Question 1

A rational decision maker takes an action only if the:

Accepted Answer

A) marginal benefit is greater than the marginal cost 
B) marginal benefit is less than the marginal cost 
C) average benefit is greater than the average cost 
D) marginal benefit is greater than both the average cost and the marginal cost 
A) marginal benefit is greater than the marginal cost 
B) marginal benefit is less than the marginal cost 
C) average benefit is greater than the average cost 
D) marginal benefit is greater than both the average cost and the marginal cost

Question 2

Both Japan and the Philippines were badly damaged by the Second World War.Wages in Japan however, quickly overtook those of the Philippines in the post-war period.What is the fundamental cause of this difference?

Accepted Answer

The main cause of wage levels

Question 3

People are likely to make good decisions only if they understand the options that are available to them.

Accepted Answer

A) True 
 B)False

Question 4

Market power refers to the:

Accepted Answer

A) relative importance of a market to the overall economy 
B) ability of a person or group of people to successfully market new products 
C) power of the government to regulate a market 
D) power of a single person (or small group of people) to unduly influence market prices 
A) relative importance of a market to the overall economy 
B) ability of a person or group of people to successfully market new products 
C) power of the government to regulate a market 
D) power of a single person (or small group of people) to unduly influence market prices

Question 5

A market economy is guided by:

Accepted Answer

A) a central planner 
B) people's decisions to buy and sell goods 
C) people's decisions on whether to pay taxes or not 
D) people's ability to produce things that other people are willing to pay for 
A) a central planner 
B) people's decisions to buy and sell goods 
C) people's decisions on whether to pay taxes or not 
D) people's ability to produce things that other people are willing to pay for

Question 6

Economists study how individuals make decisions, how they interact with each other and the factors that affect the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 7

Paid parental leave provides income to the mother to stay at home after having a baby.What might be the different incentives under a system providing benefits to the value of the minimum wage, compared to one where benefits are calculated as a portion of the mother's income?

Accepted Answer

The different policies will have an effe

Question 8

Which of the following is NOT included in the decisions that every society must make?

Accepted Answer

A) what goods will be produced 
B) what determines consumer preferences 
C) who will produce goods 
D) who will consume the goods 
A) what goods will be produced 
B) what determines consumer preferences 
C) who will produce goods 
D) who will consume the goods

Question 9

Australia can benefit from trade if it

Accepted Answer

A) trades with all other countries 
B) does not trade with countries that make the same goods as Australia 
C) does not trade with any country with lower wages than Australia 
D) trades only with countries that have higher wages than Australia 
A) trades with all other countries 
B) does not trade with countries that make the same goods as Australia 
C) does not trade with any country with lower wages than Australia 
D) trades only with countries that have higher wages than Australia

Question 10

Trade can benefit a family:

Accepted Answer

A) by increasing the variety of goods and services they can buy at a lower cost 
B) by requiring each person to perform a wide range of tasks, including those they are not very productive in 
C) only if the government provides them with a subsidy 
D) both A and B 
A) by increasing the variety of goods and services they can buy at a lower cost 
B) by requiring each person to perform a wide range of tasks, including those they are not very productive in 
C) only if the government provides them with a subsidy 
D) both A and B

Question 11

Periods of high, persistent inflation are almost always caused by:

Accepted Answer

A) rising taxes 
B) low productivity 
C) aggressive wage increases 
D) rapid and sustained growth in the quantity of money 
A) rising taxes 
B) low productivity 
C) aggressive wage increases 
D) rapid and sustained growth in the quantity of money

Question 12

The income of a typical worker in a country is most closely linked to which of the following?

Accepted Answer

A) population 
B) labour unions 
C) productivity 
D) government policies 
A) population 
B) labour unions 
C) productivity 
D) government policies

Question 13

Suppose that the government enforces a law which prohibits the creation of any pollution.What effect do you think the enforcement of this law will have on the wellbeing of society?

Accepted Answer

While pollution creates an external cost

Question 14

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Accepted Answer

A) In the long run, the value of money falls and productivity increases 
B) In the short run, reducing inflation is associated with rising prices 
C) In the long run, the Phillips curve does not describe the relationship between inflation and unemployment 
D) In the short run, inflation and unemployment are determined by market forces 
A) In the long run, the value of money falls and productivity increases 
B) In the short run, reducing inflation is associated with rising prices 
C) In the long run, the Phillips curve does not describe the relationship between inflation and unemployment 
D) In the short run, inflation and unemployment are determined by market forces

Question 15

Productivity is defined as the:

Accepted Answer

A) actual amount of effort workers put into an hour of working time 
B) number of workers required to produce a given amount of goods and services 
C) amount of labour that can be saved by replacing workers with machines 
D) amount of goods and services produced from each hour of a worker's time 
A) actual amount of effort workers put into an hour of working time 
B) number of workers required to produce a given amount of goods and services 
C) amount of labour that can be saved by replacing workers with machines 
D) amount of goods and services produced from each hour of a worker's time

Question 16

According to Peltzman, one effect of a government-imposed seatbelt law has been:

Accepted Answer

A) fewer pedestrian deaths 
B) safer driving 
C) an increase in the number of accidents 
D) that everyone now wears seatbelts 
A) fewer pedestrian deaths 
B) safer driving 
C) an increase in the number of accidents 
D) that everyone now wears seatbelts

Question 17

The Australian government redistributes income from the rich to the poor.Explain how this action affects equity as well as efficiency in the economy.

Accepted Answer

Policies aimed at achieving a more equal

Question 18

A monopolist has limited market power.

Accepted Answer

A) True 
 B)False

Question 19

Two important causes of market failure are:

Accepted Answer

A) externalities and market power 
B) externalities and increases in prices 
C) market power and increases in poverty 
D) increases in poverty and increases in prices 
A) externalities and market power 
B) externalities and increases in prices 
C) market power and increases in poverty 
D) increases in poverty and increases in prices

Question 20

The Phillips curve shows that at least in the short term, reductions in the inflation rate must be accompanied by increases in unemployment.

Accepted Answer

A) True 
 B)False

Exam 1: Ten Lessons From Economics

A rational decision maker takes an action only if the:

Both Japan and the Philippines were badly damaged by the Second World War.Wages in Japan however, quickly overtook those of the Philippines in the post-war period.What is the fundamental cause of this difference?

People are likely to make good decisions only if they understand the options that are available to them.

Market power refers to the:

A market economy is guided by:

Economists study how individuals make decisions, how they interact with each other and the factors that affect the economy as a whole.

Paid parental leave provides income to the mother to stay at home after having a baby.What might be the different incentives under a system providing benefits to the value of the minimum wage, compared to one where benefits are calculated as a portion of the mother's income?

Which of the following is NOT included in the decisions that every society must make?

Australia can benefit from trade if it

Trade can benefit a family:

Periods of high, persistent inflation are almost always caused by:

The income of a typical worker in a country is most closely linked to which of the following?

Suppose that the government enforces a law which prohibits the creation of any pollution.What effect do you think the enforcement of this law will have on the wellbeing of society?

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Productivity is defined as the:

According to Peltzman, one effect of a government-imposed seatbelt law has been:

The Australian government redistributes income from the rich to the poor.Explain how this action affects equity as well as efficiency in the economy.

A monopolist has limited market power.

Two important causes of market failure are:

The Phillips curve shows that at least in the short term, reductions in the inflation rate must be accompanied by increases in unemployment.

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

Application: 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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