C719 MACROECONOMICS PRE-ASSESSMENT QUESTIONS AND ANSWERS

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C719 Macroeconomics Pre-Assessment Questions 1. According to the production possibilities curve model, as you increase the production of one good, what will happen to the sacrifices of the alternate... good? a. They will steadily increase. b. They will steadily decrease. c. They will remain the same. d. They will gradually disappear. 2. A farmer fully utilizes his resources to produce cauliflower and kale. As the farmer produces more cauliflower, he has fewer resources available to produce kale. Which curve is illustrated in this scenario? a. Aggregate supply curve b. Aggregate demand curve c. Production possibilities curve d. Business cycle 3. What are the main foci of economics? a. Consumption, production, and use of renewable resources b. Consumption, production, and use of scarce resources c. Consumption, production and use of financial resources d. Consumption, production and use of abundant resources 4. Study the two-sector circular-flow diagram. Classify each statement as either a flow of resources or a flow of dollars. Answer options may be used more than once or not at all. Select your answers from the pull-down list. a. Households provide productive resources to firms. Flow of resources b. Households buy consumer products from firms. Flow of dollars c. Firms sell products to households. Flow of dollars d. Households supply labor to firms. Flow of resources 5. Florence could earn an annual salary of $70,000 as a financial advisor or $60,000 as a bank manager. Currently, Florence is a teacher and earns an annual salary of $35,000. What is Florence's opportunity cost for choosing to be a teacher instead of a financial advisor? a. $70,000 b. $60,000 c. $35,000 d. $25,000 6. Florence is a teacher and earns $35,000 a year. Her spouse is a part-time IT specialist who earns $45,000 a year. Florence and her spouse decide that one of them should quit work and become a stay-at-home parent. Based on the principle of comparative advantage, who should be the full-time, stay-at-home parent? a. Florence should stay home, since she has a lower opportunity cost. b. Her spouse should stay at home, since Florence can potentially earn more. c. Her spouse should stay at home, since Florence only makes $35,000. d. Neither; they should both continue working. 7. Referring to the three economic questions (what, how, and for whom), in a market system, by whom are these questions determined? a. The culture’s tradition b. The buyers and sellers c. The central authority d. The market itself 8. In the car manufacturing industry, the supply for cars has a positive slope. What happens if the price of cars increases? a. The supply curve will shift right. b. The supply curve will shift left. c. The supply curve will change slope. d. There will be a movement along the supply curve. 9. In the car manufacturing industry, the supply for cars has a positive slope. Which two factors can cause the supply curve to shift? a. A change in price of cars b. A change in the cost of labor c. A change in expectations about the future d. A change in consumer tastes 10. Textbooks and class enrollments are complements. What happens to the demand curve for textbooks if the tuition rate increases? a. It will shift to the left. b. It will shift to the right. c. It will stay the same. d. It will first shift to the left, then shift to the right. [Show More]

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