31) An outward shift of a nation’s production possibilities frontier represents A) economic growth. B) rising prices of the two goods on the production possibilities frontier model. C) an impossible situation. D) a situation in which a country produces more of one good and less of another. 32) Economic decline (negative growth) is represented on a production possibilities frontier model by the production possibility […]

    1.3   Economic Models   1) Economic models A) make no assumptions in order to remain as accurate as possible. B) are simplified versions of reality. C) can not be used to analyze real-world issues. D) magnify the complexity of economic issues in order to provide useful data.     2) Which of the following is part of an economic model? A) assumptions B) […]

  11.3   Common Resources   1) In which of the following cases does the tragedy of the commons occur? i.cattle grazing on private ranches ii.catching lobsters off the coast of Florida iii.raising salmon on salmon farms iv.using legal services provided by the courts A) i only B) ii only C) ii and iii D) i and iv E) i and iii   2) The tragedy […]

    61) Suppose that the Australian economy initially uses 50 billion hours of labor to produce $5 trillion of real GDP. If 50 billion more hours are employed and Australia’s real GDP increases by $4 trillion more, A) Australia’s production function exhibits diminishing returns. B) Australia’s production function exhibits increasing returns. C) Australia has an Okun Wedge of $1 trillion. D) Australia has positive […]

    31) The official settlements account records the A) change in official U.S. reserves. B) revenue collected from taxing imports. C) income used to settle international lawsuits. D) change in the official U.S. exchange rate. E) revenue collected from taxing exports.   32) The official settlements account is the record of A) a nation’s international trading, borrowing and lending. B) payments for imports, receipts […]

    65) The term “market” in economics refers to A) a place where money changes hands. B) a legal institution where exchange can take place. C) a group of buyers and sellers of a product and the arrangement by which they come together to trade. D) an organization which sells goods and services.   66) Economists assume that A) individuals behave in unpredictable ways. […]

  51) Sue consumes oysters and clams. Pounds of oysters are measured on the y-axis and pounds of clams on the x-axis. If the slope of Sue’s budget line is 5 pounds of oysters per pound of clams, Sue must A) give up 5 pounds of clams to obtain 1 pound of oysters. B) give up 5 pounds of oysters to obtain 1 pound of […]

  21) The larger the value of marginal product of a skill, the A) larger the vertical difference between the demand curves for high- and low-skilled labor. B) smaller the vertical difference between the demand curves for high- and low-skilled labor. C) larger the vertical distance between the supply curves for high- and low-skilled labor. D) smaller the vertical distance between the supply curves for […]

  9.3   Economic Growth Theories: Old and New 1) Thomas Malthus was an economist who contributed to the ________ theory of growth. A) classical B) neoclassical C) new growth D) socialist E) Keynesian 2) The Malthusian theory A) is also called the classical growth theory and predicts that we will run out of resources. B) is also called the neoclassical growth theory. C) predicts that […]

    31) As technologies develop, digital rights management offers IP holders the benefit of ________. A) preventing loss of critical organization data B) collaborating online to create open source products C) adding visual appeal to their digital products D) offering technological protection for their products   32) ________ is a type of intellectual property theft that involves reproducing the words of another and passing […]