Economics 101 96%...

1. According to economists, which of the following would explain why the above production possibilities curve is shaped as it is? I. Society must choose how to use scarce resources. II. Law of increasing opportunity costs. III. Resources must be allocated between consumer and capital goods. I only. II only. III only. I and II only. I, II, and III. 2. Given the production possibilities curve above which of the following would cause a shift from curve A to curve B? An increase in the demand for consumer goods. A decrease in the demand for capital goods. A new technology that made capital goods easier to produce. An increase in the income of consumers. Greater productivity of workers in the consumer goods industry. 3. Mr. Divers retired last year with a small pension. He also has a mutual fund account made entirely up of stable fixed-rate bonds. Between the two, he is able to live quite comfortably. How will unanticipated inflation affect Mr. Divers' retirement account? He will not be affected because his pension is adjusted by a COLA in January each year. He is helped because his total income will be greater after inflation. He is hurt because his total income will be smaller after inflation. He is helped because his income will buy more in the future than it would before inflation. He is hurt because his income will buy less in the future than it would before inflation. 4. If real GDP grew at 3.5% last year and prices increased by 3% over the same time period then the average consumer is better off. the average consumer is worse off. the average consumer is unaffected. the average producer is unaffected. the average producer is worse off. 5. The market for tennis shoes is in equilibrium. If the government increases business taxes, then we would expect to see a(n) increase in supply. increase in quantity supplied. decrease in supply. decrease in quantity supplied. shortage in the market. 6. According to the graph above, the opportunity cost of producing 10 additional bottles of lime juice is 25 bottles of coconut oil. 75 bottles of coconut oil. 100 bottles of coconut oil. 125 bottles of coconut oil. 40 bottles of lime juice. 7. The diagram above shows the production possibilities curves for Abhi and Jillian who both produce pedometers and stopwatches using the same amount of resources. Based on this information, Abhi's opportunity cost of producing one pedometer is one half of a stopwatch. Abhi's opportunity cost of producing one pedometer is one and a half stopwatches. Abhi's opportunity cost of producing one pedometer is two stopwatches. Jillian's opportunity cost of producing one pedometer is one and one-third stopwatches. Jillian's opportunity cost of producing one pedometer is one and a half stopwatches. 8. In the short-run, a decrease in wage rates in an economy would increase aggregate supply. decrease aggregate supply. cause a movement up the AS curve. cause a movement down the AS curve. not impact aggregate supply. 9. If a new technology increases productivity then short-run aggregate supply will shift right and output and price level will increase. shift left and output and price level will increase. shift right and output and price level will decrease. shift left and output will increase and price level will decrease. shift right and output will increase and price level will decrease. 10. The price level increases due to demand-pull inflation. As a result short-run aggregate supply will shift left. short-run aggregate supply will shift right. there will be a movement up the short-run aggregate supply curve. there will be a movement down the short-run aggregate supply curve. the aggregate supply curve will not be impacted. 11. If consumer confidence decreases then aggregate demand will increase and output and price level will increase as well. decrease and output and price level will decrease as well. increase and output will increase but price level will decrease. increase and output will decrease but price level will increase. decrease and output will decrease but price level will increase. 12. If consumers are more optimistic about the future economy, then there is a movement down the AD curve as price level decreases. AD shifts right and price level would decrease. AD shifts right and price level would increase. AD shifts left and price level would decrease. AD shifts left and the price level would increase. 13. If consumers are more optimistic about the future economy, then there is no change in the AD curve as SRAS has decreased. AD shifts right and output would increase. AD shifts right and output would decrease. AD shifts left and output would increase. AD shifts left and the output would decrease. 14. If Congress passes a plan to cut the national debt in half, then there is no change in the AD curve as SRAS has decreased. AD shifts right and output would increase. AD shifts right and output would decrease. AD shifts left and output would increase. AD shifts left and the output would decrease. 15. Disposable Income Consumer Spending $10,000 $7,500 $12,000 $8,500 Given the information in the table above, calculate the MPS for this economy. .5 .75 .8 .2 .1 16. Assume Angela's disposable income is $800 and her boss gives her a $100 raise. Her consumption increased from $600 to $650. Which of the following is true? MPC = .8 MPS = .8 MPC = .75 MPS = .75 MPC = .5 17. When economists discuss the "multiplier effect," they mean that when taxes increase, output increases by a greater amount. when government spending increases, output increases by the same amount. when consumption increases, output increases by the same amount. when investment increases by a little, output increases by a greater amount. when investment increases, output increases by the same amount. 18. Disposable Income Consumption $0 $300 $2,000 $1,800 What is the MPC according to the table above? .5 .6 .75 .8 .9 19. If consumers expect a shortage of consumer goods in the future, what will happen to output and price level? Output / Price Level Increase / Increase Increase / Decrease Increase / No Change Decrease / Increase Decrease / Decrease 20. If the economy was operating at P1Y1, then the economy is at full employment of resources. employment is less than full employment. inflation is greater than 5%. the economy is above full employment of resources. the economy is in equilibrium. 21. Cost-push inflation would occur when the economy moves from P3Yf to P1Y2. from P2Yf to P1Y1. from P3Yf to P1Y1. from P1Y1 to P1Y2. from P1Y1 to P2Yf. 22. If Congress cuts personal income taxes and business taxes at the same time, then aggregate demand, short-run aggregate supply, and price level will change in which of the following ways: AD / SRAS / Price Level Increase / No Change / Increase No Change / Increase / Increase Increase / Increase / Indeterminate Increase / No Change / Indeterminate No Change / Increase / Indeterminate 23. A change in aggregate demand from AD2 to AD4 can be caused by an increase in productivity. a decrease in consumer wealth. an increase in exports. an increase in imports. an increase in farm subsidies. 24.