Question 1

Productivity is defined as the

Accepted Answer

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

Question 2

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Accepted Answer

A)  inflation 
B)  unemployment 
C)  both inflation and unemployment 
D)  neither inflation nor unemployment 
A)  inflation 
B)  unemployment 
C)  both inflation and unemployment 
D)  neither inflation nor unemployment

Question 3

Market power and externalities are two possible causes of market failure.

Accepted Answer

A) True 
 B)False

Question 4

The phrase "no such thing as a free lunch" means

Accepted Answer

A)  people must face tradeoffs. 
B)  rational people think at the margin. 
C)  people respond to incentives. 
D)  trade can make everyone better off. 
A)  people must face tradeoffs. 
B)  rational people think at the margin. 
C)  people respond to incentives. 
D)  trade can make everyone better off.

Question 5

For a college student who wishes to calculate the true costs of going to college,the costs of room and board

Accepted Answer

A)  should be counted in full, regardless of the costs of eating and sleeping elsewhere. 
B)  should be counted only to the extent that they are more expensive at college than elsewhere. 
C)  usually exceed the opportunity cost of going to college. 
D)  plus the cost of tuition, equals the opportunity cost of going to college. 
A)  should be counted in full, regardless of the costs of eating and sleeping elsewhere. 
B)  should be counted only to the extent that they are more expensive at college than elsewhere. 
C)  usually exceed the opportunity cost of going to college. 
D)  plus the cost of tuition, equals the opportunity cost of going to college.

Question 6

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others.This extra benefit society gets from vaccinating its citizens is known as

Accepted Answer

A)  productivity. 
B)  an externality. 
C)  market power. 
D)  property rights. 
A)  productivity. 
B)  an externality. 
C)  market power. 
D)  property rights.

Question 7

The increase in living standards of American workers over the past century is primarily due to

Accepted Answer

A)  the success of labor unions. 
B)  minimum-wage laws. 
C)  improvements in productivity. 
D)  None of the above are correct. 
A)  the success of labor unions. 
B)  minimum-wage laws. 
C)  improvements in productivity. 
D)  None of the above are correct.

Question 8

In the early 1980s,U.S.economic policy was directed toward reducing inflation.What would you have expected to observe during this short period of time?

Accepted Answer

A)  Inflation fell and unemployment fell. 
B)  Inflation and unemployment were both unaffected. 
C)  Inflation fell and unemployment increased. 
D)  Inflation fell and unemployment was unchanged. 
A)  Inflation fell and unemployment fell. 
B)  Inflation and unemployment were both unaffected. 
C)  Inflation fell and unemployment increased. 
D)  Inflation fell and unemployment was unchanged.

Question 9

When the government implements programs such as progressive income tax rates,which of the following is likely to occur?

Accepted Answer

A)  equality is increased and efficiency is increased. 
B)  equality is increased and efficiency is decreased. 
C)  equality is decreased and efficiency is increased. 
D)  equality is decreased and efficiency is decreased. 
A)  equality is increased and efficiency is increased. 
B)  equality is increased and efficiency is decreased. 
C)  equality is decreased and efficiency is increased. 
D)  equality is decreased and efficiency is decreased.

Question 10

In less than two years in the early 1920s,the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks.This is a spectacular example of

Accepted Answer

A)  market power caused by a change in the country's standard of living. 
B)  market power caused by a single firm controlling the newspaper production. 
C)  inflation caused by increased productivity in the economy. 
D)  inflation caused by an increase in the quantity of money in the economy. 
A)  market power caused by a change in the country's standard of living. 
B)  market power caused by a single firm controlling the newspaper production. 
C)  inflation caused by increased productivity in the economy. 
D)  inflation caused by an increase in the quantity of money in the economy.

Question 11

In the short run,which of the following is not correct?

Accepted Answer

A)  Increasing the money supply increases the demand for goods and services. 
B)  Increasing the money supply encourages firms to hire more workers. 
C)  Lowering the money supply leads to a higher level of unemployment. 
D)  Policies that encourage higher employment will also induce a lower rate of inflation. 
A)  Increasing the money supply increases the demand for goods and services. 
B)  Increasing the money supply encourages firms to hire more workers. 
C)  Lowering the money supply leads to a higher level of unemployment. 
D)  Policies that encourage higher employment will also induce a lower rate of inflation.

Question 12

Prior to the collapse of communism,communist countries worked on the premise that economic well-being could be best attained by

Accepted Answer

A)  a market economy. 
B)  a strong reliance on prices and individuals' self-interests. 
C)  a system of large privately-owned firms. 
D)  the actions of government central planners. 
A)  a market economy. 
B)  a strong reliance on prices and individuals' self-interests. 
C)  a system of large privately-owned firms. 
D)  the actions of government central planners.

Question 13

President Gerald Ford referred to inflation as

Accepted Answer

A)  a blight on our nation's economy. 
B)  a necessary evil to combat high unemployment. 
C)  public enemy number one. 
D)  a fly in the ointment. 
A)  a blight on our nation's economy. 
B)  a necessary evil to combat high unemployment. 
C)  public enemy number one. 
D)  a fly in the ointment.

Question 14

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 15

The U.S.president who referred to inflation as "public enemy number one" was

Accepted Answer

A)  Richard Nixon. 
B)  Gerald Ford. 
C)  Jimmy Carter. 
D)  Ronald Reagan. 
A)  Richard Nixon. 
B)  Gerald Ford. 
C)  Jimmy Carter. 
D)  Ronald Reagan.

Question 16

Which of the following is a decision that economists study?

Accepted Answer

A)  how much people work 
B)  what people buy 
C)  how much money people save 
D)  All of the above are correct. 
A)  how much people work 
B)  what people buy 
C)  how much money people save 
D)  All of the above are correct.

Question 17

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it,the regulations come at the cost of reducing the incomes of the regulated firms' owners,workers,and customers.This statement illustrates the principle that

Accepted Answer

A)  trade can make everyone better off. 
B)  rational people think at the margin. 
C)  people face tradeoffs. 
D)  people respond to incentives. 
A)  trade can make everyone better off. 
B)  rational people think at the margin. 
C)  people face tradeoffs. 
D)  people respond to incentives.

Question 18

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Accepted Answer

A) True 
 B)False

Question 19

Causes of market failure include

Accepted Answer

A)  externalities and market power. 
B)  market power and incorrect forecasts of consumer demand. 
C)  externalities and foreign competition. 
D)  incorrect forecasts of consumer demand and foreign competition. 
A)  externalities and market power. 
B)  market power and incorrect forecasts of consumer demand. 
C)  externalities and foreign competition. 
D)  incorrect forecasts of consumer demand and foreign competition.

Question 20

In the United States,incomes have historically grown

Accepted Answer

A)  about 0.5 percent per year. 
B)  about 2 percent per year. 
C)  about 4 percent per year. 
D)  about 6 percent per year. 
A)  about 0.5 percent per year. 
B)  about 2 percent per year. 
C)  about 4 percent per year. 
D)  about 6 percent per year.

Exam 1: Ten Principles of Economics.

Productivity is defined as the

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Market power and externalities are two possible causes of market failure.

The phrase "no such thing as a free lunch" means

For a college student who wishes to calculate the true costs of going to college,the costs of room and board

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others.This extra benefit society gets from vaccinating its citizens is known as

The increase in living standards of American workers over the past century is primarily due to

In the early 1980s,U.S.economic policy was directed toward reducing inflation.What would you have expected to observe during this short period of time?

When the government implements programs such as progressive income tax rates,which of the following is likely to occur?

In less than two years in the early 1920s,the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks.This is a spectacular example of

In the short run,which of the following is not correct?

Prior to the collapse of communism,communist countries worked on the premise that economic well-being could be best attained by

President Gerald Ford referred to inflation as

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?

The U.S.president who referred to inflation as "public enemy number one" was

Which of the following is a decision that economists study?

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it,the regulations come at the cost of reducing the incomes of the regulated firms' owners,workers,and customers.This statement illustrates the principle that

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Causes of market failure include

In the United States,incomes have historically grown

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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