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81. One characteristic that has allowed the U.S. economy to change the mix of output in response to consumer
demand is the
82. Whenever technology advances, an economy can produce more output with
83. Which of the following does not contribute to the high productivity of the U.S. economy?
84. Which of the following will contribute to accelerated growth for the U.S. economy?
85. Outsourcing leads to
86. Outsourcing leads to
A. Increases in total output, but with temporary job losses for some domestic workers.
87. Which of the following would be a legitimate government activity in the U.S.
economy? A.
88. The government establishes the rules of the game for economic transactions in order to
A. Legitimatize and enforce contracts.
89. The term externalities refers to
90. The cost or benefit of a market activity borne by a third party is
A. An externality.
91. Which of the following is an example of an external cost?
92. When the production of a good creates external costs,
A. Profits for the producer of the good will be lower.
93.
Goods that have spillover costs affect our collective well-being and therefore can be overproduced because
94. Government intervention to reduce the level of pollution is prompted by the existence
of A. An inequitable distribution of income.
95. The government regulates food additives
96. A monopoly exists when
A. A small number of firms are the only producers of a good.
97. When unregulated monopolies exist,
A. Prices tend to be higher than with a competitive market.
98. The purpose of antitrust policy in the United States is to
99. In a market economy with no government intervention, the HOW to produce question is based on
A. Production costs alone.
100. The result of government intervention in the market is that
A. Society is always better off.
101. Which of the following statements about the way markets allocate resources is most accurate from society's
perspective?
A. The market always allocates resources in the best way.
102. The bottom 80 percent of the families in the United States receive approximately ______ percent of
total income.
A. 10
103. The theory of how to grow GDP is
104.
Income inequality tends to be greatest in
105. A country that increased its literacy rate and thereby its average human capital would probably
106. A rich country that opened its borders to trade with a poor country would cause in the long run
107. A rich country that opened its borders to trade with a poor country would cause in the long run
108.
As of 2013, to be in the top quintile for income distribution in the United States, a family needed in income at
least
109. As of 2010, to be in the bottom quintile for income distribution in the United States, a family needed in
income no more than
110. As of 2010, for income distribution in the United States, the minimum family earnings in the top quintile were
approximately _______ times the maximum family earnings in the bottom quintile.
A. 3
111. A laissez faire economy
A. Relies predominantly on government policy rather than free market action.
112. The income distribution of the United States is basically the nation's answer to the
113. Which of the following statements is true concerning income inequality?
A. Income is equally distributed in poor countries.
114. One-fifth of the population, rank ordered by income, is
115. The richest 20 percent of the families in the United States receive approximately ______ percent of
total income.
116. The 20 percent of families with the lowest income in the United States receive approximately ______ percent of
total income.
A. 1
117. When compared to the average household in most low-income countries, poor people in the United
States receive
A. About the same amount of goods and services.
118. Income inequality is
A. Often greatest in the richest countries.
119. Income inequalities are greatest
in A. Highly developed countries.
120. According to the World View titled "Income Share of the Rich," in which of the following would the top tenth of
the population be most likely to receive the highest percentage of the country's income?
A. Namibia.
121. According to the World View titled "Income Share of the Rich," in which of the following would the top tenth of
the population be most likely to receive the highest percentage of the country's income?
A. Japan.
122. According to the World View excerpt that compares GDP figures for several nations, Japan's real GDP is
approximately
123. According to the World View excerpt that compares GDP figures for several nations, Russia's real GDP is
approximately
A. More than that of Germany.
124. The World View article titled "The Education Gap between Rich and Poor Nations" says that 85 percent of
all Americans graduate from high school. This is an example of
A. The inequitable distribution of income.
125. The World View article titled "The Education Gap between Rich and Poor Nations" says that a greater
percentage of people graduate from high school in rich nations than in poor nations. This investment in human
capital can lead to
126. The World View article in the text titled "Income Share of the Rich" reports, "In poor, developing countries the
richest tenth of the population typically gets 40 to 50 percent of all income." Which of the following is a form of
government intervention designed to change this situation?
127. In the United States today, nearly _________ of the population has attained a college degree.
A. 30 percent
128. The role of the government in establishing how private business can operate includes all of the following
except
A. Providing a legal framework.
129. According to the World View article that compares GDP per capita figures for several nations, which of the
following nations has the highest GDP per capita?
A. Japan.
130. Externalities measure
A. Only costs of a market activity borne by a third party.
131. Over many years the capital stock in the United States has grown to approximately
132. The GDP is a measure of the market value of all final goods and services produced in the economy in a
given time period.
133. The GDP of the United States includes production by foreign-owned firms that are located in the United States.
134. The standard of living rises when population growth exceeds economic growth.
135. The relative decline in goods production compared to services produced means that we're producing fewer
goods than in earlier decades.
136. On average over the last century, the U.S. population has grown three times as fast as the U.S. real GDP.
137. A good approximation of a country's standard of living is per capita GDP, which is population divided by
real GDP.
138. According to the World Bank, nearly one-third of the people on earth subsist on incomes of less than $2 per
day.
139. In the years from 2000 through 2009, China's standard of living or per capita GDP grew faster than that of
the United States.
TRUE
140. Education and training are examples of investment in human capital.
141. The high productivity of the U.S. economy results from using highly educated workers in a capital-
intensive production process.
142. Outsourcing is a source of increased U.S. output.
143. Government intervention is sometimes used to reduce the external costs of production.
144. Monopolists can dictate the price or the quantity of the product they produce, but not both.
145. The richest fifth of U.S. households get nearly half of all U.S. income.
146. Income inequalities are often greatest in the poorest countries.
147. How is per capita GDP calculated, and what does it tell us about the economy?
148. How is per capita GDP affected by GDP growth and population growth?
149. Compare the composition of U.S. output in the year 1900 with its composition in the year 2000.
150. What are externalities, and how do they affect who pays the true cost of a polluting factory?
151. What factors contribute to the high level of productivity of the American worker?
152. What is human capital, and how does it affect U.S. productivity?
Chapter 02 Test Bank Summary
Category
# of Questions
AACSB: Analytic
5
AACSB: Reflective Thinking
147
Accessibility: Keyboard Navigation
146
Blooms: Analyze
5
Blooms: Apply
5
Blooms: Remember
77
Blooms: Understand
65
Difficulty: 01 Easy
77
Difficulty: 02 Medium
65
Difficulty: 03 Hard
10
Learning Objective: 02-01 The relative size of the U.S. economy.
37
Learning Objective: 02-02 How the U.S. output mix has changed over time.
22
Learning Objective: 02-03 How the U.S. is able to produce so much output.
69
Learning Objective: 02-04 How incomes are distributed in the United States and elsewhere.
24
Topic: FOR WHOM AMERICA PRODUCES
23
Topic: HOW AMERICA PRODUCES
67
Topic: WHAT AMERICA PRODUCES
56
Topic: WORLD VIEW
6
