Economics Review practice test

question

When manufactured goods are used to produce other goods and services, they are called capital goods.
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true
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A nondurable good lasts for less than five years when sued on a regular basis.
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false, three
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The paradox of value occurs when some necessities have little value, while some non-necessities have a much higher value.
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true
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Economic growth occurs when a nation’s total output of the goods and services increases over time.
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true
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The circular flow of economic activity describes an economy that is free of market.
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false
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In economics, land refers to the natural resources needed for production, such as forests, minerals, and climate.
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true
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The four factors of production are land, capital, labor, and financing.
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false
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Economics is a social science because it deals with how people behave while trying to satisfy their needs and wants through use of relatively scarce resources.
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true
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Economic products consist of both goods and services that are useful, relatively scarce, and transferable to others
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true
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A nation’s wealth refers to a worth that can be expressed in dollars and cents.
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false
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Both goods and services are counted as part of a nation’s wealth.
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true
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Division of labor increases efficiency because it allows workers to master many aspects of their jobs.
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false, one
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Economic interdependence limits a nation’s growth and usually reduces the efficiency of production.
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false, encourages
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Time is an opportunity cost when a manufacturer assigns workers to one task rather than to another.
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true
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The production possibilities frontier can be reached even if certain resources remain idle.
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false
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The situation in which some necessities have little value while some non necessities have a much higher value is known as a. paradox of value b. opportunity cost c. trade-offs
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a
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Manufactured goods needed to produce other goods and services are called a. nondurable goods b. capital goods c. consumer goods
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b
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To arrive at an economic decision, a decision making grid may be used to evaluate a. productivity b. only durable goods c. alternative choices of action
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c
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Division of labor is a characteristic of a. home craft businesses b. assembly line production c. classroom education
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b
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The study of economics is important because it enables us to a. describe our standard of living b. increase our consumption of consumer goods c. become better decision makers
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c
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The dollar value of all final goods and services and the most comprehensive measure of a country’s total production output a. financial capital b. a cost-benefit analysis c. Gross Domestic Product (GDP)
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c
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A popular model used to illustrate the concept of opportunity cost is a. the production possibilities frontier b. entrepreneurship c. the paradox of value
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a
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An economy at its production possibilities frontier is operating a. with slow economic growth b. at full potential c. without division of labor
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b
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The money used to buy the tools and equipment needed for production is known as a. the factors of production b. financial capital c. wealth
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c
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Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of a. trade-offs b. specialization c. economic interdependence
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c
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___ describes the concept that everything we do has a cost
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TANSTAAFL
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WHAT, HOW, and FOR WHOM to ___ are the three basic economic questions
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produce
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The ___ of production include land, labor, capital, and entrepreneurs
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factors
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___ is a key measure of a nation’s economic health
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GDP
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The study of ___ helps all of us to become more informed citizens and better decision makers
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economics
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A ___ grid can be used to evaluate alternatives
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decision-making
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The opportunity cost of doing something is the next best alternative, or ___, that you give up
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tradeoff
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A production possibilities frontier shows the various possible combinations of output that can be produced when all ___ are fully employed
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resources
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When economic growth takes place, the ___ production possibility shifts outward, showing that more products are produced than before
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production possibility fronteir
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The study of economics helps people make better __
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decisions
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worth that can be expressed in dollars and cents
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value
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study of how people try to satisfy their needs and wants through the used of limited resources
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economics
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tools, equipment, machinery, and factories used in the production of goods and services
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capital
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condition of not having enough resources to produce all the things people want
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scarcity
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cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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opportunity cost
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sum of those economic products that are tangible, scarce, useful, and transferrable
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wealth
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people with all their efforts, abilities, and skills
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labor
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alternative choices made by consumers in the marketplace
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trade-offs
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quality of life based on the possession of the necessities and luxuries that make life easier
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standard of living
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item that is economically useful or that satisfies an economic want
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good
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manufactured goods that are used to produce other goods
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capital good
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process of using up goods and services to satisfy wants and needs
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consumption
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basic requirement for survival
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need
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way of expressing a need that leads to a preference for some goods over others
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want
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work that is performed for someone
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service
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diagram representing various combinations of goods and/or services that an economy can produce when all productive resources are fully employed
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production possibilities frontier
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process of creating goods and services
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production
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market where productive resources are bought and sold
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factor market
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any good that lasts three years or more when used regularly
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durable good
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economy is which consumers and privately owned businesses make the majority of the WHAT, HOW, and FOR WHOM decisions
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free enterprise economy

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