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ECO 202– Questions With Correct Solutions
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ECO 202– Questions With Correct Solutions
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ECO 202– Questions With Correct SolutionsThe term market failure refers to Right Ans - a situation in which the
market on its own fails to allocate resources efficiently
productivity is defined as the Right Ans - The amount of goods and services
produced from each unit of labor input
Market power refers to the Right Ans - power of a single person or small
group to influence market prices
The terms equality and efficiency are similar in that they both refer to benefits
to society. However they are different in that Right Ans - equality refers to
uniform distribution of those benefits and efficiency refers to maximizing
benefits from scarce resources
The business cycle is measured by the Right Ans - production of goods and
services and number of people employed.
Inflation is defined as Right Ans - an increase in the overall level of prices
in the economy
In a market economy, economic activity is guided by Right Ans - self-
interest and prices
Economics is the study of Right Ans - how society manages its scarce
resources
Irregular fluctuations in economic activity are known as the Right Ans -
business cycle
The property of society getting the most it can from its scarce resources is
called Right Ans - efficiency
Which of the following can lead to market failure? Right Ans - externalities
and market power
, In a market economy, who makes the decisions that guide most economic
activity? Right Ans - firms and households
Prices usually reflect Right Ans - both the value of a good to society and the
cost to society of making the good
The invisible hand refers to Right Ans - how the decisions of households
and firms lead to desirable market outcomes
Trade between countries tends to Right Ans - increase both competition
and specialization.
A model that shows how dollars flow through markets among households and
firms is called the Right Ans - circular-flow diagram
The simple circular-flow diagram is a model that includes only some key
players in the real economy. Which of the following key players are omitted
from the simple circular-flow model? Right Ans - government
The slope of a line is equal to Right Ans - the change in the value of y
divided by the change in the value of x
When two variables have a negative correlation Right Ans - they tend to
move in opposite directions
Which of these terms are used interchangeably? Right Ans - "inputs" and
"factors of production"
The nation's antitrust laws are enforced by economists at the Department of
Right Ans - Justice
The President receives economic policy advice from economists at each of the
following except Right Ans - the Congressional Budget office
A demand curve shows the relationship between price and Right Ans -
quantity demanded
Economic models Right Ans - are usually composed of diagrams and
equations
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