Households receive a total income of $5 million. Of this, $3.5 million are wages received for labor services, $1 million are rental payments, and $250,000 are interest payments received. What are the costs of production and profits equal to respectively? A) $4.75 million; 0 B) $5 million; $250,000 C) $4.75 million; $250,000 D) $5 million; […]
The duration of unemployment tends to rise when A) business activity goes into a downturn. B) business activity starts back up after a long period of decline. C) people leave their jobs rather than lose their jobs. D) the number of entrants exceeds the number of reentrants. ANSWER A
In a small country, the adult population equals 10,000. In that country, 8,000 people are in the labor force and 200 people are unemployed. The unemployment rate equals A) 2.5 percent. B) 2 percent. C) 4 percent. D) an undetermined amount given the lack of information. ANSWER A
The dollar value of final output A) is equal to total income. B) is less than total income. C) equals profits. D) is greater than total income. ANSWER A
The faster economic growth is, the A) steeper the slope of the production possibilities curve. B) closer to the origin the production possibilities curve becomes. C) more bowed the production possibilities curve becomes. D) farther the production possibilities curve shifts out. ANSWER D
Which of the following statements is NOT true about the relationship between the dollar value of total output and total income? A) The dollar value of total output equals total income because profit is considered a cost of production. B) The dollar value of total output equals total income because of the economic definition of […]
Which of the following is NOT an important factor affecting economic growth? A) the rate of growth of capital B) the rate of saving C) the rate of growth in labor productivity D) the growth of leisure ANSWER D
How much of each dollar spent by a consumer ultimately becomes income to someone else? A) less than one dollar B) It depends on how much the cost there is in the distribution channel that delivers the good from the manufacturer to the consumer. C) It depends on how much labor was needed to produce […]
Which of the following is TRUE? A) Real and nominal values are not related. B) Real standards of living can increase without any positive economic growth. C) Real standards of living decrease with positive economic growth. D) Real growth rates fail to account for by price level changes. ANSWER B
The two sectors of the economy in the simple circular flow model are A) the employed and the unemployed. B) households and businesses. C) foreign markets and domestic markets. D) the private sector and the public sector. ANSWER B
