Foundations of Microeconomics, 5e (Bade/Parkin)
Chapter 2 The U.S. and Global Economies
2.1 What, How, and For Whom?
1) Items that are purchased by individuals for their own enjoyment are called
A) consumption goods and services.
B) capital goods.
C) government goods and services.
D) exports of goods and services.
E) private goods.
2) Items bought by individuals to provide personal enjoyment are termed
A) consumption goods.
B) personal goods.
C) consumption or investment goods.
D) standard goods.
E) pleasure goods.
3) What would be an example of consumption good?
A) Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
B) The local driver’s license office purchases a new digital camera and printer.
C) Rhianna gets a haircut.
D) Jake buys an iPhone.
E) Donald Trump purchases furniture for his office.
4) Which of the following is a consumption good or service?
A) a personal computer purchased in order to play games at home
B) a United Airline ticket counter
C) the Endeavor space shuttle
D) a United Parcel Service truck delivering Christmas gifts
E) a satellite dish installed by Cox Cable to download programs that are then distributed through
its cable system
5) What would be an example of consumption service?
A) Rhianna gets a haircut.
B) Jake buys an iPhone.
C) Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
D) The local driver’s license office purchases a new digital camera and printer.
E) Donald Trump purchases furniture for his office.
6) The largest share of total production in the United States is
A) consumption goods and services.
B) capital goods.
C) government goods and services.
D) exported goods and services.
E) imported goods and services.
7) Items bought by businesses to help produce other goods and services are called
A) consumption goods and services.
B) capital goods.
C) government goods and services.
D) exports of goods and services.
E) productive goods.
8) An item that is purchased to increase businesses’ productive factors is
A) an export.
B) a government good.
C) a capital good.
D) a consumption good.
E) a productive good.
9) What would be an example of capital good?
A) Jeanette buys a new dress.
B) The local driver’s license office purchases a new digital camera and printer.
C) Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
D) Apple sells computers to Japan.
E) Rhianna gets a haircut.
10) The difference between consumption and capital goods is that
A) only big corporations can afford capital goods.
B) capital goods are used to produce additional goods while consumption goods are not.
C) capital goods are provided by the government.
D) consumption goods can be enjoyed by many people at the same time.
E) it is illegal to export capital goods.
11) Goods and services bought by the government account for around ________ percent of total
production.
A) 2
B) 8
C) 18
D) 35
E) 67
12) What would be an example of government good?
A) Jake buys an iPhone.
B) The local driver’s license office purchases a new digital camera and printer.
C) Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
D) Donald Trump purchases furniture for his office.
E) Rhianna gets a haircut.
13) Goods produced in the United States and sold in other countries are called
A) exports.
B) imports.
C) foreign goods.
D) capital goods.
E) capital account goods.
14) An export good is a good produced
A) in the United States and sold to foreigners living in the United States.
B) by foreigners in the United States and purchased by U.S. households.
C) in another country and purchased by U.S. residents.
D) in the United States and sold in other countries.
E) in another country and purchased by foreigners not residing in the United States.
15) Computers and insurance coverage produced in the United States and sold to people in other
nations are categorized as
A) U.S. consumption goods and services.
B) foreign capital goods.
C) U.S. government goods and services.
D) U.S. exports of goods and services.
E) U.S. imports of goods and services.
16) The Colorado Ski Shop sold 60 ski jackets to a Belgium company’s headquarters located in
Paris, France. The ski jackets are a
A) U.S. export.
B) capital good.
C) government good.
D) U.S. consumption service.
E) U.S. import.
17) Which of the following is not considered as one of the factors of production?
A) Land.
B) Labor.
C) Capital.
D) Technology.
E) Entrepreneurship.
18) Which of the following correctly lists the categories of factors of production?
A) land, labor, capital, and entrepreneurship
B) land, buildings, capital, and entrepreneurship
C) labor, machines, buildings, capital, and entrepreneurship
D) forests, fish, buildings, capital, and entrepreneurship
E) labor, money, stocks, and bonds
19) Goods and services are produced by using four factors of production:
A) land, labor, capital, and entrepreneurship.
B) land, labor, money, and equipment.
C) natural resources, human resources, financial assets, and entrepreneurial resources.
D) labor, human capital, physical capital, and financial capital.
E) land, labor, capital, and money.
20) Factors of production are the
A) goods that are bought by individuals and used to provide personal enjoyment.
B) goods that are bought by businesses to produce productive resources.
C) productive resources used to produce goods and services.
D) productive resources used by government to increase the productivity of consumption.
E) goods and services produced by the economy.
21) The productive resource that includes all the “gifts of nature” is called
A) land.
B) labor.
C) capital.
D) entrepreneurship.
E) land if undeveloped and capital if developed.
22) Economists classify energy and water as part of which factor of production?
A) land
B) labor
C) capital
D) entrepreneurship
E) land if undeveloped and capital if developed
23) As a factor of production, oil reserves are counted as
A) land.
B) labor.
C) capital.
D) entrepreneurship.
E) financial capital.
24) Over time, the percentage of total employment in services has ________ and in agriculture,
employment has ________.
A) increased; increased.
B) decreased; increased.
C) decreased; increased.
D) stayed about the same; increased.
E) increased; decreased.
25) The concept of human capital describes
A) human skills, that is, the quality of labor.
B) human population, that is, the quantity of labor.
C) the number of machines per employed worker.
D) the number of workers per operating machine.
E) the number of machines (capital) that have been produced by people (humans).
26) Which factor of production does human capital enhance?
i. land
ii. labor
iii. capital
A) i only.
B) ii only.
C) iii only.
D) i and ii.
E) i, ii, and iii.
27) Human capital can be increased through
A) investment in new technology.
B) education, on-the-job training, and work experience.
C) investment in new machinery.
D) decreases in population.
E) increasing the nation’s production of consumption goods.
28) The United States possesses a large amount of human capital. As a result of this fact, in the
United States there is a
A) large amount of machinery and equipment.
B) large number of people and a great deal of land.
C) highly skilled and educated labor force.
D) large number of kind and generous humans.
E) large amount of machinery (capital) that is run by people (humans).
29) Jan is attending college and studying to be an investment broker. To improve her chances of
employment following college, she has interned at a top brokerage firm during the last two
summers. Jan’s internship has increased her
A) natural labor.
B) human capital.
C) consumption services.
D) natural resources.
E) entrepreneurship capital.
30) Capital, as a factor of production, refers to
A) money, stocks, and bonds.
B) the production technology used by firms.
C) the physical goods used to produce other goods and services.
D) the production factors imported from abroad.
E) stocks, and bonds but not money.
31) The total value of capital in the United States is around
A) $47 trillion.
B) $10 trillion.
C) $79 trillion.
D) $100 trillion.
E) $145 trillion.
32) Capital is best defined as
A) produced goods used by businesses.
B) financial capital.
C) investment.
D) money.
E) stocks and/or bonds.
33) Capital is a factor of production. Which of the following is an example of capital?
i. $1,000 in money
ii. 100 shares of Microsoft stock
iii. $10,000 in bonds issued by General Motors
iv. A drill press in your local machine shop
A) i and ii.
B) ii only.
C) iii only.
D) iv only.
E) ii and iii.
34) Capital is a factor of production. An example of capital as a factor of production is
A) money.
B) stocks.
C) bonds.
D) machines.
E) education.
35) One of the productive resources is capital. Capital includes
A) money borrowed from a bank.
B) a company’s stocks and bonds.
C) tools, buildings, and machine tools.
D) toys, t-shirts, CD players, and pencils.
E) money in a savings account at a bank.
36) Which of the following is NOT considered capital?
A) An assembly line at a General Motors plant.
B) A computer used by your instructor for presentations in class.
C) Stocks and bonds that are sold by Pepsico.
D) The furniture in the President’s office.
E) A nail gun used for building houses.
37) The owners of the resource ________ are paid ________ .
A) land; wages
B) labor; profit
C) capital; rent
D) capital; interest
E) entrepreneurship; wages
38) Entrepreneurship, as a factor of production, refers to
A) the technology used by firms.
B) the human capital accumulated by workers.
C) the value of the firm’s stock.
D) the human resource that organizes labor, land, and capital.
E) the capital the firm uses.
39) The productive resource that organizes labor, land, and capital is
A) human capital.
B) financial capital.
C) entrepreneurship.
D) government.
E) capital.
40) Payments to the factors of production are
A) rent, mortgage, interest, and bonds.
B) rent, interest, bonds, and profit or loss.
C) rent, wages, interest, and profit or loss.
D) rent, wages, profit or loss, and bonus.
E) land, labor, capital, and entrepreneurship.
41) ________ paid for the use of land; ________ paid for the services of labor; and ________
paid for the use of capital.
A) Rent is; wages are; interest is
B) Rent is; interest is; wages are
C) Interest is; wages are; profit is
D) Mortgages are; interest is; wages are
E) Rent is; wages are; profit is
42) The income paid for the use of land is called
A) rent.
B) wages.
C) interest.
D) profit.
E) land capital.
43) The income paid to labor is called
A) rent.
B) wages.
C) interest.
D) profit.
E) human capital.
44) Which factor of production is paid “interest”?
A) land
B) labor
C) capital
D) entrepreneurship
E) human capital
45) Which factor of production is paid “profit”?
A) land
B) labor
C) capital
D) entrepreneurship
E) human capital
46) The functional distribution of income measures which of the following?
A) How federal tax revenues are related to the business function that employs taxpayers.
B) The distribution of earnings by the factors of production.
C) The proportion of income generated by the four types of expenditures on goods and services.
D) The distribution of income among households.
E) The distribution of income among nations.
47) In the United States, the productive factor that, as a group, receives the largest fraction of the
nation’s total income was
A) labor.
B) capital.
C) consumption goods and services.
D) entrepreneurship.
E) land.
48) According to the functional distribution of income, in the United States
A) capital earns most of the income.
B) labor earns most of the income.
C) land earns most of the income.
D) entrepreneurs earned most of the income.
E) the income earned by capital and labor are approximately equal.
49) The data show that more than 60 percent of the total income earned in the United States goes
to
A) labor.
B) land.
C) capital.
D) entrepreneurship.
E) profit.
50) The majority of the income earned in the United States is paid in
A) rent.
B) wages.
C) interest.
D) profit.
E) dividends.
51) The personal distribution of income measures which of the following?
A) How federal tax revenues are related to the type of businesses that employs the taxpayers.
B) The distribution of earnings by the factors of production.
C) Proportion of income generated by the four types of expenditures on goods and services.
D) The distribution of income among households.
E) The distribution of income among nations.
52) In the United States, the poorest 20 percent of households receive roughly ________ percent
of total income.
A) 20
B) 10
C) 15
D) 3
E) 0.5
53) The personal distribution of income in the United States shows that
A) income is equally distributed.
B) the poorest 20 percent of individuals receive approximately 20 percent of total income.
C) the richest 20 percent of individuals receive approximately 50 percent of total income.
D) the poorest 60 percent of individuals receive approximately 50 percent of total income.
E) the richest 20 percent of individuals receive approximately 25 percent of total income.
54) The richest 20 percent of individuals in the United States receive about ________ of the
nation’s total income.
A) 20 percent
B) 50 percent
C) 90 percent
D) 10 percent
E) 23 percent
55) When the total U.S. production of goods and services is divided into consumption goods and
services, capital goods, government goods and services, and export goods and services, the
largest component is
A) consumption goods and services.
B) capital goods.
C) government goods and services.
D) export goods and services.
E) capital goods and government goods and services tie for the largest component.
56) An example of a capital good is
A) a fiber optic cable TV system.
B) an insurance policy.
C) a hair cut.
D) an iPod.
E) a slice of pizza.
57) Goods and services produced in the United States and sold in other countries are called
A) consumption goods and services.
B) capital goods.
C) government goods and services.
D) export goods and services.
E) import goods and services.
58) Which of the following correctly lists the categories of factors of production?
A) machines, buildings, land, and money
B) hardware, software, land, and money
C) capital, money, and labor
D) owners, workers, and consumers
E) land, labor, capital, and entrepreneurship
59) In economics, the factor of production “land” includes all of the following except ________.
A) energy
B) plastics
C) wild plants
D) animals, birds, and fish
E) oil
60) Human capital is
A) solely the innate ability we are born with.
B) the money humans have saved.
C) the knowledge humans accumulate through education and experience.
D) machinery that needs human supervision.
E) any type of machinery.