A+ Answers of the following Questions

Question 1         
XXXXX XXXXX used a pin factory to demonstrate:
A. the advantages of economies of scale.
B. diseconomies of scale.
C. the long-run average cost curve.
D. the advantage of being established.

Question 2         
When output is 0, total cost equals __________ cost.
A. total variable
B. total fixed
C. marginal
D. average variable

Question 3         
At an output of 1, marginal cost is:
A. $0.
B. $200.
C. $300.
D. $400.

Question 1         
The law of diminishing marginal returns implies:
A. the more hours you spend studying economics the less you will know.
B. your understanding of economics will be increased by decreasing your marginal study time.
C. after a certain point, the more hours you spend studying economics per day, the less you will learn with each added hour.
D. the more hours you spend studying economics per day, the more you will learn with each added hour.

Question 2         
Which of the following cost curves will NOT shift downward if the price of a variable input decreases?
A. Total cost
B. Average cost
C. Marginal cost
D. Average fixed cost

Question 3         
Marginal cost may be defined as the __________ cost that results from producing one more unit of output.
A. change in average total
B. change in average variable
C. change in total
D. rate of change in total fixed

Question 1

The Federal Reserve kept interest rates low between 2002 and 2006 because:

A. they wanted to reduce the value of the dollar and help domestic exporters.-

B. they were worried about inflation creeping into the economy.-

C. they wanted to avoid deflation and the resulting recession.-

D. they wanted to follow the Taylor Rule.-

Question 2

Which of the following statements gives the correct definition of the real deficit?

A. Real deficit = Nominal deficit + (inflation x total debt)-

B. Real deficit = Nominal deficit + (total debt/inflation)-

C. Real deficit = Nominal deficit - (total debt/inflation)-

D. Real deficit = Nominal deficit - (inflation x total debt)-

Question 3

Debt is measured relative to GDP because:

A. the ability of a country to pay off its debt depends on its productive capacity.-

B. the ability to produce output depends on the size of the nation's debt.-

C. GDP is always used as a reference point in economics.-

D. as long as this ratio remains high, the government will have no trouble repaying the debt.-

Question 1

If the national debt increases in any given year, it follows that the government:

-A. sold bonds in that year to finance a budget surplus.-

-B. bought bonds in that year to finance a budget surplus.-

-C. sold bonds in that year to finance a budget deficit.-

-D. bought bonds in that year to finance a budget deficit.-

Question 2

Paying interest on internal government debt involves a:

-A. net reduction in domestic income.-

-B. redistribution of income among citizens of the country.-

-C. net increase in domestic income.-

-D. redistribution of income to citizens of other countries.-

Question 3

The U.S. Treasury Department reported that in December 2009 the total debt of the United States was approximately $10.7 trillion. The amount of government debt held by private investors was approximately $5.9 trillion. The difference between these two is debt

-A. held by U.S financial institutions.-

-B. held by foreigners.-

-C. held by some parts of the government itself.-

-D. that has been adjusted for the effects of inflation

Question 1

Government debt is defined as:

-A. a shortfall of incoming revenue under outgoing payment.-

-B. a shortfall of outgoing payments under incoming revenue.-

-C. accumulated deficits minus accumulated surpluses.-

-D. accumulated deficits plus accumulated surpluses.-

Question 2

Use the above table to determine which statement is true

-A. 1946 and 1950, the budget was in deficit while in 1948-1949, the budget was in surplus.-

-B. In 1946 and 1950, the budget was in surplus while in 1948-1949, the budget was in deficit-

-C. The debt rose each year from 1946 to 1950-

-D. The debt fell from 1946 to 1950.-

Question 3

If the national debt increases in any given year, it follows that the government:

-A. sold bonds in that year to finance a budget surplus.-

-B. bought bonds in that year to finance a budget surplus.-

-C. sold bonds in that year to finance a budget deficit.-

-D. bought bonds in that year to finance a budget deficit.-