Which of the following is a nondurable good? a. washing machine c . bicycle

1. A music store holds a one-day half-price sale on all CDs. Consumers reactto the sale by buying more CDs than on a typical day. This action is an example of • a. elasticity of demand. • c. the law of demand. • b. the substitution effect. • d. total revenue.

2. Which of the following is a nondurable good? • a. washing machine • c. bicycle • b. air conditioner • d. gasoline

3. How do economists calculate GDP for one year using the expenditure approach? • a. add together all the amounts spent on final goods and services • b. add up all the incomes received • c. add the amounts spent on goods and services to the incomes received • d. subtract the amounts received as income from the goods and services

4. Which person is most likely to be described as “working poor”? • a. Dolores, who has an advanced degree and works 40 hours a week • b. Jason, who works part-time so he can start a real estate business • c. Jim, a full-time student with a job in the college library • d. Deb, a single mother who works part-time at minimum wage

5. Which of these is a limitation of GDP? • a. It does not include government goods and services. • b. It does not measure a country’s well-being. • c. It does not measure the success of a country’s economy. • d. It does not include goods that are exported.

6. The substitution effect and the income effect describe • a. how income changes when buyers change jobs. • b. choices that producers make to improve goods. • c. factors that influence consumer buying choices. • d. market changes that affect production of goods.

7. Which of the following is included in gross domestic product (GDP)? • a. intermediate goods • b. used goods • c. final goods • d. goods made in another country by an American company

8. When you buy a snack at a convenience store, you expect it to be safe to eat. This is because you know that government inspectors make sure food factories are clean. Which type of government action is this is an example of? • a. tax • c. regulation • b. marketing • d. subsidy

9. You are searching for a job, but discover that you are not qualified for any of the available jobs. What type of unemployment do you face? • frictional unemployment • seasonal unemployment • cyclical unemployment • Structural unemployment

10. According to the quantity theory, what is a major cause of inflation? • a. excess demand for existing goods and services • b. increased costs of doing business • c. rapid rise in the unemployment rate • d. excess of money in the economy

11. If a store owner notices that demand for all types of bread has been droppingsteadily over the last year, while the price has changed very little, whatconditions might she be seeing? • a. a change in the quantity demanded due to the income effect • b. a change in demand due to a popular low-carbohydrate diet • c. a shift right due to the introduction of bread-making machines • d. a demand curve shift to the left due to the substitution of inferior goods

12. You put money in a bank account. How are you helping businessesexpand? • a. By learning to save, you are increasing your value as a worker. • b.Banks lend your saved money to businesses to help them expand. • c. The interest you earn can be spent at local businesses. • d. By saving money, you can buy a business one day.

13. What does the consumer price index (CPI) measure? • a. core inflation rate • b. prices of all goods in the economy • c. prices of necessary items a typical customer might buy • d. amount of money consumers spend on goods and services

14. Which items does the consumer price index measure? • a. nonfood items purchased by adult consumers • b. food items purchased by rural families • c.goods and services purchased by an urban consumer • d. food and necessary services for any family

15. . Due to an increase in her rent, Isa needs to cut back her spending on otheritems. Which of the following types of goods will Isa consume less of? • a. substitutes • c. inferior goods • b. normal goods • d. complements

16. A factory makes pencils. New machines in the factory make it fasterand cheaper to make pencils. What will happen next? • a. Costs will drop, but supply will remain the same. • b. Supply and costs will both decrease. • c. Costs will go down and supply will go up. • d. At first, supply will rise, but then it will decrease.

17. Which of the following best describes the signal that high prices give to suppliers? • a. green traffic light that means to produce more • b. red traffic light that means to stop producing • c. yield sign that means to slow production down • d. crosswalk sign that means to change products

18. . A sandwich shop lowers the price of tuna sandwiches. The shop suddenly sells more tuna sandwiches than usual. Which of the following does this change in sales show? • a. law of demand • c. income effect • b. law of supply • d. substitution effect

19. . Jessica has an advanced degree in chemistry. However, a laboratorywill not hire her until she learns how to use the latest software.Which of these conditions describes Jessica’s situation? • a. seasonal unemployment • c. structural unemployment • b. frictional unemployment • d. underemployment

20. Which goods would be included in the calculation of GDP? • a. toys made in China at a factory owned by a U.S. company • b. cars made in Ohio at a factory owned by a Japanese car company • c. plastic made in Kentucky and sold to a toy maker in Hawai’i • d. cloth made in India and sold to clothes makers in the U.S.