Deck 2: The Us and Global Economies

Question 1

Wages are paid to _{--------------------} and interest is paid to_{--------------------} .

A)entrepreneurs; land
B)labor; entrepreneurs
C)labor; land
D)labor; capital
E)entrepreneurs; capital

Answer 1

labor; capital

Question 2

The circular flow model shows the flow of

A)only money throughout the economy.
B)expenditure and income throughout the economy.
C)only tax payments and government expenditures.
D)only funds in stock and bond markets.
E)goods market and factor markets as they move through the economy.

Answer 2

B

Question 3

Approximately_{--------------------} people live in the United States and _{--------------------} people live in the world.

A)310 million; 3 billion
B)210 million; 6 billion
C)310 million; 7 billion
D)410 million; 8 billion
E)210 million; 5 billion

Answer 3

310 million; 7 billion

Question 4

The percentage of the world's population that lives in the advanced economies is

A)between 51 percent and 70 percent.
B)between 20 percent and 30 percent.
C)less than 20 percent.
D)more than 71 percent.
E)between 31 percent and 50 percent.

Question 5

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 good.
B)U.S. consumption service.
C)government good.
D)capital good.
E)U.S. import.

Question 6

Which of the following is true?
I. The advanced economies account for more than half of global production.
Ii. Almost four out of every five people in the world live in the developing economies.
Iii. In the advanced economies, agriculture accounts for a larger part of total production than in the developing economies.

A)i, ii, and iii
B)Only i
C)Only i and ii
D)Only ii and iii
E)Only i and iii

Question 7

Which of the following is NOT a function of the federal government?

A)collecting property taxes
B)making transfers to state and local governments
C)making social security and welfare payments
D)imposing a personal income tax
E)providing public goods and services

Question 8

Which of the following is NOT shown explicitly in the circular flow model?

A)the governments' purchases in the goods market
B)the taxes the governments collect from households
C)the governments' interaction with firms
D)the transfers the governments make to households
E)the legal system

Question 9

A real flow in the circular flow diagram is
i.a firm's payments of wages to its workers.
ii.a household's purchase of a new car.
iii)a farmer's use of land to grow corn.

A)i and iii
B)ii and iii
C)i only
D)i, ii and iii
E)ii only

Question 10

The concept of human capital describes

A)the number of machines (capital)that have been produced by people (humans).
B)the number of machines per employed worker.
C)human population, that is, the quantity of labor.
D)human skills, that is, the quality of labor.
E)the number of workers per operating machine.

Question 11

According to the functional distribution of income, in the United States

A)land earns most of the income.
B)the income earned by capital and labor are approximately equal.
C)capital earns most of the income.
D)labor earns most of the income.
E)entrepreneurs earned most of the income.

Question 12

In the circular flow model, which of the following owns the factors of production?

A)firms, households, and all levels of government
B)only firms
C)only federal, state, and local governments
D)both firms and households
E)only households

Question 13

In the circular flow model,

A)only firms sell in markets.
B)only households buy from markets.
C)the money used to buy goods and the goods themselves travel in the same direction.
D)some firms only sell and some firms only buy.
E)both firms and households buy or sell in different markets.

Question 14

The owners of the resource _{--------------------} are paid _{--------------------} .

A)entrepreneurship; wages
B)labor; profit
C)land; wages
D)capital; interest
E)capital; rent

Question 15

The income earned by entrepreneurs is

A)profit or loss.
B)a mixture of rent, wages, interest, and profit.
C)wages.
D)rent, wages, and interest.
E)interest.

Question 16

_{--------------------}is the human resource that organizes labor, land, and capital.

A)Human skill
B)Profit
C)A gift of nature
D)Human capital
E)Entrepreneurship

Question 17

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)export goods and services.
B)consumption goods and services.
C)government goods and services.
D)capital goods.
E)capital goods and government goods and services tie for the largest component.

Question 18

Which of the following is NOT classified as an advanced economy?

A)Russia
B)Hong Kong
C)the United Kingdom
D)South Korea
E)Australia

Question 19

Which factor of production is paid "interest"?

A)land
B)entrepreneurship
C)capital
D)human capital
E)labor

Question 20

Which of following groups of countries are all advanced economies?

A)Hong Kong, Japan, France, and the United Kingdom
B)Italy, the United States, China, and Russia
C)Australia, Brazil, and the United States
D)Mexico, Canada, Germany, and Egypt
E)Singapore, Russia, France, and Chad

Question 21

Which of the following are sources of revenue for state and local governments?
I)property taxes
Ii)sales taxes
Iii)transfers from the federal government

A)i only
B)i, ii and iii
C)i and iii
D)ii and iii
E)i and ii

Question 22

_{--------------------}paid for the use of land;_{--------------------} paid for the services of labor; and _{--------------------} paid for the use of capital.

A)Rent is; wages are; profit is
B)Mortgages are; interest is; wages are
C)Rent is; wages are; interest is
D)Rent is; interest is; wages are
E)Interest is; wages are; profit is

Question 23

The difference between consumption and capital goods is that

A)capital goods are used to produce additional goods while consumption goods are not.
B)only big corporations can afford capital goods.
C)consumption goods can be enjoyed by many people at the same time.
D)it is illegal to export capital goods.
E)capital goods are provided by the government.

Question 24

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 number of people and a great deal of land.
B)highly skilled and educated labor force.
C)large amount of machinery (capital)that is run by people (humans).
D)large number of kind and generous humans.
E)large amount of machinery and equipment.

Question 25

In the United States, the poorest 20 percent of households earn roughly_{--------------------} percent of total income.

A)20
B)0.5
C)15
D)3
E)10

Question 26

The personal distribution of income in the United States shows that

A)the poorest 20 percent of individuals receive approximately 20 percent of total income.
B)the richest 20 percent of individuals receive approximately 50 percent of total income.
C)the richest 20 percent of individuals receive approximately 25 percent of total income.
D)the poorest 60 percent of individuals receive approximately 50 percent of total income.
E)income is equally distributed.

Question 27

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In the figure above, which of the following is true?
I. Governments coordinate economic activities of households and firms.
Ii. Governments buy goods and services in goods markets.
iii. Households pay taxes directly to firms.

A)Only i
B)ii and iii
C)Only iii
D)Only ii
E)i and ii

Question 28

Human capital is

A)solely the innate ability we are born with.
B)the knowledge humans accumulate through education and experience.
C)any type of machinery.
D)machinery that needs human supervision.
E)the money humans have saved.

Question 29

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)land, labor, capital, and entrepreneurship
D)owners, workers, and consumers
E)capital, money, and labor

Question 30

Most countries in the world are classified as

A)developing.
B)advanced.
C)emerging market.
D)industrialized.
E)in transition.

Question 31

In the goods market, firms _{--------------------}and households _{--------------------}.

A)purchase goods and services; supply goods and services
B)hire land, labor, capital, and entrepreneurship services; supply goods and services
C)supply land, labor, capital, and entrepreneurship services; hire land, labor, capital, and entrepreneurship services
D)pay rent, wages, interest, and profit:; earn rent, wages, interest, and profit
E)supply goods and services; purchase goods and services

Question 32

Compared to the world, the rate of U.S. population growth is

A)much faster than in the world as a whole.
B)about the same as in the world as a whole.
C)incomparable because we do not have accurate world population statistics.
D)slower than in the world as a whole.
E)incomparable because U.S. residents are born with a much greater chance of accumulating a lot of human capital.

Question 33

As the circular flow model shows, the factors of production flow from

A)households to firms through the goods market.
B)firms to households through the factor market.
C)firms to households through the goods market.
D)the goods market through firms to the factor markets.
E)households to firms through the factor market.

Question 34

The circular flow model shows that goods and services flow from

A)businesses to households.
B)the factor markets to the goods markets.
C)households to business.
D)the factor market to businesses.
E)the goods market to businesses.

Question 35

In the circular flow model with the government sector, transfers

A)to households flow in the same direction as do expenditures on goods and services.
B)flow in the same direction as do taxes.
C)flow only through the goods market.
D)to firms flow in the same direction as do rent, wages, interest, and profits.
E)flow in the opposite direction as do taxes.

Question 36

The two biggest items of the U.S. federal government revenue that together account for over approximately 80 percent of total federal government revenue are

A)corporate income taxes and property taxes.
B)personal income taxes and Social Security taxes.
C)corporate income taxes and Social Security taxes.
D)personal income taxes and corporate income taxes.
E)personal income taxes and sales taxes.

Question 37

When Ethan continues his education beyond high school he is increasing his

A)capital.
B)rent.
C)human capital.
D)wage rate.
E)quantity of labor.

Question 38

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The figure above shows governments in the circular flow.
In the figure above, firms

A)receive transfers from governments through factor markets.
B)sell goods and services to governments in goods markets.
C)own factors of production.
D)pay taxes directly to governments.
E)do all of the above.

Question 39

Capital is a factor of production. An example of capital as a factor of production is

A)machines.
B)education.
C)stocks.
D)money.
E)bonds.

Question 40

Among the United States, Canada, Russia, India, and the United Kingdom, the country with the highest average income per person is

A)Russia.
B)India.
C)Canada.
D)the United Kingdom.
E)the United States.

Question 41

Which of the following correctly describes how the "global pie is baked"?

A)Emerging economies account for about 25 percent of the global pie.
B)The U.S.'s share of economic pie is increasing while China's share is decreasing.
C)Advanced economies account for about 50 percent of the value of the world's production.
D)Asia accounts for about 40 percent of the global pie.
E)The increase in manufacturing has taken place in mainly the advanced economies.

Question 42

Computers and insurance coverage produced in the United States and sold to people in other nations are categorized as

A)U.S. government goods and services.
B)foreign capital goods.
C)U.S. exports of goods and services.
D)U.S. consumption goods and services.
E)U.S. imports of goods and services.

Question 43

When describing the IMF broad country classification, the most accurate statement is that

A)most of the world's population lives in advanced economies.
B)the category with the greatest number of countries is the advanced economies.
C)most of the nations in Western Europe are considered emerging market economies.
D)the emerging market economies are countries that were, until the early 1990s, part of the Soviet Union or its satellites.
E)about 50 percent of the world's population live in the advanced economies and the other 50 percent live in the emerging market and developing economies.

Question 44

The data show that more than 60 percent of the total income earned in the United States goes to

A)capital.
B)entrepreneurship.
C)profit.
D)land.
E)labor.

Question 45

A money flow in the circular flow diagram is
i)the government's collection of taxes.
ii)Chevrolet's production of SUVs.
iii)Nike's payment of wages to its workers.

A)i only
B)ii and iii
C)ii only
D)i, ii and iii
E)i and iii

Question 46

In the circular flow model, the factor markets are the markets in which

A)consumption goods and services are bought and sold.
B)investment goods and services are bought and sold.
C)government goods and services are provided.
D)governments impose all their taxes.
E)land, labor, capital, and entrepreneurship are bought and sold.

Question 47

In the advanced economies,_{--------------------} of the factories use advanced capital equipment and in the developing economies_{--------------------} of the factories use advanced capital equipment

A)some; some
B)virtually all; none
C)virtually all; some
D)virtually all; virtually all
E)some; none of

Question 48

As the circular flow model points out, a choice that households make is how

A)many resources a firm will hire.
B)many goods and services are produced.
C)much the government will collect in taxes and how much the government will spend on transfer payments.
D)much labor is hired.
E)many goods and services are purchased.

Question 49

U.S. exports of goods and services flow to households and firms in_{--------------------} and U.S. financial inflows of capital flow to households and firms in_{--------------------} .

A)the United States; the United States
B)the United States; the rest of the world and the United States
C)the rest of the world; the rest of the world
D)the United States; the rest of the world
E)the rest of the world; the United States

Question 50

Tax revenues are transferred from

A)local governments to state and federal governments.
B)state governments to the federal government.
C)one state government to other state governments.
D)the state and local governments to the federal government.
E)the federal government to state and local governments.

Question 51

Goods produced in the United States and sold in other countries are called

A)capital goods.
B)imports.
C)exports.
D)foreign goods.
E)capital account goods.

Question 52

Households receive transfers from _{--------------------}and firms receive transfers from _{--------------------}.

A)government; government and households
B)government; government
C)firms and government; government
D)firms; households
E)government; no one

Question 53

A market is defined as

A)any arrangement that brings buyers and sellers together.
B)the physical place where goods and services are sold.
C)the physical place where goods (but not services)are sold.
D)another name for a store.
E)a place where money is exchanged for goods.

Question 54

In economics, the factor of production "land" includes all of the following EXCEPT_{--------------------} .

A)wild plants
B)plastics
C)oil
D)animals, birds, and fish
E)energy

Question 55

Compared to the developing economies, the advanced economies have_{--------------------} human capital and_{--------------------} physical capital.

A)the same; the same
B)less; less
C)more; more
D)more; less
E)less; more

Question 56

The charitable organization Creating Hope International trains women in Afghanistan to become tailors. This effort reduces

A)entrepreneurship differences between advanced and developing economies.
B)human capital differences between advanced and developing economies.
C)physical capital differences between advanced and developing economies.
D)manufacturing differences between advanced and developing economies.
E)agricultural differences between advanced and developing economies.

Question 57

An example of a real flow in the circular flow diagram is

A)a household's supply of work effort at its new business.
B)Nike's payment of wages to workers in China.
C)the government's payment of wages to a soldier.
D)your county's collection of property taxes.
E)a teacher's salary at the local high school.

Question 58

In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was

A)consumption goods and services.
B)capital.
C)land.
D)labor.
E)entrepreneurship.

Question 59

The figure above shows the circular flow model.


In the figure above, which of the following represents a real flow?

A)Wages
B)Capital
C)Profit
D)Expenditures on real estate services
E)Both B and D

Question 60

Physical capital differences across countries can be seen in the fact that

A)students in India study the same subjects as those in the United States.
B)more advanced economies typically have more sophisticated technology.
C)the iPhone's components are produced in 30 countries.
D)advanced economies produce 53 percent of the world's income.
E)furniture factories in China use machines like those in North Carolina.

Question 61

What would be an example of capital good?

A)Rhianna gets a haircut.
B)Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
C)Apple sells computers to Japan.
D)The local driver's license office purchases a new digital camera and printer.
E)Jeanette buys a new dress.

Question 62

Of the following, the largest source of revenue for the federal government is

A)lottery revenue.
B)property taxes.
C)corporate income taxes.
D)personal income taxes.
E)sales taxes.

Question 63

Which of the following is an example of an effort to decrease physical capital differences between an advanced and a developing economy?

A)Through World Vision, women and children in Africa receive education.
B)American troops build roads in Afghanistan.
C)Creating Hope International trains women in Afghanistan to become tailors.
D)Habitat for Humanity builds houses for low income families in the United States.
E)Peace Corps volunteers teach English around the world.

Question 64

The majority of the value of production in the world economy is produced in

A)all of the developing economies taken together.
B)China and other Asian developing economies.
C)all of Africa and the Middle East taken together.
D)all of the advanced economies taken together.
E)all of the emerging market economies taken together.

Question 65

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The figure above shows the circular flow model.

In the figure above, which of the following represents a money flow?

A)Goods supplied
B)Services sold
C)Goods purchased
D)Capital
E)Interest

Question 66

An example of a U.S. export is

A)a washing machine made in Indiana sold to a buyer in France.
B)pasta made in Italy sold to buyers in Spain.
C)matchbooks made in Mexico sold to a buyer in New Jersey.
D)a TV made in China sold to a buyer in Azerbaijan.
E)diamonds mined in Africa sold to buyers in South America.

Question 67

What would be an example of government good?

A)Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
B)Donald Trump purchases furniture for his office.
C)The local driver's license office purchases a new digital camera and printer.
D)Jake buys an iPhone.
E)Rhianna gets a haircut.

Question 68

The majority of the income earned in the United States is paid in

A)rent.
B)profit.
C)wages.
D)interest.
E)dividends.

Question 69

Entrepreneurship, as a factor of production, refers to

A)the capital the firm uses.
B)the value of the firm's stock.
C)the technology used by firms.
D)the human capital accumulated by workers.
E)the human resource that organizes labor, land, and capital.

Question 70

One of the productive resources is capital. Capital includes

A)tools, buildings, and machine tools.
B)toys, t-shirts, CD players, and pencils.
C)money borrowed from a bank.
D)a company's stocks and bonds.
E)money in a savings account at a bank.

Question 71

The decisions of firms and households are

A)made independently of one another.
B)coordinated by but not totally controlled by the government.
C)coordinated by markets.
D)controlled by but not totally coordinated by the government.
E)unexplainable by the circular flow model.

Question 72

A circular flow model shows the interrelationship between the_{--------------------} market and the_{--------------------}
Markets.

A)expenditure; income
B)goods; factor
C)household; goods
D)household; factor
E)business; household

Question 73

In the circular flow model, the expenditures on goods and services flow in the

A)same direction as goods and services in all cases.
B)same direction as factor markets.
C)same direction as goods and services only if they both flow through the goods market.
D)same direction as goods and services only if they both flow through the factor market.
E)opposite direction as goods and services.

Question 74

_{--------------------}earned the highest amount of income among the factors of production in the United States.

A)Investment
B)Land
C)Entrepreneurship
D)Capital
E)Labor

Question 75

In the circular flow model, which of the following is on the selling side in the goods market?

A)exporters
B)only firms
C)both firms and households
D)only households
E)federal, state, and local governments

Question 76

Which factor of production does human capital enhance?
i. land
ii. labor
iii. capital

A)i and ii
B)i only
C)ii only
D)iii only
E)i, ii, and iii

Question 77

Which factor of production is paid "profit"?

A)capital
B)entrepreneurship
C)human capital
D)labor
E)land

Question 78

In the United States, the poorest 20 percent of households receive about_{--------------------} percent of total income.

A)23
B)15
C)3
D)49
E)20

Question 79

_--------the owners of the factors of production, while_-------- what amounts of those factors to hire.

A)Households are; the government determines
B)The government is; firms determine
C)Firms are; households determine
D)Firms are; the government determines
E)Households are; firms determine

Question 80

State and local governments finance expenditures mainly from

A)lottery funds.
B)funds provided by the federal government.
C)government bonds issued at the state level.
D)tax revenue.
E)private bank loans.