Question 1

Evidence indicates that seat belt laws have led to

Accepted Answer

A) fewer pedestrian deaths. 
B) fewer automobile accidents. 
C) fewer deaths per automobile accident. 
D) All of the above are correct. 
A) fewer pedestrian deaths. 
B) fewer automobile accidents. 
C) fewer deaths per automobile accident. 
D) All of the above are correct.

Question 2

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

Accepted Answer

A) create a more fair distribution of income. 
B) change the way in which the economic pie is divided. 
C) enlarge the economic pie. 
D) All of the above are correct. 
A) create a more fair distribution of income. 
B) change the way in which the economic pie is divided. 
C) enlarge the economic pie. 
D) All of the above are correct.

Question 3

To improve living standards, policymakers should

Accepted Answer

A) impose restrictions on foreign competition. 
B) formulate policies designed to increase productivity. 
C) impose tougher immigration policies. 
D) provide tax breaks for the middle class. 
A) impose restrictions on foreign competition. 
B) formulate policies designed to increase productivity. 
C) impose tougher immigration policies. 
D) provide tax breaks for the middle class.

Question 4

Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal

Accepted Answer

A) cost of teaching increased. 
B) benefit of teaching increased. 
C) cost of a corporate job increased. 
D) benefit of a corporate job decreased. 
A) cost of teaching increased. 
B) benefit of teaching increased. 
C) cost of a corporate job increased. 
D) benefit of a corporate job decreased.

Question 5

Government policies resulting in reduced efficiency include (i)
The welfare system
(ii)
Unemployment insurance
(iii)
Progressive income tax

Accepted Answer

A) (i) only 
B) (ii) only 
C) (i) and (ii) only 
D) (i), (ii), and (iii) 
A) (i) only 
B) (ii) only 
C) (i) and (ii) only 
D) (i), (ii), and (iii)

Question 6

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

Accepted Answer

A) Average income in the US is higher than the average income in Ghana. 
B) The US has a higher standard of living than Ghana. 
C) Productivity in the US is higher than productivity in Ghana. 
D) All of the above are correct. 
A) Average income in the US is higher than the average income in Ghana. 
B) The US has a higher standard of living than Ghana. 
C) Productivity in the US is higher than productivity in Ghana. 
D) All of the above are correct.

Question 7

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 8

Benefits from trade would not include

Accepted Answer

A) the ability of people and nations to specialize. 
B) a greater variety of goods and services becoming available. 
C) less competition. 
D) lower prices. 
A) the ability of people and nations to specialize. 
B) a greater variety of goods and services becoming available. 
C) less competition. 
D) lower prices.

Question 9

Central planning refers to

Accepted Answer

A) markets guiding economic activity. Today many countries that had this system have abandoned it. 
B) markets guiding economic activity. Today many countries that did not have this system have implemented it. 
C) government guiding economic activity. Today many countries that had this system have abandoned it. 
D) government guiding economic activity. Today many countries that did not have this system have implemented it. 
A) markets guiding economic activity. Today many countries that had this system have abandoned it. 
B) markets guiding economic activity. Today many countries that did not have this system have implemented it. 
C) government guiding economic activity. Today many countries that had this system have abandoned it. 
D) government guiding economic activity. Today many countries that did not have this system have implemented it.

Question 10

Most economists believe that an increase in the quantity of money results in

Accepted Answer

A) an increase in the demand for goods and services. 
B) lower unemployment in the short run. 
C) higher inflation in the long run. 
D) All of the above are correct. 
A) an increase in the demand for goods and services. 
B) lower unemployment in the short run. 
C) higher inflation in the long run. 
D) All of the above are correct.

Question 11

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

Question 12

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 13

Trade between the United States and India

Accepted Answer

A) benefits both the United States and India. 
B) is a losing proposition for the United States because India has cheaper labor. 
C) is a losing proposition for India because capital is much more abundant in the U.S. than in India. 
D) is a losing proposition for India because U.S. workers are more productive. 
A) benefits both the United States and India. 
B) is a losing proposition for the United States because India has cheaper labor. 
C) is a losing proposition for India because capital is much more abundant in the U.S. than in India. 
D) is a losing proposition for India because U.S. workers are more productive.

Question 14

Market failure is the ability of a single person to have a substantial influence on market prices.

Accepted Answer

A) True 
 B)False

Question 15

Economists study how people make decisions.

Accepted Answer

A) True 
 B)False

Question 16

In most societies, resources are allocated by

Accepted Answer

A) a single central planner. 
B) a small number of central planners. 
C) those firms that use resources to provide goods and services. 
D) the combined actions of millions of households and firms. 
A) a single central planner. 
B) a small number of central planners. 
C) those firms that use resources to provide goods and services. 
D) the combined actions of millions of households and firms.

Question 17

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 18

Max and Maddy charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, seven people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have seven or five cars parked on their lawn does not affect their costs. From this information it follows that

Accepted Answer

A) they should leave the price at $10. 
B) it does not matter if they charge $10 or $15. 
C) they would do better charging $15 than $10. 
D) they should raise the price even more. 
A) they should leave the price at $10. 
B) it does not matter if they charge $10 or $15. 
C) they would do better charging $15 than $10. 
D) they should raise the price even more.

Question 19

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Accepted Answer

A) True 
 B)False

Question 20

Olivia was accepted to Notre Dame and another college. She is trying to decide where to go. Which of the following should she include in making her decision?

Accepted Answer

A) how much she spent applying to Notre Dame, and the difference between living expenses at Notre Dame and the other college 
B) how much she spent applying to Notre Dame, but not the difference between living expenses at Notre Dame and the other college 
C) the difference between living expenses at Notre Dame and her second choice, but not how much she spent applying to Notre Dame 
D) neither how much she spent applying to Notre Dame nor the difference between living expenses at Notre Dame and her second choice 
A) how much she spent applying to Notre Dame, and the difference between living expenses at Notre Dame and the other college 
B) how much she spent applying to Notre Dame, but not the difference between living expenses at Notre Dame and the other college 
C) the difference between living expenses at Notre Dame and her second choice, but not how much she spent applying to Notre Dame 
D) neither how much she spent applying to Notre Dame nor the difference between living expenses at Notre Dame and her second choice

Exam 1: Ten Principles of Economics

Evidence indicates that seat belt laws have led to

To say that government intervenes in the economy to promote efficiency is to say that government is attempting to

To improve living standards, policymakers should

Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal

Government policies resulting in reduced efficiency include (i) The welfare system (ii) Unemployment insurance (iii) Progressive income tax

US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?

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?

Benefits from trade would not include

Central planning refers to

Most economists believe that an increase in the quantity of money results in

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

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

Trade between the United States and India

Market failure is the ability of a single person to have a substantial influence on market prices.

Economists study how people make decisions.

In most societies, resources are allocated by

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

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Olivia was accepted to Notre Dame and another college. She is trying to decide where to go. Which of the following should she include in making her decision?

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

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