Quiz questions Flashcards
According to the model of demand & supply, a simultaneous increase in both the demand for computers and the supply of computers must increase
a.
the number of computers bought and sold.
b.
the price of computers.
c.
both the equilibrium price and quantity of computers.
d.
the shortage of computers in the market.
c. both the equilibrium price and quantity of computers.
Money serves as a
a.
unit of account
b.
medium of exchange
c.
store of wealth
d.
all of the above
d. all of the above
Under which conditions is credit – a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at a later date – most likely to spur economic growth?
a.
If business and the economy is seen as a zero-sum game.
b.
If credit is extended only when the borrower can offer an asset to a lender as security for a loan (collateral).
c.
If people trust that resources in the future will be more abundant than in the present.
d.
If people believe that wealth is diminishing over time.
b. If credit is extended only when the borrower can offer an asset to a lender as security for a loan (collateral).
The First Welfare Theorem states that
a.
competitive markets are efficient when there are no externalities and no concentration of market power.
b.
competitive markets are efficient even in the presence of externalities.
c.
taxes and regulations always lower a society’s welfare, on the aggregate.
d.
substantial inequality is a necessary by-product of an economy that operates efficiently.
a. competitive markets are efficient when there are no externalities and no concentration of market power.
The Principle of Comparative Advantage says that
a.
two countries can benefit from trade, but only when one country has a higher productivity (i.e., output per worker) for one group of products while the other country has a higher productivity for another group of products.
b.
two countries can benefit from trade, even when one country has a higher productivity (i.e., output per worker) for all products than the other country. What matters are differences in relative productivity between the different products.
c.
the more productive country benefits more from trade than the less productive country.
b.
two countries can benefit from trade, even when one country has a higher productivity (i.e., output per worker) for all products than the other country. What matters are differences in relative productivity between the different products.
