Question 1

The overriding reason why households and societies face many decisions is that

Accepted Answer

A)  resources are scarce. 
B)  goods and services are not scarce. 
C)  incomes fluctuate with business cycles. 
D)  people, by nature, tend to disagree. 
A)  resources are scarce. 
B)  goods and services are not scarce. 
C)  incomes fluctuate with business cycles. 
D)  people, by nature, tend to disagree.

Question 2

Which of the following is correct?

Accepted Answer

A)  The word economy comes from the Greek word for "rational thinker." 
B)  Economists study the management of scarce resources. 
C)  Because economists believe that people pursue their best interests, they are not interested in how people interact. 
D)  All of the above are correct. 
A)  The word economy comes from the Greek word for "rational thinker." 
B)  Economists study the management of scarce resources. 
C)  Because economists believe that people pursue their best interests, they are not interested in how people interact. 
D)  All of the above are correct.

Question 3

If the price of a dozen eggs were fixed above the current price,then we would expect

Accepted Answer

A)  an increase in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell. 
B)  an increase in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell. 
C)  a decrease in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell. 
D)  a decrease in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell. 
A)  an increase in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell. 
B)  an increase in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell. 
C)  a decrease in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell. 
D)  a decrease in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell.

Question 4

In 2008,the average American earned about $47,000 while the average Nigerian earned about $1,400.Which of the following statements is likely?

Accepted Answer

A)  The average American purchases more televisions than the average Nigerian. 
B)  The average American has better nutrition and healthcare than the average Nigerian. 
C)  The average American has a longer life expectancy than the average Nigerian. 
D)  All of the above are correct. 
A)  The average American purchases more televisions than the average Nigerian. 
B)  The average American has better nutrition and healthcare than the average Nigerian. 
C)  The average American has a longer life expectancy than the average Nigerian. 
D)  All of the above are correct.

Question 5

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new,fuel-efficient aircraft.

Accepted Answer

A) True 
 B)False

Question 6

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Accepted Answer

A)  every person is entitled to life, liberty, and the pursuit of happiness. 
B)  individuals are best left to their own devices without the government guiding their actions. 
C)  the government plays a central role in organizing a market economy. 
D)  because of human nature a strong legal system is necessary for a market system to survive. 
A)  every person is entitled to life, liberty, and the pursuit of happiness. 
B)  individuals are best left to their own devices without the government guiding their actions. 
C)  the government plays a central role in organizing a market economy. 
D)  because of human nature a strong legal system is necessary for a market system to survive.

Question 7

Which is the most accurate statement about trade?

Accepted Answer

A)  Trade can make every nation better off. 
B)  Trade makes some nations better off and others worse off. 
C)  Trading for a good can make a nation better off only if the nation cannot produce that good itself. 
D)  Trade helps rich nations and hurts poor nations. 
A)  Trade can make every nation better off. 
B)  Trade makes some nations better off and others worse off. 
C)  Trading for a good can make a nation better off only if the nation cannot produce that good itself. 
D)  Trade helps rich nations and hurts poor nations.

Question 8

Which of the following statements about markets is most accurate?

Accepted Answer

A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not an acceptable way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations, but not in less developed nations. 
A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not an acceptable way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations, but not in less developed nations.

Question 9

Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements about trade is false?

Accepted Answer

A)  Trade increases competition. 
B)  With trade, one country wins and one country loses. 
C)  Bulgaria can benefit, potentially, from trade with any other country. 
D)  Trade allows people to buy a greater variety of goods and services at lower cost. 
A)  Trade increases competition. 
B)  With trade, one country wins and one country loses. 
C)  Bulgaria can benefit, potentially, from trade with any other country. 
D)  Trade allows people to buy a greater variety of goods and services at lower cost.

Question 11

Which of the following can policy do?

Accepted Answer

A)  alter incentives 
B)  alter trade-offs 
C)  change opportunity costs 
D)  All of the above are correct. 
A)  alter incentives 
B)  alter trade-offs 
C)  change opportunity costs 
D)  All of the above are correct.

Question 12

Irregular fluctuations in economic activity are known as the

Accepted Answer

A)  business cycle. 
B)  broken window fallacy. 
C)  tradeoff between inflation and unemployment. 
D)  ten principles of economics. 
A)  business cycle. 
B)  broken window fallacy. 
C)  tradeoff between inflation and unemployment. 
D)  ten principles of economics.

Question 13

Variations in the standard of living across countries is due almost entirely to differences in each nation's total output of goods and services.

Accepted Answer

A) True 
 B)False

Question 14

The historical rise in living standards of American workers is primarily a result of

Accepted Answer

A)  the influence of labor unions in America. 
B)  tariff protection imposed by the American government. 
C)  the enactment of minimum-wage laws in America. 
D)  the rise in American productivity. 
A)  the influence of labor unions in America. 
B)  tariff protection imposed by the American government. 
C)  the enactment of minimum-wage laws in America. 
D)  the rise in American productivity.

Question 15

Prices direct economic activity in a market economy by

Accepted Answer

A)  influencing the actions of buyers and sellers. 
B)  reducing scarcity of the goods and services produced. 
C)  eliminating the need for government intervention. 
D)  allocating goods and services in the most equitable way. 
A)  influencing the actions of buyers and sellers. 
B)  reducing scarcity of the goods and services produced. 
C)  eliminating the need for government intervention. 
D)  allocating goods and services in the most equitable way.

Question 16

Inflation is the primary determinant of a country's living standards.

Accepted Answer

A) True 
 B)False

Question 17

When a government program is justified not on its merits but on the number of jobs it will create,

Accepted Answer

A)  the program is an efficient use of taxpayer dollars. 
B)  it should be approved only if the unemployment rate is low. 
C)  taxes should be raised to fund the program. 
D)  it is known as the "broken window fallacy." 
A)  the program is an efficient use of taxpayer dollars. 
B)  it should be approved only if the unemployment rate is low. 
C)  taxes should be raised to fund the program. 
D)  it is known as the "broken window fallacy."

Question 18

Trade

Accepted Answer

A)  allows specialization, which increases costs. 
B)  allows specialization, which reduces costs. 
C)  reduces specialization, which increases costs. 
D)  reduces specialization, which reduces costs. 
A)  allows specialization, which increases costs. 
B)  allows specialization, which reduces costs. 
C)  reduces specialization, which increases costs. 
D)  reduces specialization, which reduces costs.

Question 19

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  population 
B)  productivity 
C)  market power 
D)  government policies 
A)  population 
B)  productivity 
C)  market power 
D)  government policies

Exam 1: Ten Principles of Economics.

The overriding reason why households and societies face many decisions is that

Which of the following is correct?

If the price of a dozen eggs were fixed above the current price,then we would expect

In 2008,the average American earned about $47,000 while the average Nigerian earned about $1,400.Which of the following statements is likely?

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new,fuel-efficient aircraft.

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Which is the most accurate statement about trade?

Which of the following statements about markets is most accurate?

Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.

Which of the following statements about trade is false?

Which of the following can policy do?

Irregular fluctuations in economic activity are known as the

Variations in the standard of living across countries is due almost entirely to differences in each nation's total output of goods and services.

The historical rise in living standards of American workers is primarily a result of

Prices direct economic activity in a market economy by

Inflation is the primary determinant of a country's living standards.

When a government program is justified not on its merits but on the number of jobs it will create,

Trade

Inflation increases the value of money.

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

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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