$$\frac{8}{100} \times 100 = 8\%$$

Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Scarcity refers to the limited nature of resources, which forces individuals and societies to make choices.

Question 2

A country is operating at a point inside its Production Possibilities Frontier (PPF). What does this indicate?

Accepted Answer

The country is experiencing inefficiency, possibly due to unemployment or underutilization of resources.

Question 3

If the opportunity cost of producing one more unit of good X increases as more of X is produced, what does the shape of the PPF look like?

Accepted Answer

The PPF is bowed outward (concave to the origin).

Question 4

Which of the following is an example of a choice made in self-interest that also benefits the social interest?

Accepted Answer

A person gets vaccinated, reducing their risk and helping prevent disease spread.

Question 5

Suppose the marginal benefit of producing an additional unit of a good is less than the marginal cost. What should a rational producer do?

Accepted Answer

Decrease production of the good.

Question 6

Which equation correctly represents the expenditure approach to calculating GDP?

Accepted Answer

$$Y = C + I + G + (X - M)$$

Question 7

A shift of the demand curve to the right, with supply held constant, will result in:

Accepted Answer

An increase in equilibrium price and quantity.

Question 8

Which of the following is NOT included in the calculation of GDP?

Accepted Answer

The value of intermediate goods used in production.

Question 9

If the labor force in a country is 100 million and 8 million are unemployed, what is the unemployment rate?

Accepted Answer

$$\frac{8}{100} 	imes 100 = 8\%$$

Question 10

Which type of unemployment is caused by changes in technology or international competition that reduce the demand for certain skills?

Accepted Answer

Structural unemployment

Question 11

If nominal GDP increases by 5% but real GDP increases by only 2%, what does this suggest about the price level?

Accepted Answer

The price level has increased.

Question 12

Which of the following would cause a movement along the supply curve rather than a shift of the supply curve?

Accepted Answer

A change in the price of the good itself.

Question 13

If a country increases its capital stock and improves labor productivity, what is the likely effect on its PPF?

Accepted Answer

The PPF will shift outward.

Question 14

During a recession, which phase of the business cycle is the economy most likely experiencing?

Accepted Answer

Trough

Question 15

Which of the following best describes allocative efficiency?

Accepted Answer

Producing at a point where marginal benefit equals marginal cost.

Question 16

Suppose the government increases spending on infrastructure. According to the GDP equation, which component is directly affected?

Accepted Answer

G (Government spending)

Question 17

If the equilibrium price of wheat rises and the equilibrium quantity falls, which of the following could explain this outcome?

Accepted Answer

A decrease in supply with demand held constant.

Question 18

Which of the following is a final good in the calculation of GDP?

Accepted Answer

A new car sold to a consumer.

Question 19

If the labor force increases while the number of employed remains constant, what happens to the unemployment rate?

Accepted Answer

It increases.

Question 20

Which of the following best explains the difference between long-term and short-term GDP growth?

Accepted Answer

Short-term growth is driven by changes in aggregate demand, while long-term growth is driven by increases in productive capacity.

Macroeconomics Study Guide: Key Concepts and Principles

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