T2 Unit 1 Test MC
1. Which of the following refers to the process of converting inputs into outputs?
a) Production
b) Consumption
c) Distribution
d) Supply
2. Which of the following is not a factor of production?
a) Labor
b) Capital
c) Money
d) Land
3. Which of the following refers to resources that are used to produce goods and services?
a) Inputs
b) Outputs
c) Factors
d) Productions
4. Which of the following is an example of an intermediate good?
a) Bread
b) Car
c) Cotton
d) Computer
5. If an economy is operating inside its production possibilities frontier, it means that:
a) It is producing at maximum efficiency
b) It is producing only consumption goods
c) It is producing below its potential
d) It is producing too many capital goods
6. Which of the following policies is aimed at increasing a country's level of investment in physical capital?
a) Monetary policy
b) Fiscal policy
c) Industrial policy
d) Trade policy
7. Which of the following is not a characteristic of traditional economies?
a) Economic decisions are based on customs and traditions
b) Little economic mobility
c) Central planning by the government
d) Strong sense of community and family
8. Which of the following is true about producers in a market economy?
a) They have complete control over the production process
b) They produce goods and services to meet the needs and wants of consumers
c) They are not motivated by profit
d) They do not face competition
9. Which of the following represents a trade-off?
a) Choosing between going to a party or staying home to study
b) Buying a new car with cash or financing it
c) Choosing between a job that pays $20 per hour or $25 per hour
d) Spending money on books or movies
10. Which of the following is a reason for international trade?
a) To decrease competition among countries
b) To increase unemployment
c) To specialize in producing goods and services
d) To reduce economic growth