Question # 1

If injection are less than with drawls at the full employment level of national income there is.

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an inflationary gap

Equilibrium

A deflationary gap

Hyperinflation

A benefit to consumers of price discrimination is that

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Some products are produced that would not other wise be produced

Producer surplus increases

Consumer surplus decreases

Firms profits increase

What lies is at the heart of the allocation of goods and services in a free market economy.

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Concerns of equity or equal distribution among individuals.

The order or command of the ruling government or dictator

The wishes of consumers in the market

The price mechanism

Economists use the term marginal utility to mean.

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Additional satisfaction gained divided by additional cost of the last unit.

Additional satisfaction gained by the consumption of one more unit of a good

Total satisfaction gained when consuming a given number of units.

The process of comparing marginal units of all goods which could be purchased

The first level of output at which the long run average costs are minimized is called.

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The minimum Efficient Scale

The minimum External scale

The Maximum External scale

The maximum Effective scale.

Macro economics deals with

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Only the decisions made by individuals and their results.

Only the decisions made by businesses and their results.

Mostly large scale decisions made by countries and governments, and their results.

Only the decisions made by individuals but not the results.

An increase in investment is most likely to be caused by.

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Lower interest rates

Lower national income

A decreasing the marginal propensity to consume

An increase in with drywalls.

If there is cyclical unemployment in the economy the government might.

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Increase interest rates

Encourage savings

Cut taxes

Reduce government spending

The precautionary demand for money is

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An idle balance

An active balance

Directly related to interest rates

Inversely related to income

If firm earn normal profits.

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They will aim to leave the industry

Other firms will join the industry

The revenue equals total costs

No profit is made in accounting terms

If demand is price inelastic.

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An increase in price must raise profits

An increase in price decreases revenue

An increase in price increase revenue

A decrease in price reduces sales.

Why is the law of diminishing marginal returns true.

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specialization and division of labor

Spreading the average fixed cost

Limited capital

All factors being variable in the long run

Lower interest rates are likely to.

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Decrease consumption

Increase cost of borrowing

Encourage saving

Increase spending

Economic theory assumes that people

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Act in greedy and selfish ways, without regard for the welfare of others.

Act without regard for their own interests.

Are not motivated by self interest

Are motivated by self interest but still might be concerned for the welfare of others.

In perfect competation.

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The price equals the marginal revenue

The price equals the average variable cost

The fixed cost equals the variable costs

The price equals the total costs

Barriers to entry do not include

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Patents

Internal economics of scale

Mobility of resources

High investment costs

Which of the following is not involved with fiscal policy.

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Income tax

National insurance

VAT

Interest rates

A reduction in the costs of production will

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Lead to a movement along the supply curve

Shift the demand curve

Shift the supply curve

Lead to an extension of supply

An increase in costs will

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Shift aggregate demand

Shift aggregate supply

Reduce the natural rate of unemployment

Increases the productivity of employees

In a free market the combination of products produced will be determined by.

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Market forces of supply and demand

The government

The law

The public sector

Which of the following is a determinant of consumption.

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Expectations about future prices

Level of indebtedness of consumers

The price level

All of the above

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