C) The pricing system

D) Foreign trade

E) God

17. A price ceiling is:

A) A price set by government that varies with market conditions.

B) A legal maximum price at which a good can be sold.

C) A legal minimum price at which a good can be sold.

D) A price set by sellers that vary with market conditions.

E) Typically equal to the equilibrium price of a good.

18. National saving is composed of:

A) Private saving and public saving.

B) Public saving and government deficits.

C) Private saving and government surpluses.

D) Private saving, public saving, and government surpluses.

E) Private saving, public saving, and government deficits.

19. Scarcity is the result of:

A) An unfair distribution of income.

B) Taxes that is too low.

C) A fair distribution of income.

D) Taxes those are too high.

E) Too few resources to satisfy society's desires.

20. Diminishing marginal product refers to the fact that:

A) The marginal product of an input decreases as the quantity of the input increases.

B) The marginal product of an input increases as the quantity of the input increases.

C) The marginal product of an input does not change as the quantity of the input increases.

D) Output will increase at an increasing rate as more inputs are hired.

E) The marginal product of an input decreases as the quantity of the input decreases.

21. Which of the following is an appropriate function of government?

A) Making a market less competitive by forcing individuals from the market

B) Redistributing income to make a market outcome more equitable or fair

C) Increasing the level of externalities in the economy

D) Performing central control functions in a market economy

E) Making a market less competitive by forcing firms from the market

22. Suppose more men decided to stay at home to raise their pre-school age children. We would expect:

1. the labor force participation rate for males to decrease.

2. the labor force participation rate for males to remain the same.

3. the impact on the labor force participation rate for males to be unpredictable.

4. the labor force participation rate for males to increase.

E) the labor force participation rate for females to decrease.

23. Intermediate goods and services:

A) Are counted in gross domestic product (GDP).

B) Are not counted in gross domestic product (GDP) because they have no value to consumers.

C) Are not counted in GDP because that would constitute double counting.

D) Are counted in national income but not in gross domestic product (GDP).

E) Are not counted in gross national product (GNP) because they have no value to consumers.

24. Define Kuznets cycles by their duration (trough to trough or peak to peak):

A) 48-60 years

B) 3 years

C) 9-10 years

D) within a year

E) 15-20 years

25. When the price of bananas increases, consumption of apples increases. Which of the following conclusions can be drawn?

A) Bananas are an inferior good compared to apples.

B) The goods are complements.

C) The goods are substitutes.

D) The supplies of bananas and apples are interrelated.

E) The goods are not related.

26. Economics is primarily the study of:

A) how society manages its scarce resources.

B) how to operate a business successfully.

C) how to make money in the stock market.

D) the methods that government might use to transform a scarce good into an economic good.

E) how to earn money

27. What ever must be given up to obtain some item is:

A) an explicit cost.

B) an implicit cost

C) a historical cost.

D) an accounting cost.

E) an opportunity cost.

28. A decrease in the price level indicates:

A) that the economy has experienced deflation.

B) the existence of inflation.

C) a decline in real GDP.

D) that either inflation or deflation may exist.

E) a decline in real GNP.