Question 1

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 2

The willingness of citizens to pay for a 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 3

In the short run,which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

Accepted Answer

A)  3 percent per year 
B)  5 percent per year 
C)  7 percent per year 
D)  9 percent per year 
A)  3 percent per year 
B)  5 percent per year 
C)  7 percent per year 
D)  9 percent per year

Question 4

The "invisible hand" directs economic activity through

Accepted Answer

A)  advertising. 
B)  prices. 
C)  central planning. 
D)  government regulations. 
A)  advertising. 
B)  prices. 
C)  central planning. 
D)  government regulations.

Question 5

A rational decisionmaker

Accepted Answer

A)  ignores marginal changes and focuses instead on "the big picture." 
B)  ignores the likely effects of government policies when he or she makes choices. 
C)  takes an action only if the marginal benefit of that action exceeds the marginal cost of that action. 
D)  takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions. 
A)  ignores marginal changes and focuses instead on "the big picture." 
B)  ignores the likely effects of government policies when he or she makes choices. 
C)  takes an action only if the marginal benefit of that action exceeds the marginal cost of that action. 
D)  takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions.

Question 6

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor.This redistribution of wealth

Accepted Answer

A)  is more efficient and more equal for society. 
B)  is more efficient but less equal for society. 
C)  is more equal but less efficient for society. 
D)  is less equal and less efficient for society. 
A)  is more efficient and more equal for society. 
B)  is more efficient but less equal for society. 
C)  is more equal but less efficient for society. 
D)  is less equal and less efficient for society.

Question 7

When computing the opportunity cost of attending a concert you should include

Accepted Answer

A)  the price you pay for the ticket and the value of your time. 
B)  the price you pay for the ticket,but not the value of your time. 
C)  the value of your time,but not the price you pay for the ticket. 
D)  neither the price of the ticket nor the value of your time. 
A)  the price you pay for the ticket and the value of your time. 
B)  the price you pay for the ticket,but not the value of your time. 
C)  the value of your time,but not the price you pay for the ticket. 
D)  neither the price of the ticket nor the value of your time.

Question 8

If wages for accountants rose,then accountants' leisure time would have a lower opportunity cost.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Suppose one county in Missouri decides it wants to reduce alcohol consumption,so the county passes a law that raises the price of a bottle of beer by $1.As a result,people drive to other counties to drink alcohol,which results in an increase in drunk driving.This illustrates the principle that people respond to incentives.

Accepted Answer

A) True 
 B)False

Question 11

Government policies that improve equality usually increase efficiency at the same time.

Accepted Answer

A) True 
 B)False

Question 12

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 13

The short-run tradeoff between inflation and unemployment implies that,in the short run,

Accepted Answer

A)  a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
B)  an increase in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
C)  policymakers are able to reduce the inflation rate and,at the same time,reduce the unemployment rate. 
D)  policymakers can influence the inflation rate,but not the unemployment rate. 
A)  a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
B)  an increase in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
C)  policymakers are able to reduce the inflation rate and,at the same time,reduce the unemployment rate. 
D)  policymakers can influence the inflation rate,but not the unemployment rate.

Question 14

Over the past century,the average income in the United States has risen about

Accepted Answer

A)  twofold. 
B)  fivefold. 
C)  eightfold. 
D)  tenfold. 
A)  twofold. 
B)  fivefold. 
C)  eightfold. 
D)  tenfold.

Question 15

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

Because economics is the study of how so

Question 16

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Accepted Answer

A)  In the short run,falling inflation is associated with falling unemployment. 
B)  In the short run,falling inflation is associated with rising unemployment. 
C)  In the long run,falling inflation is associated with falling unemployment. 
D)  In the long run,falling inflation is associated with rising unemployment. 
A)  In the short run,falling inflation is associated with falling unemployment. 
B)  In the short run,falling inflation is associated with rising unemployment. 
C)  In the long run,falling inflation is associated with falling unemployment. 
D)  In the long run,falling inflation is associated with rising unemployment.

Question 17

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Accepted Answer

A) True 
 B)False

Question 18

Trade with any nation can be mutually beneficial.

Accepted Answer

A) True 
 B)False

Question 19

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 20

The primary determinant of a country's standard of living is

Accepted Answer

A)  the country's ability to prevail over foreign competition. 
B)  the country's ability to produce goods and services. 
C)  the total supply of money in the economy. 
D)  the average age of the country's labor force. 
A)  the country's ability to prevail over foreign competition. 
B)  the country's ability to produce goods and services. 
C)  the total supply of money in the economy. 
D)  the average age of the country's labor force.

Exam 1: Ten Principles of Economics

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 a 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

In the short run,which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

The "invisible hand" directs economic activity through

A rational decisionmaker

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor.This redistribution of wealth

When computing the opportunity cost of attending a concert you should include

If wages for accountants rose,then accountants' leisure time would have a lower opportunity cost.

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

Government policies that improve equality usually increase efficiency at the same time.

Central planning refers to

The short-run tradeoff between inflation and unemployment implies that,in the short run,

Over the past century,the average income in the United States has risen about

How does the study of economics depend upon the phenomenon of scarcity?

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Trade with any nation can be mutually beneficial.

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?

The primary determinant of a country's standard of living is

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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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