A firm produces a good and generates $5 million in receipts. Wages are $3 million, rent is $500,000, and interest payments are $1 million. Then A) profits are $500,000, the cost of production is $4.5 million, and households receive income equal to $4.5 million. B) profits are $500,000, the cost of production is $5 million, […]
Countries are concerned about small changes in their average annual growth rates in per capita income because A) growth rates are a factor in U.N. participation. B) the power of compounding means small changes have large effects over time. C) growth rates tend to decline over time. D) the faster a country grows today, the […]
In a small country, the adult population is 10,000. In that country, 7,000 people are in the labor force and 6,300 people are employed. The unemployment rate equals A) 0.63 percent. B) 7 percent. C) 10 percent. D) an undetermined amount given the lack of information. ANSWER C
Which of the following occurs in the factor market? A) households exchange resources for goods and services. B) firms exchange money for resources. C) firms exchange goods and services for resources. D) households exchange money for goods and services. ANSWER B
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 […]
