Question 1

Economics is the study of the circulation of money between banks, taxpayers and the government.

Accepted Answer

A) True 
 B)False

Question 2

Why does Australia continue to trade with a country like Japan, which places tariffs and other barriers on Australian goods?

Accepted Answer

Trade between Australia and Japan allows

Question 3

In economic policymaking, there is often a conflict between the goal of efficiency and the goal of equity.

Accepted Answer

A) True 
 B)False

Question 4

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short run.

Accepted Answer

To lower inflation, the government may c

Question 5

New Zealand and Australia trade similar, but not identical, forestry products with each other. Why wouldn't each country choose to produce all the forestry products they need domestically?

Accepted Answer

By trading, each country can specialise

Question 6

The countries with the lowest labour productivities tend to have the lowest wages.

Accepted Answer

A) True 
 B)False

Question 7

When government policies are being designed:

Accepted Answer

A)  equity and efficiency goals are usually independent of each other 
B)  there is usually a trade-off between equity and efficiency 
C)  equity can usually be achieved without an efficiency loss 
D)  increasing efficiency usually results in more equity 
A)  equity and efficiency goals are usually independent of each other 
B)  there is usually a trade-off between equity and efficiency 
C)  equity can usually be achieved without an efficiency loss 
D)  increasing efficiency usually results in more equity

Question 8

A forestry company is trying to decide whether to harvest a plantation of pine trees or leave harvest for another year. How might it use marginal analysis to make a decision on timing?

Accepted Answer

The company would have to consider wheth

Question 9

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 10

The mechanism employed by the 'invisible hand' to direct economic activity is:

Accepted Answer

A)  unlimited quantity 
B)  large corporations 
C)  advertising 
D)  prices 
A)  unlimited quantity 
B)  large corporations 
C)  advertising 
D)  prices

Question 11

What ultimately determines a country's standard of living?

Accepted Answer

A)  its ability to produce goods and services that people want to buy 
B)  the level of oil reserves it has 
C)  the quantity of natural resources, like forests and gold mines 
D)  the level of trade barriers to protect domestic industries and local workers 
A)  its ability to produce goods and services that people want to buy 
B)  the level of oil reserves it has 
C)  the quantity of natural resources, like forests and gold mines 
D)  the level of trade barriers to protect domestic industries and local workers

Question 12

Concern among economists about their country's budget deficit is based largely on the:

Accepted Answer

A)  likelihood that the deficit will cause the country to go bankrupt 
B)  deficit's adverse impact on productivity 
C)  fact that part of the deficit is covered by borrowing from foreigners 
D)  fact that the deficit is covered by printing money 
A)  likelihood that the deficit will cause the country to go bankrupt 
B)  deficit's adverse impact on productivity 
C)  fact that part of the deficit is covered by borrowing from foreigners 
D)  fact that the deficit is covered by printing money

Question 13

The main motivation behind the 'invisible hand' is:

Accepted Answer

A)  the threat of government intervention 
B)  business ethics 
C)  self-interest 
D)  the legal system 
A)  the threat of government intervention 
B)  business ethics 
C)  self-interest 
D)  the legal system

Question 14

A situation in which a market left on its own fails to allocate resources efficiently is known as:

Accepted Answer

A)  scarcity 
B)  opportunity cost 
C)  market failure 
D)  market power 
A)  scarcity 
B)  opportunity cost 
C)  market failure 
D)  market power

Question 15

The two broad reasons for a government to intervene in the economy are to promote efficiency and to promote equity.

Accepted Answer

A) True 
 B)False

Question 16

Inflation causes:

Accepted Answer

A)  the value of money to fall 
B)  productivity to increase 
C)  the government to lower taxes 
D)  profiteering by greedy corporations 
A)  the value of money to fall 
B)  productivity to increase 
C)  the government to lower taxes 
D)  profiteering by greedy corporations

Question 17

Public policies often alter the costs and benefits of private actions. Why is it important for policymakers to consider both the direct and indirect effects of public policies?

Accepted Answer

If policymakers don't consider

Question 18

In what case can a government's attempt to lower inflation and promote increased barrier-free trade have long-term consequences on unemployment?

Accepted Answer

When the money supply is reduced, lower

Question 19

In the early 1980s, US economic policy was directed toward reducing inflation. What would you assume about inflation and unemployment during this period?

Accepted Answer

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

Question 20

Inflation is defined as:

Accepted Answer

A)  a period of rising productivity in the economy 
B)  an increase in the overall level of output in the economy 
C)  a period of rising income in the economy 
D)  an increase in the overall level of prices in the economy 
A)  a period of rising productivity in the economy 
B)  an increase in the overall level of output in the economy 
C)  a period of rising income in the economy 
D)  an increase in the overall level of prices in the economy

Exam 1: Ten Lessons From Economics

Economics is the study of the circulation of money between banks, taxpayers and the government.

Why does Australia continue to trade with a country like Japan, which places tariffs and other barriers on Australian goods?

In economic policymaking, there is often a conflict between the goal of efficiency and the goal of equity.

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short run.

New Zealand and Australia trade similar, but not identical, forestry products with each other. Why wouldn't each country choose to produce all the forestry products they need domestically?

The countries with the lowest labour productivities tend to have the lowest wages.

When government policies are being designed:

A forestry company is trying to decide whether to harvest a plantation of pine trees or leave harvest for another year. How might it use marginal analysis to make a decision on timing?

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

The mechanism employed by the 'invisible hand' to direct economic activity is:

What ultimately determines a country's standard of living?

Concern among economists about their country's budget deficit is based largely on the:

The main motivation behind the 'invisible hand' is:

A situation in which a market left on its own fails to allocate resources efficiently is known as:

The two broad reasons for a government to intervene in the economy are to promote efficiency and to promote equity.

Inflation causes:

Public policies often alter the costs and benefits of private actions. Why is it important for policymakers to consider both the direct and indirect effects of public policies?

In what case can a government's attempt to lower inflation and promote increased barrier-free trade have long-term consequences on unemployment?

In the early 1980s, US economic policy was directed toward reducing inflation. What would you assume about inflation and unemployment during this period?

Inflation is defined as:

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

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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