ICA

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ICA 1

• Question 1
• Economics is the study of how people
• allocate scarce resources.
• satisfy wants.
• make choices.
• all of the above.

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ICA 1

• Question 2
• List one of the four central questions facing
  each society.

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ICA 1

• Question 3
• Japan builds a steel plant in China. The output
  of this plant is counted in Japans ______ and
  Chinas ______/
• GDP, GNP
• GNP, GDP
• GDP, GDP
• GNP, GNP

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ICA 1

• Question 4
• What two concepts does the production
  possibilities curve illustrate?
• Supply and Demand
• Marginal Social Cost and Marginal Social Benefit
• Profit and Loss
• Opportunity Cost and Scarcity

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ICA 1

• Question 5
• If all resources used in production were equally
  suited to produce all goods, the production
  possibilities curve would be a
• straight line
• curve

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ICA 2

• Given the illustrated PPC, answer the
• following questions
• Which point or points are inefficient?
• Which point or points are efficient?
• Which point or points are unattainable?
• Identify all the costs associated with a move
  from point C to point D.
• Identify all the costs associated with a move
  from point D to point E.

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ICA 3

• Question One
• The CPI in 2000 is 120. The CPI in 2001 is 150.
  What is the inflation rate for 2001?
• a. 50
• b. 30
• c. 25
• d. 20

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ICA 3

• Question Two
• The calculation of the CPI is a five step
  process. What is step number two?
• a. Find the prices.
• b. Fix the basket.
• c. Compute the baskets cost.
• d. Calculate the inflation rate.

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ICA 3

• Question Three
• As noted in lecture, which of the following is
  not a problem with calculating the CPI?
• a. Firms fail to report price changes to the
• federal government.
• b. As prices rise consumers tend to substitute
• goods not in the basket for the more expensive
  goods included.
• c. New goods are introduced that are not
• quickly added to the basket.
• d. Changes in quality cannot be easily
  measured.

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ICA 3

• Question Four
• President Hoover in 1931 had a salary of
  75,000. The price level in 1931 was 15.2. In
  1999 the price level was 166. If Clinton was paid
  200,000 in 1999, whose salary was higher in real
  terms?
• a. Hoover b. Clinton

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ICA 3

• Question Five
• In 2000 the basket of goods the Bureau of Labor
  Statistics tracks for the CPI cost 900. In 2001
  the same basket cost 1000. What was the CPI in
  2001?

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ICA 4

• Question One
• Incomes in less developed countries tend to be
  _____ equally distributed as income in developed
  nations.
• a. more
• b. less
• c. as

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ICA 3

• Question Two
• If a countrys nominal GDP increases by 5 at
  the same time there is 5 inflation, real GDP
  will
• a. increase
• b. decrease
• c. be unchanged

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ICA 4

• Question Three
• If a countrys real GDP increases by 5 at the
  same time its population increases by 2, real
  per capita GDP will
• a. increase.
• b. decrease.
• c. be unchanged.

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ICA 4

• Question Four
• As noted in lecture, what is not an action a
  government in a less developed nation can take to
  raise productivity and living standards.
• a. Enforce property rights.
• b. Expand the supply of money.
• c. Encourage increases in domestic savings.
• d. Increase spending on education.

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ICA 4

• Question Five
• List one of the costs (beyond just the cost of
  classrooms, books, teachers, etc.) associated
  with increasing a nations investment in
  education. Hint I mentioned two in lecture. Give
  me one of these two.

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ICA 5

• Question One
• ________ is defined as an economic system
• where the basic questions of society are
  answered according to tradition.
• a. Feudalism
• b. Mercantilism
• c. Capitalism
• d. Socialism

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ICA 5

• Question Two
• Private property rights and a focus on the
  individual are a primary characteristics of which
  type of economic system?
• a. Feudalism
• b. Mercantilism
• c. Capitalism
• d. Socialism

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ICA 5

• Question Three
• According to lecture, economic growth under
  feudalism was typically
• Zero
• Greater than zero
• Less than zero

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ICA 5

• Question Four
• Which of the following economic systems does not
  depend upon the government to be the primary
  force allocating resources in society?
• a. Mercantilism
• b. Capitalism
• c. Socialism

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ICA 5

• Question Five
• The calculation of the CPI is a five step
  process. What is step number three?
• a. Find the prices.
• b. Fix the basket.
• c. Compute the baskets cost.
• d. Calculate the inflation rate.

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