Chapter 1 Self-test questions

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A positive statement is:

A statement of fact correct incorrect

Based on opinion. correct incorrect

Dependent on one's moral point of view. correct incorrect

Always correct. correct incorrect

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A decline in economic growth can be shown by:

an outward shift of the Production Possibility Boundary correct incorrect

an inward shift of the Production Possibility Boundary correct incorrect

a downward shift of the Production Possibility Boundary correct incorrect

no shift in the Production Possibility Boundary correct incorrect

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Which of the following can cause an outward shift of the Production Possibility Boundary:

Natural disasters correct incorrect

Technological advancement correct incorrect

Ageing population correct incorrect

Civil unrest correct incorrect

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Which of the following is not one of the characteristics of a market economy that helps produce spontaneous self-organization?

Individuals pursue their own self-interest, buying and selling what seems best for themselves and their families. correct incorrect

People respond to financial incentives correct incorrect

Prices are set in open markets in which suppliers compete to sell to potential buyers. correct incorrect

Firms are guided by the central government in deciding what to produce. correct incorrect

Economic transactions are governed by a legal structure, which enforces contracts and property rights, and is largely created and administered by the government. correct incorrect

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The feudal system is an example of a __________

Monetary policy correct incorrect

Command system correct incorrect

Traditional economic system correct incorrect

Modern economic system correct incorrect

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The resource provided by those who take risks by introducing new products and new ways of making old products is called:

Labour correct incorrect

Capita correct incorrect

Entrepreneurship correct incorrect

Land correct incorrect

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Which one of the following is a correct definition of opportunity cost?

The amount of money that something costs today correct incorrect

The amount of money that something will cost in the future correct incorrect

A measure of the cost of something in terms of the alternatives that had to be given up but could have been chosen instead correct incorrect

The amount of time and effort spent in order to enter a competition correct incorrect

The value of the effort expended to obtain an opportunity, such as a new job correct incorrect

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A production possibility frontier shows:

The minimum amount of products that a nation can produce with its current resource endowment correct incorrect

The maximum combinations of products that a nation can produce with its current resource endowment and current technology. correct incorrect

The maximum that a nation can produce with current resources and any past or future technology. correct incorrect

The point at which a nation currently produces. correct incorrect

The point at which a nation would like to produce. correct incorrect

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Which of the following is not a characteristic of market economies?

People respond to incentives. correct incorrect

People act selflessly in the best interests of society. correct incorrect

Prices are set in open markets correct incorrect

The state provides a legal framework for economic activity. correct incorrect

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The main behavioural incentive that drives a market economy to behave as it does is:

the individual pursuit of society's best interests. correct incorrect

the collective pursuit of society's best interests correct incorrect

the individual pursuit of self interest correct incorrect

the collective pursuit of self-interest correct incorrect