Question 1

Which of the following is an example of a transfer payment?

Accepted Answer

A)  wages and salaries paid to the employees of the Internal Revenue Service 
B)  purchase of automobiles by a local police department 
C)  agriculture subsidies paid to farmers 
D)  salaries paid to the college professors of state-operated universities 
A)  wages and salaries paid to the employees of the Internal Revenue Service 
B)  purchase of automobiles by a local police department 
C)  agriculture subsidies paid to farmers 
D)  salaries paid to the college professors of state-operated universities

Question 2

Which of the following is true about government spending?

Accepted Answer

A)  Real federal spending per person was approximately 50 times higher in 1900 than 1800. 
B)  Real federal spending per person was approximately 75 times higher in the most recent fiscal year than 1916. 
C)  Real federal spending per person grew slowly under the Reagan Administration during the 1980s, but it increased rapidly under the Clinton administration in the 1990s. 
D)  In recent years, government expenditures at the state and local levels have been greater than government spending at the federal level. 
A)  Real federal spending per person was approximately 50 times higher in 1900 than 1800. 
B)  Real federal spending per person was approximately 75 times higher in the most recent fiscal year than 1916. 
C)  Real federal spending per person grew slowly under the Reagan Administration during the 1980s, but it increased rapidly under the Clinton administration in the 1990s. 
D)  In recent years, government expenditures at the state and local levels have been greater than government spending at the federal level.

Question 3

Compared to 1980, the top marginal federal income tax rate today is

Accepted Answer

A)  substantially lower and the rate structure is less progressive than in 1980. 
B)  substantially lower and the rate structure is more progressive than in 1980. 
C)  substantially higher and the rate structure is less progressive than in 1980. 
D)  substantially higher and the rate structure is more progressive than in 1980. 
A)  substantially lower and the rate structure is less progressive than in 1980. 
B)  substantially lower and the rate structure is more progressive than in 1980. 
C)  substantially higher and the rate structure is less progressive than in 1980. 
D)  substantially higher and the rate structure is more progressive than in 1980.

Question 4

The basic difference between macroeconomics and microeconomics is that

Accepted Answer

A)  microeconomics is concerned with aggregate markets and the entire economy, while macroeconomics is concerned with specific individual markets. 
B)  macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. 
C)  microeconomics is concerned with individual markets and the behavior of people and firms, while macroeconomics is concerned with aggregate markets and the entire economy. 
D)  macroeconomics is concerned with positive economics, while microeconomics is concerned with normative economics. 
A)  microeconomics is concerned with aggregate markets and the entire economy, while macroeconomics is concerned with specific individual markets. 
B)  macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. 
C)  microeconomics is concerned with individual markets and the behavior of people and firms, while macroeconomics is concerned with aggregate markets and the entire economy. 
D)  macroeconomics is concerned with positive economics, while microeconomics is concerned with normative economics.

Question 5

Which of the following is a normative economic statement?

Accepted Answer

A)  If we doubled the size of welfare payments, we would reduce the number of homeless persons. 
B)  Companies should be concerned with more than just their profits. 
C)  An increase in spending on airport security will reduce the number of hijackings. 
D)  If social security were to be privatized, workers would earn a higher rate of return on their retirement contributions. 
A)  If we doubled the size of welfare payments, we would reduce the number of homeless persons. 
B)  Companies should be concerned with more than just their profits. 
C)  An increase in spending on airport security will reduce the number of hijackings. 
D)  If social security were to be privatized, workers would earn a higher rate of return on their retirement contributions.

Question 6

Which of the following statements best describes the scientific method?

Accepted Answer

A)  The use of modern electronic testing equipment to understand the world. 
B)  The unbiased development and testing of theories about how the world works. 
C)  The use of controlled laboratory experiments to understand the way the world works. 
D)  Finding evidence to support preconceived theories about how the world works. 
A)  The use of modern electronic testing equipment to understand the world. 
B)  The unbiased development and testing of theories about how the world works. 
C)  The use of controlled laboratory experiments to understand the way the world works. 
D)  Finding evidence to support preconceived theories about how the world works.

Question 7

While waiting in line to buy one cheeseburger for $1.50 and a medium drink for $1.00, Sally notices that she could get a value meal that contains both the cheeseburger and medium drink and also a medium order of fries for $2.75. She thinks to herself, "Is it worth the extra 25 cents to get the medium fries?" To an economist, Sally's decision is an example of

Accepted Answer

A)  marginal decision making. 
B)  basing decisions on total, rather than marginal, value. 
C)  an unintended consequence. 
D)  the fallacy of composition. 
A)  marginal decision making. 
B)  basing decisions on total, rather than marginal, value. 
C)  an unintended consequence. 
D)  the fallacy of composition.

Question 8

The share of Americans who pay no personal income tax

Accepted Answer

A)  has been relatively constant at approximately 33 percent throughout 1975-2000. 
B)  was relatively constant near 33 percent between 1975 and 2000, but it has increased during the past decade, reaching nearly 60 percent of adult Americans in 2013. 
C)  was relatively constant near 33 percent between 1975 and 2000, but it has fallen during the past decade, receding to only 18 percent in 2013. 
D)  rose steadily from 18 percent in 1975 to nearly 50 percent of adult Americans in 2000, but it receded to less than 40 percent in 2013. 
A)  has been relatively constant at approximately 33 percent throughout 1975-2000. 
B)  was relatively constant near 33 percent between 1975 and 2000, but it has increased during the past decade, reaching nearly 60 percent of adult Americans in 2013. 
C)  was relatively constant near 33 percent between 1975 and 2000, but it has fallen during the past decade, receding to only 18 percent in 2013. 
D)  rose steadily from 18 percent in 1975 to nearly 50 percent of adult Americans in 2000, but it receded to less than 40 percent in 2013.

Question 9

Which one of the following states a central element of the economic way of thinking?

Accepted Answer

A)  Scarce goods are priceless. 
B)  Incentives matter--human choice is influenced in predictable ways by changes in personal costs and benefits. 
C)  The realism of the assumptions is the best test of an economic theory. 
D)  When deciding how to allocate time, the concept of opportunity cost is meaningless. 
A)  Scarce goods are priceless. 
B)  Incentives matter--human choice is influenced in predictable ways by changes in personal costs and benefits. 
C)  The realism of the assumptions is the best test of an economic theory. 
D)  When deciding how to allocate time, the concept of opportunity cost is meaningless.

Question 10

Isabella wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $1.50 per gallon, the car wash costs $1, but if she buys 10 gallons of gasoline, the car wash is free. For Isabella, the marginal cost of the tenth gallon of gasoline is

Accepted Answer

A)  zero. 
B)  50 cents. 
C)  $1. 
D)  $1.50. 
A)  zero. 
B)  50 cents. 
C)  $1. 
D)  $1.50.

Question 11

The administrative, enforcement, and compliance costs of collecting taxes in the United States sum to

Accepted Answer

A)  between 1 and 2 percent of the revenues collected. 
B)  between 5 and 6 percent of the revenues collected. 
C)  between 12 and 15 percent of the revenues collected. 
D)  more than half of the revenues collected. 
A)  between 1 and 2 percent of the revenues collected. 
B)  between 5 and 6 percent of the revenues collected. 
C)  between 12 and 15 percent of the revenues collected. 
D)  more than half of the revenues collected.

Question 12

The opportunity cost of going to college is

Accepted Answer

A)  the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. 
B)  the value of the best opportunity a student gives up to attend college. 
C)  zero for students who are fortunate enough to have all of their college expenses paid by someone else. 
D)  zero, since a college education will allow a student to earn a larger income after graduation. 
A)  the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. 
B)  the value of the best opportunity a student gives up to attend college. 
C)  zero for students who are fortunate enough to have all of their college expenses paid by someone else. 
D)  zero, since a college education will allow a student to earn a larger income after graduation.

Question 13

Economists make assumptions in order to

Accepted Answer

A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand. 
A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand.

Question 14

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

Accepted Answer

A)  One dollar. 
B)  Less than one dollar because the administration of and compliance with the tax laws creates jobs for people. 
C)  More than a dollar because collection of the taxes requires resources that would otherwise be available for private sector production. 
D)  More than a dollar because of the excess burden resulting from the elimination of productive exchanges by the taxes. 
E)  Both c and d are correct. 
A)  One dollar. 
B)  Less than one dollar because the administration of and compliance with the tax laws creates jobs for people. 
C)  More than a dollar because collection of the taxes requires resources that would otherwise be available for private sector production. 
D)  More than a dollar because of the excess burden resulting from the elimination of productive exchanges by the taxes. 
E)  Both c and d are correct.

Question 15

Concerning government spending, which of the following is true?

Accepted Answer

A)  In 1916, the per person real government expenditures were approximately 60 times greater than in 1800. 
B)  Prior to 1929, government expenditures at the state and local levels were substantially smaller than federal expenditures. 
C)  Real federal spending per person was approximately 75 times greater in the most recent fiscal year than in 1916. 
D)  All of the above are true. 
A)  In 1916, the per person real government expenditures were approximately 60 times greater than in 1800. 
B)  Prior to 1929, government expenditures at the state and local levels were substantially smaller than federal expenditures. 
C)  Real federal spending per person was approximately 75 times greater in the most recent fiscal year than in 1916. 
D)  All of the above are true.

Question 16

Which of the following is the largest source of revenue for the federal government?

Accepted Answer

A)  Corporate income tax. 
B)  Payroll tax. 
C)  Personal income tax. 
D)  User charges. 
A)  Corporate income tax. 
B)  Payroll tax. 
C)  Personal income tax. 
D)  User charges.

Question 17

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Accepted Answer

Mother Theresa used the money to help th

Question 18

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

Accepted Answer

Poor William has made several errors. Fi

Question 19

Government expenditures for Social Security and unemployment benefits are examples of

Accepted Answer

A)  government consumption. 
B)  government investment. 
C)  government purchases. 
D)  transfer payments. 
A)  government consumption. 
B)  government investment. 
C)  government purchases. 
D)  transfer payments.

Question 20

Economic choice and competitive behavior are the result of

Accepted Answer

A)  basic human greed. 
B)  poverty. 
C)  private ownership of resources. 
D)  scarcity. 
A)  basic human greed. 
B)  poverty. 
C)  private ownership of resources. 
D)  scarcity.

Which of the following is an example of a transfer payment?

Which of the following is true about government spending?

Compared to 1980, the top marginal federal income tax rate today is

The basic difference between macroeconomics and microeconomics is that

Which of the following is a normative economic statement?

Which of the following statements best describes the scientific method?

The share of Americans who pay no personal income tax

Which one of the following states a central element of the economic way of thinking?

Isabella wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $1.50 per gallon, the car wash costs $1, but if she buys 10 gallons of gasoline, the car wash is free. For Isabella, the marginal cost of the tenth gallon of gasoline is

The administrative, enforcement, and compliance costs of collecting taxes in the United States sum to

The opportunity cost of going to college is

Economists make assumptions in order to

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

Concerning government spending, which of the following is true?

Which of the following is the largest source of revenue for the federal government?

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

Government expenditures for Social Security and unemployment benefits are examples of

Economic choice and competitive behavior are the result of

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 1: The Economic Approach

Which of the following is an example of a transfer payment?

Which of the following is true about government spending?

Compared to 1980, the top marginal federal income tax rate today is

The basic difference between macroeconomics and microeconomics is that

Which of the following is a normative economic statement?

Which of the following statements best describes the scientific method?

The share of Americans who pay no personal income tax

Which one of the following states a central element of the economic way of thinking?

Isabella wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $1.50 per gallon, the car wash costs $1, but if she buys 10 gallons of gasoline, the car wash is free. For Isabella, the marginal cost of the tenth gallon of gasoline is

The administrative, enforcement, and compliance costs of collecting taxes in the United States sum to

The opportunity cost of going to college is

Economists make assumptions in order to

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

Concerning government spending, which of the following is true?

Which of the following is the largest source of revenue for the federal government?

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

Government expenditures for Social Security and unemployment benefits are examples of

Economic choice and competitive behavior are the result of

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters