The _____ tend to have a smaller public sector relative to the total economy.
a. socialist economies
b. centrally planned economies
c. autocratic economies
d. market economies
e. mercantilist economies
Question 2Which of the following scenarios would cause an outward shift in the production possibilities curve?
a. temporary shutdown of mines due to frequent accidents
b. discovery of large mineral deposits
c. tougher environmental legislation
d. shortage of skilled labor
Question 3At a given price level, anything that changes the amount of total purchases in the economy will cause the aggregate demand curve to shift.
a. True
b. False
Indicate whether the statement is true or false
Question 4Which of the following institutions form the private sector in an economy?
a. Only households
b. Households and the government
c. Households, businesses, and foreign firms
d. Households and businesses only
e. Foreign investors and foreign governments
Question 5Alex must prepare for exams in both biology and economics this week. Assume that the production possibilities curve showing the tradeoff between exam scores in biology and economics is concave toward the origin. As Alex moves along the curve spending more of his time studying for economics, the opportunity cost of an hour of preparation for economics:
a. increases.
b. remains constant.
c. decreases.
d. first increases then decreases.
Question 6The real wealth and the real interest rate effects are both causes of the downward slope of the aggregate demand curve.
a. True
b. False
Indicate whether the statement is true or false
Question 7Which of the following statements is a defining feature of a corporation?
a. The owners of a corporation face unlimited liability on debts.
b. A corporation owns and operates units only in foreign countries.
c. A corporation is created by a verbal agreement.
d. A corporation that is based on a verbal agreement is also recognized by State law.
e. A corporation has a legal identity that is separate from that of its owners.
Question 8A production possibilities curve that is linear (a straight line):
a. illustrates a tradeoff in which opportunity cost of a good increases with the level of its production.
b. illustrates a tradeoff in which the opportunity cost of a good decreases with the level of its production.
c. illustrates a tradeoff in which the opportunity cost of a good is constant at all levels of production.
d. demonstrates the fallacy of composition.
Question 9A reduction in the price level will cause the aggregate demand curve to shift to the left.
a. True
b. False
Indicate whether the statement is true or false
Question 10When a household owns shares of stock, _____.
a. it has ownership rights in that firm
b. it is entitled to the majority of the firm's profits
c. it is liable to bear the entire loss faced by the firm
d. it can consume the firm's products without paying for it
e. it is responsible for correcting any defect in the product identified by the customers
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