Question 1

Why do taxes adversely affect the allocation of resources in society?

Accepted Answer

A) because they do not always fall more heavily on the rich 
B) because the taxes collected are not enough to finance government spending 
C) because not everyone pays taxes 
D) because they distort prices and thus the decisions of households and firms 
A) because they do not always fall more heavily on the rich 
B) because the taxes collected are not enough to finance government spending 
C) because not everyone pays taxes 
D) because they distort prices and thus the decisions of households and firms

Question 2

What has been one effect of a government-imposed seat belt law?

Accepted Answer

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

Question 3

Equity means everyone in the economy should receive an equal share of the goods and services produced.

Accepted Answer

A) True 
 B)False

Question 4

What happened when the German government increased the quantity of money in the German economy in the 1920s?

Accepted Answer

A) Germany experienced hyperinflation. 
B) Many people in Germany became rich. 
C) Unemployment increased. 
D) Germany was able to repay all its foreign debts. 
A) Germany experienced hyperinflation. 
B) Many people in Germany became rich. 
C) Unemployment increased. 
D) Germany was able to repay all its foreign debts.

Question 5

How do prices direct economic activity in a market economy?

Accepted Answer

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

Question 6

What does the adage, "There is no such thing as a free lunch," mean?

Accepted Answer

A) Even people on welfare have to pay for food. 
B) The cost of living is always increasing. 
C) To get something we like, we usually have to give up another thing we like. 
D) All costs are included in the price of a product. 
A) Even people on welfare have to pay for food. 
B) The cost of living is always increasing. 
C) To get something we like, we usually have to give up another thing we like. 
D) All costs are included in the price of a product.

Question 7

Under what conditions might government intervention in an economy improve the market outcome?

Accepted Answer

If there is a market failure, such as an

Question 8

What concept is illustrated by the adage, "There is no such thing as a free lunch"?

Accepted Answer

A) tradeoffs 
B) scarcity 
C) productivity 
D) efficiency 
A) tradeoffs 
B) scarcity 
C) productivity 
D) efficiency

Question 9

Which of the following best defines efficiency?

Accepted Answer

A) absolute fairness 
B) equal distribution 
C) minimum waste 
D) consumer sovereignty 
A) absolute fairness 
B) equal distribution 
C) minimum waste 
D) consumer sovereignty

Question 10

What is an increase in the overall level of prices in an economy called?

Accepted Answer

A) economic growth 
B) inflation 
C) monetary policy 
D) supply shocks 
A) economic growth 
B) inflation 
C) monetary policy 
D) supply shocks

Question 11

In most societies, who allocates resources?

Accepted Answer

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

What did Ralph Nader's book Unsafe at Any Speed cause the U.S. government to require?

Accepted Answer

A) safety glass in all new cars 
B) seat belts in all new cars 
C) air bags in all new cars 
D) stricter drunk driving laws 
A) safety glass in all new cars 
B) seat belts in all new cars 
C) air bags in all new cars 
D) stricter drunk driving laws

Question 14

When the government attempts to cut the economic pie into more equal slices, what happens?

Accepted Answer

A) It is easier to cut the pie, and therefore the economy can produce a larger pie. 
B) The government can more easily allocate the pie to those most in need. 
C) The pie gets smaller, and there will be less pie for everyone. 
D) The economy will spend too much time cutting and loses the ability to produce enough pie for everyone. 
A) It is easier to cut the pie, and therefore the economy can produce a larger pie. 
B) The government can more easily allocate the pie to those most in need. 
C) The pie gets smaller, and there will be less pie for everyone. 
D) The economy will spend too much time cutting and loses the ability to produce enough pie for everyone.

Question 15

What will pollution regulations do?

Accepted Answer

A) increase profit to firms 
B) impose a tradeoff on society 
C) allow firms to raise workers' wages 
D) lower prices for consumers 
A) increase profit to firms 
B) impose a tradeoff on society 
C) allow firms to raise workers' wages 
D) lower prices for consumers

Question 16

What is almost always the cause of large or persistent inflation?

Accepted Answer

A) an increase in demand for domestic production 
B) growth in the quantity of money 
C) foreign competition 
D) higher worker productivity 
A) an increase in demand for domestic production 
B) growth in the quantity of money 
C) foreign competition 
D) higher worker productivity

Question 17

How do people make decisions at the margin?

Accepted Answer

A) by following tradition 
B) by experience 
C) by calculating dollar costs 
D) by comparing costs and benefits 
A) by following tradition 
B) by experience 
C) by calculating dollar costs 
D) by comparing costs and benefits

Question 18

With careful planning, we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 19

The Phillips curve shows the short-run tradeoff between inflation and economic growth.

Accepted Answer

A) True 
 B)False

Question 20

What does economics study?

Accepted Answer

A) business 
B) how society manages its scarce resources 
C) central planning 
D) government regulation 
A) business 
B) how society manages its scarce resources 
C) central planning 
D) government regulation

Why do taxes adversely affect the allocation of resources in society?

What has been one effect of a government-imposed seat belt law?

Equity means everyone in the economy should receive an equal share of the goods and services produced.

What happened when the German government increased the quantity of money in the German economy in the 1920s?

How do prices direct economic activity in a market economy?

What does the adage, "There is no such thing as a free lunch," mean?

Under what conditions might government intervention in an economy improve the market outcome?

What concept is illustrated by the adage, "There is no such thing as a free lunch"?

Which of the following best defines efficiency?

What is an increase in the overall level of prices in an economy called?

In most societies, who allocates resources?

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

What did Ralph Nader's book Unsafe at Any Speed cause the U.S. government to require?

When the government attempts to cut the economic pie into more equal slices, what happens?

What will pollution regulations do?

What is almost always the cause of large or persistent inflation?

How do people make decisions at the margin?

With careful planning, we can usually get something that we like without having to give up something else that we like.

The Phillips curve shows the short-run tradeoff between inflation and economic growth.

What does economics study?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

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 Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 1: Ten Principles of Economics

Why do taxes adversely affect the allocation of resources in society?

What has been one effect of a government-imposed seat belt law?

Equity means everyone in the economy should receive an equal share of the goods and services produced.

What happened when the German government increased the quantity of money in the German economy in the 1920s?

How do prices direct economic activity in a market economy?

What does the adage, "There is no such thing as a free lunch," mean?

Under what conditions might government intervention in an economy improve the market outcome?

What concept is illustrated by the adage, "There is no such thing as a free lunch"?

Which of the following best defines efficiency?

What is an increase in the overall level of prices in an economy called?

In most societies, who allocates resources?

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

What did Ralph Nader's book Unsafe at Any Speed cause the U.S. government to require?

When the government attempts to cut the economic pie into more equal slices, what happens?

What will pollution regulations do?

What is almost always the cause of large or persistent inflation?

How do people make decisions at the margin?

With careful planning, we can usually get something that we like without having to give up something else that we like.

The Phillips curve shows the short-run tradeoff between inflation and economic growth.

What does economics study?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

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 Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters