The market demand curve is derived by summing individual demand curves horizontally.

The market demand curve is derived by summing individual demand curves horizontally.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 2

A technological advance that increases the productivity of all inputs is best illustrated as:
 a. a movement along the production possibilities curve.
  b. a flattening of the production possibilities curve.
 c. an inward shift of the production possibilities curve.
  d. an outward shift of the production possibilities curve.

Question 3

Rank bonds, common stock, and preferred stock with regard to two factors the possibility of a substantial increase in value. Rank these same securities with regard to investors' legal claims for repayment on their investments.

Question 4

The demand schedule shows that the price of a good and quantity demanded are directly related to each other.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 5

Along a production possibilities curve that is concave to the origin, the opportunity cost of production of the good on the horizontal axis ____ as we move down along the curve.
 a. Decreases
 b. Increases
 c. remains constant
 d. first decreases, then increases

Question 6

What is the present value of 1,000 to be received in two years if the current market interest rate is 8.0?
 a. 481
  b. 556
  c. 857
  d. 926

Question 7

The demand schedule is a price list for a fixed basket of consumer goods following a particular format.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 8

Which of the following distinguishes a straight-line production possibilities curve from one that is bowed out?
 a. A straight-line production possibilities curve exhibits increasing opportunity costs, whereas a bowed production possibilities curve does not.
  b. A straight-line production possibilities curve exhibits decreasing opportunity costs, whereas a bowed production possibilities curve does not.
  c. A straight-line production possibilities curve exhibits constant opportunity costs, whereas a bowed production possibilities curve does not.
  d. A straight-line production possibilities curve is upward sloping, whereas a bowed production possibilities curve is not.

Question 9

What is the present value of 5,000 to be received in one year if the current market interest rate is 6.0?
 a. 3,125
  b. 4,717
  c. 4,923
  d. 5,300

Question 10

The demand for luxurious goods are usually unaffected by an increase in income.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 11

Along a straight-line production possibilities curve:
 a. the opportunity cost of production of a good is zero.
 b. the opportunity cost of production of a good falls as its output increases.
  c. the opportunity cost of production of a good rises as its output increases.
  d. the opportunity cost of production of a good is constant.

Question 12

The substantial risks taken by financial intermediaries like Sallie Mae because they are effectively insured are examples of what economists refer to as:
 a. sub-prime behavior.
 b. asymmetric information.
  c. moral hazard.
 d. countercyclical policy.

Question 13

According to the law of demand, when the price of a BMW or a Gucci purse increases, the quantity demanded of these goods will also increase because consumers consider them prestigious.
 a. True
  b. False
  Indicate whether the statement is true or false