An inefficient use of resources can be illustrated using a production possibilities curve as:
a. a movement to the northeast along the curve.
b. a movement to the southeast along the curve.
c. a movement off the curve in a northeast direction.
d. a movement off the curve in a southwest direction.
Question 2Which of the following was not a reason for the financial collapse in 2008?
a. inaccurate ratings by S&P and Moody's
b. government promoting aggressive mortgage lending
c. pooling of mortgage backed securities
d. the absence of financial leveraging in the banking industry
Question 3Without money, no transaction can occur.
a. True
b. False
Indicate whether the statement is true or false
Question 4If an economy is operating inside its production possibilities curve for tanks and bread:
a. scarcity does not exist.
b. all resources are being used efficiently.
c. production of bread can only increase by sacrificing the production of tanks.
d. production of bread and tanks can both increase.
Question 5Adjustable rate mortgages with extremely low initial interest rates which enable high risk buyers to purchase homes are known as:
a. upside down mortgages.
b. ARMs.
c. sub-prime loans.
d. mortgage backed securities.
Question 6In general, the purpose of markets is to facilitate the exchange of goods and services between buyers and sellers.
a. True
b. False
Indicate whether the statement is true or false
Question 7In a market operating along the production possibilities curve, which of the following is inevitable if the production of one of the goods is increased?
a. inefficiency
b. labor shortage
c. unemployed resources
d. less of other goods must be produced
Question 8Which of the following is a government sponsored enterprise that funds or guarantees a substantial number of mortgage loans in the U.S.?
a. Fannie Mae
b. Freddy Mac
c. both A and B above
d. neither A nor B above
Question 9In the market for eggs, a removal of the price ceiling on eggs results in:
a. an increase in the demand for eggs.
b. farmers supplying more eggs to the market.
c. consumers demanding a larger quantity of eggs.
d. farmers supplying less eggs to the market.
e. consumers demanding a smaller quantity of eggs.
Question 10Inefficiency is best illustrated by which of the following?
a. foregoing civilian goods in order to produce more military goods
b. limiting economic growth by reducing capital spending
c. high levels of unemployment of labor and other resources that could be productively employed
d. producing outside the production possibilities frontier
Question 11Which of the following was not a reason for the significant decline in housing prices in 2007?
a. overbuilding
b. strict regulation
c. excessive previous appreciation
d. aggressive mortgages
Question 12The removal of a price ceiling in a market results in:
a. an increase in the market price.
b. a shortage in the market.
c. over-production of the commodity and a surplus.
d. a fall in the market price.
e. abnormal profits for producers.
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