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

$$ \frac{\text{Value in the second period} - \text{Value in the first period}}{\text{Value in the first period}} \times 100 $$

Question 1

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

Accepted Answer

Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Question 2

A government decides to increase taxes on high-income earners to fund welfare programs for the poor. Which economic trade-off does this policy illustrate?

Accepted Answer

The trade-off between efficiency and equity.

Question 3

Which of the following statements about market economies is correct?

Accepted Answer

Market economies allocate resources based on the decisions of households and firms interacting in markets.

Question 4

Suppose a firm can produce a good using either more labor and less capital, or more capital and less labor. Which economic question does this scenario address?

Accepted Answer

How will the goods and services be produced?

Question 5

If the marginal benefit of producing one more unit of a good is equal to the marginal cost, what does this imply about allocative efficiency?

Accepted Answer

Allocative efficiency has been achieved.

Question 6

Which of the following is an example of a positive economic statement?

Accepted Answer

Increasing the minimum wage will lead to higher unemployment among teenagers.

Question 7

A student is deciding whether to spend an extra hour studying economics or working at a part-time job. The opportunity cost of studying for an extra hour is:

Accepted Answer

The wage the student would have earned during that hour.

Question 8

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

Accepted Answer

$$ \frac{	ext{Value in the second period} - 	ext{Value in the first period}}{	ext{Value in the first period}} 	imes 100 $$

Question 9

A centrally planned economy differs from a market economy in that:

Accepted Answer

The government decides how economic resources will be allocated in a centrally planned economy.

Question 10

Which of the following best describes voluntary exchange?

Accepted Answer

A transaction in which both the buyer and seller are made better off.

Question 11

Suppose the price of a product increases from $$10 to 12$$, and the quantity sold decreases from 100 units to 80 units. What is the slope of the line connecting these two points on a price-quantity graph?

Accepted Answer

$$ \frac{12 - 10}{80 - 100} = \frac{2}{-20} = -0.1 $$

Question 12

Which of the following is NOT a key assumption typically made when analyzing markets?

Accepted Answer

All resources are unlimited.

Question 13

If a government policy unintentionally causes colleges to increase tuition, this is an example of:

Accepted Answer

An unintended consequence due to a change in economic incentives.

Question 14

Which of the following best illustrates the concept of a trade-off?

Accepted Answer

A country increases spending on healthcare, resulting in less spending on education.

Question 15

What is the area of a rectangle representing total revenue on a price-quantity graph if the price is $5 and the quantity sold is 200 units?

Accepted Answer

$$ 5 	imes 200 = 1000 $$

Question 16

Which of the following is a normative statement?

Accepted Answer

The government should provide free healthcare to all citizens.

Question 17

A mixed economy is best described as:

Accepted Answer

An economy in which most decisions result from the interaction of buyers and sellers in markets, but the government plays a significant role.

Question 18

If a graph shows a positive relationship between two variables, which of the following is true?

Accepted Answer

As one variable increases, the other also increases.

Question 19

Which of the following best explains why economists use models?

Accepted Answer

To analyze real-world economic situations using simplified versions of reality.

Question 20

Suppose the area of a triangle on a graph has a base of 30 units and a height of $4. What is the area of the triangle?

Accepted Answer

$$ \frac{1}{2} 	imes 30 	imes 4 = 60 $$

Foundations of Macroeconomics: Key Concepts and Models (Chapter 1 Study Notes)

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