Question 1

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

Accepted Answer

A) only the one with a low level of output per person. 
B) only the one with a high level of output per person. 
C) both 
D) neither 
A) only the one with a low level of output per person. 
B) only the one with a high level of output per person. 
C) both 
D) neither

Question 2

In a particular country in 2008, the average worker had to work 40 hours to produce 100 units of output. In that same country in 2018, the average worker needed to work 35 hours to produce 94.5 units of output. In that country, the productivity of the average worker

Accepted Answer

A) increased by 2 percent between 2008 and 2018. 
B) increased by 8 percent between 2008 and 2018. 
C) remained unchanged between 2008 and 2018. 
D) decreased by 2 percent between 2008 and 2018. 
A) increased by 2 percent between 2008 and 2018. 
B) increased by 8 percent between 2008 and 2018. 
C) remained unchanged between 2008 and 2018. 
D) decreased by 2 percent between 2008 and 2018.

Question 3

Which of the following words and phrases best captures the notion of equality?

Accepted Answer

A) minimum waste 
B) maximum benefit 
C) sameness 
D) efficiency 
A) minimum waste 
B) maximum benefit 
C) sameness 
D) efficiency

Question 4

The opportunity cost of an item is

Accepted Answer

A) the number of hours needed to earn money to buy the item. 
B) what you give up to get that item. 
C) usually less than the dollar value of the item. 
D) the dollar value of the item. 
A) the number of hours needed to earn money to buy the item. 
B) what you give up to get that item. 
C) usually less than the dollar value of the item. 
D) the dollar value of the item.

Question 5

To promote good economic outcomes, policymakers should strive to enact policies that

Accepted Answer

A) enhance productivity. 
B) enhance individuals' market power. 
C) result in a rapidly-growing quantity of money. 
D) All of the above are correct. 
A) enhance productivity. 
B) enhance individuals' market power. 
C) result in a rapidly-growing quantity of money. 
D) All of the above are correct.

Question 6

Dee is an accomplished actress and a homeowner who pays a landscaper to maintain her lawn rather than do it herself. Dee has determined that she can earn more in the hour it would take her to work on her lawn than she must pay her landscaper. This scenario is an example of which principle of economics?

Accepted Answer

A) Trade can make everyone better off. 
B) Markets are usually a good way to organize economic activity. 
C) Governments can sometimes improve market outcomes. 
D) Prices rise when the government prints too much money. 
A) Trade can make everyone better off. 
B) Markets are usually a good way to organize economic activity. 
C) Governments can sometimes improve market outcomes. 
D) Prices rise when the government prints too much money.

Question 7

Government policies can change the costs and benefits that people face. Those policies have the potential to

Accepted Answer

A) alter people's behavior. 
B) alter people's decisions at the margin. 
C) produce results that policymakers did not intend. 
D) All of the above are correct. 
A) alter people's behavior. 
B) alter people's decisions at the margin. 
C) produce results that policymakers did not intend. 
D) All of the above are correct.

Question 8

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

Accepted Answer

A) Coal is an unlimited resource. 
B) Coal is a scarce resource. 
C) Coal is a non-scarce resource. 
D) Coal is not a resource. 
A) Coal is an unlimited resource. 
B) Coal is a scarce resource. 
C) Coal is a non-scarce resource. 
D) Coal is not a resource.

Question 9

The primary determinant of a country's standard of living is

Accepted Answer

A) the country's ability to prevail over foreign competition. 
B) the country's ability to produce goods and services. 
C) the total supply of money in the economy. 
D) the average age of the country's labor force. 
A) the country's ability to prevail over foreign competition. 
B) the country's ability to produce goods and services. 
C) the total supply of money in the economy. 
D) the average age of the country's labor force.

Question 10

The mainstream view among economists is that

Accepted Answer

A) society faces a tradeoff between unemployment and inflation, but only in the short run. 
B) society faces a tradeoff between unemployment and inflation, but only in the long run. 
C) society faces a tradeoff between unemployment and inflation, both in the short run and in the long run. 
D) no tradeoff exists between unemployment and inflation, either in the short run or in the long run. 
A) society faces a tradeoff between unemployment and inflation, but only in the short run. 
B) society faces a tradeoff between unemployment and inflation, but only in the long run. 
C) society faces a tradeoff between unemployment and inflation, both in the short run and in the long run. 
D) no tradeoff exists between unemployment and inflation, either in the short run or in the long run.

Question 11

Suppose after graduating from college you get a job working at a bank earning $30,000 per year. After two years of working at the bank earning the same salary, you have an opportunity to enroll in a one-year graduate program that would require you to quit your job at the bank. Which of the following should not be included in a calculation of your opportunity cost?

Accepted Answer

A) the cost of tuition and books to attend the graduate program 
B) the $30,000 salary that you could have earned if you retained your job at the bank 
C) the $45,000 salary that you will be able to earn after having completed your graduate program 
D) the value of insurance coverage and other employee benefits you would have received if you retained your job at the bank 
A) the cost of tuition and books to attend the graduate program 
B) the $30,000 salary that you could have earned if you retained your job at the bank 
C) the $45,000 salary that you will be able to earn after having completed your graduate program 
D) the value of insurance coverage and other employee benefits you would have received if you retained your job at the bank

Question 12

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

Accepted Answer

A) worker productivity in Bangladesh is higher than in India. 
B) the standard of living will likely be higher in India than in Bangladesh. 
C) productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India. 
D) there will be no difference between the standard of living in India and Bangladesh. 
A) worker productivity in Bangladesh is higher than in India. 
B) the standard of living will likely be higher in India than in Bangladesh. 
C) productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India. 
D) there will be no difference between the standard of living in India and Bangladesh.

Question 13

When society gets the most it can from its scarce resources, then the outcome is called

Accepted Answer

A) equitable. 
B) efficient. 
C) normal. 
D) efficacious. 
A) equitable. 
B) efficient. 
C) normal. 
D) efficacious.

Question 14

Which of the following statements does not apply to a market economy?

Accepted Answer

A) Firms decide whom to hire and what to produce. 
B) The "invisible hand" usually maximizes the income of society as a whole. 
C) Households decide which firms to work for and what to buy with their incomes. 
D) Government policies are the primary forces that guide the decisions of firms and households. 
A) Firms decide whom to hire and what to produce. 
B) The "invisible hand" usually maximizes the income of society as a whole. 
C) Households decide which firms to work for and what to buy with their incomes. 
D) Government policies are the primary forces that guide the decisions of firms and households.

Question 15

Scarcity means that there is less of a good or resource available than people wish to have.

Accepted Answer

A) True 
 B)False

Question 16

What do prices reflect in a market economy?

Accepted Answer

The value of a good

Question 17

In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

Accepted Answer

A) decreased by 1.7 percent between 1998 and 2008. 
B) remained unchanged between 1998 and 2008. 
C) increased by 4.75 percent between 1998 and 2008. 
D) increased by 6.25 percent between 1998 and 2008. 
A) decreased by 1.7 percent between 1998 and 2008. 
B) remained unchanged between 1998 and 2008. 
C) increased by 4.75 percent between 1998 and 2008. 
D) increased by 6.25 percent between 1998 and 2008.

Question 18

The fact that different countries experience different standards of living is largely explained by differences in those countries'

Accepted Answer

A) populations. 
B) productivity levels. 
C) locations. 
D) None of the above is correct. Economists are puzzled by differences in standards of living around the world. 
A) populations. 
B) productivity levels. 
C) locations. 
D) None of the above is correct. Economists are puzzled by differences in standards of living around the world.

Question 19

A certain state legislature is considering an increase in the state gasoline tax. Representative Campbell argues that an increase in the gasoline tax would harm low-income drivers disproportionately. Representative Richards responds by saying that low-income drivers own smaller cars that use less gasoline, and that low-income drivers therefore would not be harmed disproportionately.

Accepted Answer

A) Representative Campbell's argument is based primarily on efficiency, while Representative Richards' argument is based primarily on equality. 
B) Representative Campbell's argument is based primarily on equality, while Representative Richards' argument is based primarily on efficiency. 
C) Both representatives' arguments are based primarily on efficiency. 
D) Both representatives' arguments are based primarily on equality. 
A) Representative Campbell's argument is based primarily on efficiency, while Representative Richards' argument is based primarily on equality. 
B) Representative Campbell's argument is based primarily on equality, while Representative Richards' argument is based primarily on efficiency. 
C) Both representatives' arguments are based primarily on efficiency. 
D) Both representatives' arguments are based primarily on equality.

Question 20

If an electric power plant does not bear the entire cost of the pollution it emits, it will

Accepted Answer

A) not emit any pollution so as to avoid the entire cost of the pollution. 
B) emit lower levels of pollution. 
C) emit an acceptable level of pollution. 
D) emit too much pollution. 
A) not emit any pollution so as to avoid the entire cost of the pollution. 
B) emit lower levels of pollution. 
C) emit an acceptable level of pollution. 
D) emit too much pollution.

Exam 1: Ten Principles of Economics

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level. Which country can benefit?

In a particular country in 2008, the average worker had to work 40 hours to produce 100 units of output. In that same country in 2018, the average worker needed to work 35 hours to produce 94.5 units of output. In that country, the productivity of the average worker

Which of the following words and phrases best captures the notion of equality?

The opportunity cost of an item is

To promote good economic outcomes, policymakers should strive to enact policies that

Government policies can change the costs and benefits that people face. Those policies have the potential to

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

The primary determinant of a country's standard of living is

The mainstream view among economists is that

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

When society gets the most it can from its scarce resources, then the outcome is called

Which of the following statements does not apply to a market economy?

Scarcity means that there is less of a good or resource available than people wish to have.

What do prices reflect in a market economy?

In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

The fact that different countries experience different standards of living is largely explained by differences in those countries'

If an electric power plant does not bear the entire cost of the pollution it emits, it will

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

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