Question # 1

A government might use tax to.

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Discourage consumption of positive externalities

Discourage consumption of public goods

Discourage consumption of merit goods

Discourage consumption of negative externalities

In a command economy

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The price mechanism acts as an incentive

Resources are allocated by market forces

Individual firms make decisions for themselves about what to produce and how to produce it.

The public sector is large

There are three fundamental questions every society must answer Which of the following is one of these questions.

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What goods and services are to be produced.

How are the good and services to be produced.

Who will get the goods and services what are produced.

All of the above

To adjust from gross National Product to Net National Product

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Deduct deprecation

Deduct indirect taxes

Deduct subsidies

Add inflation

A significant increase in the government budget deficit is likely to.

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Reduce injections into the economy

Reduce national income

Move the economy away from full employment

Boost aggregate demand

Labour productivity measures.

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The output per worker

The output per machine

Total output

Marginal output

If a maximum price is set below equilibrium there will be.

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A price fall

A price increase

Excess supply

Excess demand

The sacrifice involved when you choose a particular course of action is called the

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Alterative

Opportunity cost

Consumer cost

Producer cost

An increase in the costs of production will

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Shift demand out wards

Shift demand in wards

Shift supply out wards so more is supplied at each and every price all other things unchanged.

Shift supply inwards

The accelerator theory of investment says that induced investments determined by.

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The rate of change of national income

Expectations

The level of national income

The level of aggregate demand

To prevent the external value of the currency from failing the government might

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Reduce interest rates

Sell its own currency

Buy its own currency with foreign reserves

Increase its own spending

According to the quantity theory of money an increase in the money supply is most likely to lead ot inflation if

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The velocity of circulation decreases

The number of transactions decreases

There is deflation

The velocity of circulation and the number of transactions is constant

Which of the following best defines price discrimination.

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Charging different prices on the basis of race

Charging different prices for goods with different costs of production

Charging different prices based on cost of service differences.

Selling a certain product of given quality and cost per unit at different prices to different buyers

Human wants are

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Always fixed

Limited

Unlimited

Likely to decrease over time

As the MPS increases, the multiplier will

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Increase

Either increase or decrease depending on the size of the change in investment

Remain constant

Decrease

If marginal cost is positive and falling.

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Total cost is falling

Total cost is increasing at a falling rate

Total cost is falling at a falling rate

Total cost is increasing at an increasing rate.

If product an inferior good.

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Demand is inversely related to income

Demand is inversely related to price

Demand is directly related to price

Demand is inversely related to the price of substitutes

Resources in an economy

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Are always fixed

Can never decrease

Always increase over time

Are limited at any moment in time

The liquidity trap occurs when the demand for money

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Is perfectly interest elastic

Is perfectly interest inelastic

Means that an increase in money supply leads to a fall int he interest rate

Means that an increase in the money supply leads to an increase in the interest rate

To maximize sales revenue a firm should produce where

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Marginal cost is zero

Marginal revenue is maximized

Marginal revenue is zero

Marginal revenue equals marginal cost

The Philips curve shows the relationship between inflation and what?

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The balance of trade

The rate of growth in an economy

The rate of price increases

Un employment

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