Question 1

The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by

Accepted Answer

A) government actions that distort prices. 
B) increased competition in markets. 
C) enforcement of property rights. 
D) too much attention paid to efficiency. 
A) government actions that distort prices. 
B) increased competition in markets. 
C) enforcement of property rights. 
D) too much attention paid to efficiency.

Question 2

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that

Accepted Answer

A) the United Kingdom has a better education system than Turkey. 
B) the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey. 
C) workers in Turkey are more productive than workers in the United Kingdom. 
D) there are more instances of market power in Turkey than in the United Kingdom. 
A) the United Kingdom has a better education system than Turkey. 
B) the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey. 
C) workers in Turkey are more productive than workers in the United Kingdom. 
D) there are more instances of market power in Turkey than in the United Kingdom.

Question 3

In economics, the cost of something is

Accepted Answer

A) the dollar amount of obtaining it. 
B) always measured in units of time given up to get it. 
C) what you give up to get it. 
D) often impossible to quantify, even in principle. 
A) the dollar amount of obtaining it. 
B) always measured in units of time given up to get it. 
C) what you give up to get it. 
D) often impossible to quantify, even in principle.

Question 4

Give an example of government intervention that is intended to reduce an externality.

Accepted Answer

Laws that restrict t

Question 5

In the broadest sense, economics is the study of

Accepted Answer

A) production methods. 
B) how society manages its scarce resources. 
C) how households decide who performs which tasks. 
D) the interaction of business and government. 
A) production methods. 
B) how society manages its scarce resources. 
C) how households decide who performs which tasks. 
D) the interaction of business and government.

Question 6

The adage, "There is no such thing as a free lunch," means

Accepted Answer

A) even people on welfare have to pay for food. 
B) the cost of living is always increasing. 
C) people face tradeoffs. 
D) all costs are included in the price of a product. 
A) even people on welfare have to pay for food. 
B) the cost of living is always increasing. 
C) people face tradeoffs. 
D) all costs are included in the price of a product.

Question 7

In the short run, an increase in the money supply is likely to lead to ______ inflation and ______ unemployment.

Accepted Answer

The answer of In the short run, an increase in...

Question 8

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

Accepted Answer

The answer of Debbie quits her job, which pays $30,000...

Question 9

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Accepted Answer

A) enhance equality. 
B) reduce efficiency. 
C) reduce the reward for working hard. 
D) All of the above are correct. 
A) enhance equality. 
B) reduce efficiency. 
C) reduce the reward for working hard. 
D) All of the above are correct.

Question 10

Which of the following do economists not generally regard as a legitimate reason for the government to intervene in a market?

Accepted Answer

A) to promote efficiency 
B) to promote equality 
C) to enforce property rights 
D) to protect an industry from foreign competition 
A) to promote efficiency 
B) to promote equality 
C) to enforce property rights 
D) to protect an industry from foreign competition

Question 11

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Accepted Answer

A) Average income in the US is higher than the average income in Ghana. 
B) The US has a higher standard of living than Ghana. 
C) Productivity in the US is higher than productivity in Ghana. 
D) All of the above are correct. 
A) Average income in the US is higher than the average income in Ghana. 
B) The US has a higher standard of living than Ghana. 
C) Productivity in the US is higher than productivity in Ghana. 
D) All of the above are correct.

Question 12

The business cycle is the

Accepted Answer

A) relationship between unemployment and inflation. 
B) irregular fluctuations in economic activity. 
C) positive relationship between the quantity of money in an economy and inflation. 
D) predictable changes in economic activity due to changes in government spending and taxes. 
A) relationship between unemployment and inflation. 
B) irregular fluctuations in economic activity. 
C) positive relationship between the quantity of money in an economy and inflation. 
D) predictable changes in economic activity due to changes in government spending and taxes.

Question 13

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

Accepted Answer

A) trade can make everyone better off. 
B) people face trade-offs. 
C) rational people think at the margin. 
D) decisions made at the margin are not particularly important. 
A) trade can make everyone better off. 
B) people face trade-offs. 
C) rational people think at the margin. 
D) decisions made at the margin are not particularly important.

Question 14

For which of the following problems can well-designed public policy enhance economic efficiency?

Accepted Answer

A) both externalities and market power 
B) externalities, but not market power 
C) market power, but not externalities 
D) neither externalities nor market power 
A) both externalities and market power 
B) externalities, but not market power 
C) market power, but not externalities 
D) neither externalities nor market power

Question 15

Ralph Nader's book Unsafe at Any Speed caused Congress to require

Accepted Answer

A) safety glass in all new cars. 
B) seat belts in all new cars. 
C) air bags in all new cars. 
D) stricter drunk driving laws in all states. 
A) safety glass in all new cars. 
B) seat belts in all new cars. 
C) air bags in all new cars. 
D) stricter drunk driving laws in all states.

Question 16

Which of the following statements exemplifies a principle of individual decisionmaking?

Accepted Answer

A) Trade can make everyone better off. 
B) Governments can sometimes improve market outcomes. 
C) The cost of something is what you give up to get it. 
D) All of the above are correct. 
A) Trade can make everyone better off. 
B) Governments can sometimes improve market outcomes. 
C) The cost of something is what you give up to get it. 
D) All of the above are correct.

Question 17

Efficiency

Accepted Answer

A) and equality both refer to how much a society can produce with its resources. 
B) and equality both refer to how fairly the benefits from using resources are distributed between members of a society. 
C) refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. 
D) refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources 
A) and equality both refer to how much a society can produce with its resources. 
B) and equality both refer to how fairly the benefits from using resources are distributed between members of a society. 
C) refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. 
D) refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources

Question 18

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Accepted Answer

A) "unimportant." 
B) "slow." 
C) "edge." 
D) "irrational." 
A) "unimportant." 
B) "slow." 
C) "edge." 
D) "irrational."

Question 19

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

Question 20

Both the production of goods and services and the unemployment rate are used to measure

Accepted Answer

A) the business cycle. 
B) productivity. 
C) the interest rate. 
D) inflation. 
A) the business cycle. 
B) productivity. 
C) the interest rate. 
D) inflation.

Exam 1: Ten Principles of Economics

The invisible hand's ability to coordinate the decisions of the firms and households in the economy can be hindered by

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that

In economics, the cost of something is

Give an example of government intervention that is intended to reduce an externality.

In the broadest sense, economics is the study of

The adage, "There is no such thing as a free lunch," means

In the short run, an increase in the money supply is likely to lead to ______ inflation and ______ unemployment.

Debbie quits her job, which pays $30,000 a year, to finish her college degree. Her annual college expenses are $10,000 for tuition, $2,000 for books, and $700 for food. What is her opportunity cost of attending college for the year?

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Which of the following do economists not generally regard as a legitimate reason for the government to intervene in a market?

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

The business cycle is the

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

For which of the following problems can well-designed public policy enhance economic efficiency?

Ralph Nader's book Unsafe at Any Speed caused Congress to require

Which of the following statements exemplifies a principle of individual decisionmaking?

Efficiency

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Inflation increases the value of money.

Both the production of goods and services and the unemployment rate are used to measure

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

In the short run, an increase in the money supply is likely to lead to inflation and unemployment.