
b. more feasible is a barter system.
c. less likely it is that monetary exchange will develop.
d. harder it is to negotiate an exchange rate between all pairs of goods.
e. more likely it is that individual consumers are self-sufficient.
QUESTION 5Suppose a production possibilities frontier (PPF) has been plotted on a graph. If the horizontal axis of the graph measures the output of capital goods and the vertical axis measures the output of consumer goods, then a point outside the PPF represents:
a. a smaller quantity of consumer goods than that represented by a point inside the PPF.
b. an inefficient output combination of the two goods in the economy.
c. an unattainable output combination of the two goods in the economy.
d. an output combination of more consumer goods than capital goods.
e. a smaller quantity of capital goods than that represented by a point inside the PPF.
QUESTION 6The importance of the Federal Trade Commission Act of 1914 is that it:
a. set up an independent antitrust agency with the power to bring court cases.
b. strengthened the law against mergers.
c. strengthened the law against price discrimination.
d. all of these.
QUESTION 7Barter was more feasible in primitive societies than in modern societies because:
a. there was no inflation in primitive societies.
b. there were many goods available for trade in primitive societies, so people could always find the goods that they wanted.
c. specialization was limited and thus there were few goods available for trade in primitive societies.
d. specialization was limited and thus there were many goods available for trade in primitive societies.
e. people in primitive societies had limited wants.
QUESTION 8Suppose a production possibilities frontier (PPF) has been plotted on a graph. If the horizontal axis of the graph measures the output of capital goods and the vertical axis measures the output of consumer goods, then a point inside the PPF represents:
a. a larger quantity of capital goods than that represented by a point along the PPF.
b. an inefficient output combination of the two goods in the economy.
c. an unattainable output combination of the two goods in the economy.
d. an output combination of more consumer goods than capital goods.
e. a larger quantity of consumer goods than that represented by a point along the PPF.
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