Question 1

The primary emphasis in macroeconomics is on:

Accepted Answer

A) how firms set prices. 
B) the national economy. 
C) marginal analysis. 
D) bits and pieces of the economy. 
A) how firms set prices. 
B) the national economy. 
C) marginal analysis. 
D) bits and pieces of the economy.

Question 2

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, _____ can trade _____ to _____ for _____ if _____ is the more efficient grower of peppers.

Accepted Answer

A) Molly; tomatoes; Sandy; peppers; Molly 
B) Sandy; tomatoes; Molly; peppers; Sandy 
C) Sandy; peppers; Molly; tomatoes; Molly 
D) Molly; peppers; Sandy; tomatoes; Molly 
A) Molly; tomatoes; Sandy; peppers; Molly 
B) Sandy; tomatoes; Molly; peppers; Sandy 
C) Sandy; peppers; Molly; tomatoes; Molly 
D) Molly; peppers; Sandy; tomatoes; Molly

Question 3

Market equilibrium will always be efficient even if it is not equitable.

Accepted Answer

A) True 
 B)False

Question 4

After a great holiday season when it opened its doors for business regularly at 6 A.M., a local retail store decides to continue to open at 6 A.M., even though many customers plan on arriving later to do their shopping. Such a plan by the retail store is:

Accepted Answer

A) efficient, since it worked previously. 
B) inefficient, since most customers will revert to their normal shopping behavior after the holidays are over. 
C) efficient, since it means that workers do not have to change their hours. 
D) most likely to lead to lower operating costs for the store. 
A) efficient, since it worked previously. 
B) inefficient, since most customers will revert to their normal shopping behavior after the holidays are over. 
C) efficient, since it means that workers do not have to change their hours. 
D) most likely to lead to lower operating costs for the store.

Question 5

The study of a single firm and how it determines prices falls under the study of:

Accepted Answer

A) macroeconomics. 
B) microeconomics. 
C) economic growth. 
D) fiscal policy. 
A) macroeconomics. 
B) microeconomics. 
C) economic growth. 
D) fiscal policy.

Question 6

Economists make predictions about individual behavior based on the assumption that people exploit opportunities to make themselves better off. The fact that different individuals make different choices when confronted with the same situation implies that this assumption is often violated.

Accepted Answer

A) True 
 B)False

Question 7

If the value of beach-front property in Beach City decreases, the people of Beach City will likely spend _____, causing incomes in Beach City to _____.

Accepted Answer

A) more; increase 
B) more; decrease 
C) less; increase 
D) less; decrease 
A) more; increase 
B) more; decrease 
C) less; increase 
D) less; decrease

Question 8

One consequence of equilibrium is that when trying to figure out which checkout line at the college bookstore is the fastest, one should choose:

Accepted Answer

A) the line nearest the door. 
B) the line farthest from the door. 
C) the middle line. 
D) randomly; if one line were truly faster, everyone would move to it and it would no longer be faster. 
A) the line nearest the door. 
B) the line farthest from the door. 
C) the middle line. 
D) randomly; if one line were truly faster, everyone would move to it and it would no longer be faster.

Question 9

A bank offers two compensation plans to its tellers. Plan A provides an hourly wage of $12. Plan B offers $10 per hour plus additional compensation if customers sign up for a related bank product. If a teller chooses plan B, most likely this person would:

Accepted Answer

A) be more helpful to customers than if he or she chose plan A. 
B) not be thinking wisely in choosing this plan. 
C) be less helpful to customers than if he or she chose plan A. 
D) not alter his or her behavior. 
A) be more helpful to customers than if he or she chose plan A. 
B) not be thinking wisely in choosing this plan. 
C) be less helpful to customers than if he or she chose plan A. 
D) not alter his or her behavior.

Question 10

A resource is anything that:

Accepted Answer

A) can be used in production. 
B) you pay for. 
C) is in scarce supply. 
D) can be consumed. 
A) can be used in production. 
B) you pay for. 
C) is in scarce supply. 
D) can be consumed.

Question 11

You are analyzing a trade-off when you compare the _____and _____ of doing something.

Accepted Answer

A) direct costs; opportunity costs 
B) marginal benefits; total benefits 
C) costs; benefits 
D) direct costs; total costs 
A) direct costs; opportunity costs 
B) marginal benefits; total benefits 
C) costs; benefits 
D) direct costs; total costs

Question 12

Specialization in production was the starting point for:

Accepted Answer

A) The Wealth of Nations, by Adam Smith. 
B) The General Theory, by John Maynard Keynes. 
C) Das Kapital, by Karl Marx. 
D) Free to Choose, by Milton Friedman. 
A) The Wealth of Nations, by Adam Smith. 
B) The General Theory, by John Maynard Keynes. 
C) Das Kapital, by Karl Marx. 
D) Free to Choose, by Milton Friedman.

Question 13

If you decide to go to Cancún with your friends during spring break, you cannot go to Paris with your sister in the summer. This statement best represents this economic concept:

Accepted Answer

A) The real cost of something is what you must give up to get it. 
B) "How much" is a decision at the margin. 
C) People usually exploit opportunities to make themselves better off. 
D) There are gains from trade. 
A) The real cost of something is what you must give up to get it. 
B) "How much" is a decision at the margin. 
C) People usually exploit opportunities to make themselves better off. 
D) There are gains from trade.

Question 14

Economists use the term equilibrium to describe when:

Accepted Answer

A) individuals are equal. 
B) no individual would be better off taking a different action. 
C) no individual has an incentive to change his or her behavior. 
D) no individual would be better off taking a different action or no individual has an incentive to change his or her behavior. 
A) individuals are equal. 
B) no individual would be better off taking a different action. 
C) no individual has an incentive to change his or her behavior. 
D) no individual would be better off taking a different action or no individual has an incentive to change his or her behavior.

Question 15

The concept of the margin deals with:

Accepted Answer

A) making incremental choices. 
B) all or none of something. 
C) engaging in unethical activities. 
D) making difficult choices. 
A) making incremental choices. 
B) all or none of something. 
C) engaging in unethical activities. 
D) making difficult choices.

Question 16

People who live in large cities decide to spend less in their day-to-day activities. This will most likely lead to:

Accepted Answer

A) less income for other people. 
B) more income for other people. 
C) no impact on other people. 
D) inflation. 
A) less income for other people. 
B) more income for other people. 
C) no impact on other people. 
D) inflation.

Question 17

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

Accepted Answer

A) People usually exploit opportunities to make themselves better off. 
B) There are gains from trade. 
C) One person's spending is another person's income. 
D) Overall spending sometimes gets out of line with the economy's productive capacity. 
A) People usually exploit opportunities to make themselves better off. 
B) There are gains from trade. 
C) One person's spending is another person's income. 
D) Overall spending sometimes gets out of line with the economy's productive capacity.

Question 18

The cost of leaving a championship soccer match before it ends is _____, while the cost of staying for the entire match is _____.

Accepted Answer

A) the opportunity cost of not seeing the winning goal with two minutes to go; zero-the ticket to the match is already paid so there is no cost 
B) the opportunity cost of not seeing the winning goal with two minutes to go; the opportunity cost of whatever else you could have done during that time 
C) zero-you don't have to pay to leave; zero-the ticket to the match is already paid, so there is no cost 
D) the cost of the ticket; the cost of the ticket 
A) the opportunity cost of not seeing the winning goal with two minutes to go; zero-the ticket to the match is already paid so there is no cost 
B) the opportunity cost of not seeing the winning goal with two minutes to go; the opportunity cost of whatever else you could have done during that time 
C) zero-you don't have to pay to leave; zero-the ticket to the match is already paid, so there is no cost 
D) the cost of the ticket; the cost of the ticket

Question 19

If resources are scarce, it means that they:

Accepted Answer

A) are insufficient to provide enough goods and services to satisfy all human material wants and needs. 
B) have no opportunity cost. 
C) are probably not valued by consumers. 
D) have an unlimited supply. 
A) are insufficient to provide enough goods and services to satisfy all human material wants and needs. 
B) have no opportunity cost. 
C) are probably not valued by consumers. 
D) have an unlimited supply.

Question 20

Some products, like tobacco, are taxed. Why would the government interfere in a market that if left untaxed would probably move to equilibrium on its own?

Accepted Answer

The government probably understands prin

The primary emphasis in macroeconomics is on:

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, ___ can trade _ to _ for _ if ___ is the more efficient grower of peppers.

Market equilibrium will always be efficient even if it is not equitable.

After a great holiday season when it opened its doors for business regularly at 6 A.M., a local retail store decides to continue to open at 6 A.M., even though many customers plan on arriving later to do their shopping. Such a plan by the retail store is:

The study of a single firm and how it determines prices falls under the study of:

Economists make predictions about individual behavior based on the assumption that people exploit opportunities to make themselves better off. The fact that different individuals make different choices when confronted with the same situation implies that this assumption is often violated.

If the value of beach-front property in Beach City decreases, the people of Beach City will likely spend _, causing incomes in Beach City to _.

One consequence of equilibrium is that when trying to figure out which checkout line at the college bookstore is the fastest, one should choose:

A bank offers two compensation plans to its tellers. Plan A provides an hourly wage of $12. Plan B offers $10 per hour plus additional compensation if customers sign up for a related bank product. If a teller chooses plan B, most likely this person would:

A resource is anything that:

You are analyzing a trade-off when you compare the _and _ of doing something.

Specialization in production was the starting point for:

If you decide to go to Cancún with your friends during spring break, you cannot go to Paris with your sister in the summer. This statement best represents this economic concept:

Economists use the term equilibrium to describe when:

The concept of the margin deals with:

People who live in large cities decide to spend less in their day-to-day activities. This will most likely lead to:

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

The cost of leaving a championship soccer match before it ends is _, while the cost of staying for the entire match is _.

If resources are scarce, it means that they:

Some products, like tobacco, are taxed. Why would the government interfere in a market that if left untaxed would probably move to equilibrium on its own?

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 1: First Principles

The primary emphasis in macroeconomics is on:

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, _____ can trade _____ to _____ for _____ if _____ is the more efficient grower of peppers.

Market equilibrium will always be efficient even if it is not equitable.

After a great holiday season when it opened its doors for business regularly at 6 A.M., a local retail store decides to continue to open at 6 A.M., even though many customers plan on arriving later to do their shopping. Such a plan by the retail store is:

The study of a single firm and how it determines prices falls under the study of:

Economists make predictions about individual behavior based on the assumption that people exploit opportunities to make themselves better off. The fact that different individuals make different choices when confronted with the same situation implies that this assumption is often violated.

If the value of beach-front property in Beach City decreases, the people of Beach City will likely spend _____, causing incomes in Beach City to _____.

One consequence of equilibrium is that when trying to figure out which checkout line at the college bookstore is the fastest, one should choose:

A bank offers two compensation plans to its tellers. Plan A provides an hourly wage of $12. Plan B offers $10 per hour plus additional compensation if customers sign up for a related bank product. If a teller chooses plan B, most likely this person would:

A resource is anything that:

You are analyzing a trade-off when you compare the _____and _____ of doing something.

Specialization in production was the starting point for:

If you decide to go to Cancún with your friends during spring break, you cannot go to Paris with your sister in the summer. This statement best represents this economic concept:

Economists use the term equilibrium to describe when:

The concept of the margin deals with:

People who live in large cities decide to spend less in their day-to-day activities. This will most likely lead to:

I know when I shop at the local grocery store, I am helping my community. This statement best represents this economic concept:

The cost of leaving a championship soccer match before it ends is _____, while the cost of staying for the entire match is _____.

If resources are scarce, it means that they:

Some products, like tobacco, are taxed. Why would the government interfere in a market that if left untaxed would probably move to equilibrium on its own?

Economic Models

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Two neighbors, Molly and Sandy, are separated by a white picket fence. Each neighbor has a garden that grows tomatoes and peppers. To gain from trade, ___ can trade _ to _ for _ if ___ is the more efficient grower of peppers.

If the value of beach-front property in Beach City decreases, the people of Beach City will likely spend _, causing incomes in Beach City to _.

You are analyzing a trade-off when you compare the _and _ of doing something.

The cost of leaving a championship soccer match before it ends is _, while the cost of staying for the entire match is _.