Exam 1: Ten Lessons From Economics

A benefit of trade is that it permits two parties to specialise in those tasks in which they have the highest productivity.

An 'increase in efficiency' suggests that an economy:

Trade between Australia and New Zealand:

The country's standard of living is generated by its:

A forestry company is trying to decide whether to harvest a plantation of pine trees or leave harvest for another year.How might it use marginal analysis to make a decision on timing?

Monopoly power and income inequality are examples of market failure.

A marginal change is a large and significant change to an existing plan of action.

Domestic fishers in South-East Asia use small boats and nets while in New Zealand, fishers use large powered boats with modern navigation devices and large nets.New Zealand fishers earn more money.The difference in the incomes of the two groups of fishers is because:

Inflation increases the value of money.

You have recently noticed the government talking about reducing its spending, and a number of your colleagues have been laid off in the last few weeks.What might be happening? Will this be a long-term situation?

In what case can a government's attempt to lower inflation have an effect on student numbers at TAFE/universities?

Concern among economists about their country's budget deficit is based largely on the:

Which of the following is most likely to be a marginal change?

In the early 1980s, US economic policy was directed toward reducing inflation.What would you assume about inflation and unemployment during this period?

Russell learned in his economics class that income depends primarily on productivity.He took a summer job in construction, and worked very hard as a manual labourer for one month at $8 per hour.His hard work and reliability led the foreman to give Russell a new responsibility - operating a steel roller at $15 per hour.The new job required much less effort than the old job, and left Russell wondering why his income had increased when his effort had gone down.How can you explain this situation to Russell?

The Phillips curve demonstrates:

What is the general rule for rational decision making?

Households face many of the same decisions that societies face.Explain why this is true.

When a government thinks about how a policy will affect living standards, the key question it must consider is:

If each person pursues their own self-interest through a market-institution, the resulting chaos would cause the market to collapse.