Exam 1: Ten Principles of Economics

The principle that "trade can make everyone better off" applies to interactions and trade between

To promote good economic outcomes, policymakers should strive to enact policies that

Both the production of goods and services and the unemployment rate are used to measure

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that

What is the most important factor that explains differences in living standards across countries?

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by

Senator Green argues that replacing the income tax with a national sales tax would increase the level of output. Senator Brown objects that this policy would benefit the rich at the expense of the poor.

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that

Which of these activities will most likely result in an external benefit?

For a very long time Treeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Mark is refinishing an antique china cabinet and has already spent $180 on the restoration. He expects to be able to sell the cabinet for $360. Mark discovers that he needs to do an additional $200 of work to make the cabinet worth $360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for $100. What should he do?

Market failure refers to a situation in which the market does not allocate resources efficiently.

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

The principle that trade can make everyone better off applies to

A worker in Equador can earn $3 per day making cotton cloth on a hand loom. A worker in the United States can earn $70 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

The amount of goods and services produced from each unit of labor input is called

In economics, the cost of something is

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

The phenomenon of scarcity stems from the fact that