Q: Which formula correctly calculates the percentage change in real GDP from one year to the next?

$$ \frac{GDP_{current} - GDP_{previous}}{GDP_{previous}} \times 100 $$

Question 1

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

Accepted Answer

A situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Question 2

According to economic theory, when making decisions, rational people:

Accepted Answer

Systematically and purposefully do the best they can to achieve their objectives, weighing costs and benefits.

Question 3

Which of the following is an example of an economic incentive?

Accepted Answer

A student studies harder after learning about a scholarship for high grades.

Question 4

What does it mean to make decisions 'at the margin'?

Accepted Answer

Making incremental adjustments to an existing plan by comparing marginal benefits and marginal costs.

Question 5

If the marginal benefit (MB) of an activity is equal to its marginal cost (MC), what should a rational decision-maker do?

Accepted Answer

Maintain the current level of the activity.

Question 6

A student decides to attend an extra year of college. The opportunity cost of this decision is:

Accepted Answer

The highest-valued alternative that must be given up, such as the income from working full-time.

Question 7

Which of the following best illustrates a trade-off?

Accepted Answer

Choosing to produce more cars means producing fewer computers due to limited resources.

Question 8

Which of the following is a positive economic statement?

Accepted Answer

"Raising the minimum wage will increase unemployment among teenagers."

Question 9

Which of the following is NOT a factor of production?

Accepted Answer

Money

Question 10

In the circular-flow diagram, which of the following best describes the flow of funds?

Accepted Answer

Firms pay households for factors of production, and households use these payments to buy goods and services from firms.

Question 11

Which formula correctly calculates the percentage change in real GDP from one year to the next?

Accepted Answer

$$ \frac{GDP_{current} - GDP_{previous}}{GDP_{previous}} 	imes 100 $$

Question 12

A firm sells 125,000 bottles of soda at $2.00 each. What is the firm's total revenue?

Accepted Answer

$$ 125,000 	imes 2.00 = 250,000 $$

Question 13

The area of a triangle on a graph is calculated as:

Accepted Answer

$$ \frac{1}{2} 	imes 	ext{base} 	imes 	ext{height} $$

Question 14

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies individual households and firms, while macroeconomics studies the economy as a whole.

Question 15

Which of the following is an example of a nonlinear relationship in economics?

Accepted Answer

A curved relationship between the quantity of iPhones produced and the total cost of production.

Question 16

In the context of the market mechanism, what is the 'invisible hand'?

Accepted Answer

The self-regulating nature of the marketplace where individuals' pursuit of self-interest leads to economic well-being.

Question 17

Which of the following is a normative economic statement?

Accepted Answer

"The government should increase spending on education."

Question 18

Which of the following is NOT an assumption commonly used in economic models?

Accepted Answer

All resources are unlimited.

Question 19

If the slope of a line on a graph is calculated as $$ \frac{\Delta y}{\Delta x} $$, what is the slope if $$ y $$ increases by 10 when $$ x $$ increases by 50?

Accepted Answer

$$ 0.2 $$

Question 20

Which of the following best describes the role of entrepreneurs in the economy?

Accepted Answer

They bring together the factors of production to produce and sell goods and services.

Principles of Macroeconomics: Foundations and Models

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