Question 1

Central banking in the United States refers to:

Accepted Answer

A)  the operation of the Federal Reserve in its attempts to affect the economy. 
B)  how commercial banks interact with one another to earn more profits. 
C)  the federal government's control of the United States banking system. 
D)  how banking decisions are centralized in New York City. 
A)  the operation of the Federal Reserve in its attempts to affect the economy. 
B)  how commercial banks interact with one another to earn more profits. 
C)  the federal government's control of the United States banking system. 
D)  how banking decisions are centralized in New York City. A

Question 2

The opportunity cost of playing two hours of Super Mario Galaxy 2 is the value of the opportunities lost from the two hours of play.

Accepted Answer

A) True 
 B)False  True

Question 3

An automobile gets 40 miles per gallon,and a gallon of fuel costs $4.00.What is the marginal fuel cost for a typical mile of driving with this vehicle?

Accepted Answer

A)  $0.05 
B)  $0.10 
C)  $0.15 
D)  $0.20 
A)  $0.05 
B)  $0.10 
C)  $0.15 
D)  $0.20 B

Question 4

On June 13,2011,writer Sebastian Anthony at Extreme Tech wrote,"During the two days that the Les Paul [Google] doodle was online,those 740 million visitors spent 26 seconds more on the Google home page than normal.That's a total of almost 10.7 million man-hours spent playing with the Les Paul Google Doodle.Assuming the average Google user earns $25/hour,the doodle cost companies around the world $268 million in lost productivity." Mr.Anthony's mistake is overestimating opportunity costs.He is doing this by assuming that:

Accepted Answer

A)  labor has no incentive to work. 
B)  all those man-hours would have been spent working if not for the doodle. 
C)  all the Google visitors do not sleep. 
D)  that labor is not making a marginal decision. 
A)  labor has no incentive to work. 
B)  all those man-hours would have been spent working if not for the doodle. 
C)  all the Google visitors do not sleep. 
D)  that labor is not making a marginal decision.

Question 5

Adam Smith's metaphor of the "invisible hand" refers to the notion that:

Accepted Answer

A)  greed is always good when externally motivated. 
B)  behavior based on self-interest can lead to an overall benefit to society. 
C)  market incentive can lead to negative side effects. 
D)  markets always align self-interest with social interest. 
A)  greed is always good when externally motivated. 
B)  behavior based on self-interest can lead to an overall benefit to society. 
C)  market incentive can lead to negative side effects. 
D)  markets always align self-interest with social interest.

Question 6

Which of the following would be the most likely to cause inflation?

Accepted Answer

A)  massive increases in government spending 
B)  sustained increases in the money supply 
C)  increases in interest rates 
D)  a decline in the purchasing power of the dollar 
A)  massive increases in government spending 
B)  sustained increases in the money supply 
C)  increases in interest rates 
D)  a decline in the purchasing power of the dollar

Question 7

The legendary rock band KISS,which sold more than 100 million albums worldwide,is often said to be only concerned about making as much money as possible.This example highlights the idea that:

Accepted Answer

A)  greed is bad. 
B)  markets align self-interest with the social interest. 
C)  government can sometimes improve market outcomes. 
D)  incentives are not always important. 
A)  greed is bad. 
B)  markets align self-interest with the social interest. 
C)  government can sometimes improve market outcomes. 
D)  incentives are not always important.

Question 8

How do self-interested businesses benefit society?

Accepted Answer

The goal of business is to maximize prof

Question 9

According to Milton Friedman,"Inflation is always and everywhere a:

Accepted Answer

A)  capitalist problem." 
B)  communist problem." 
C)  monetary phenomenon." 
D)  situation caused by haphazard technological growth." 
A)  capitalist problem." 
B)  communist problem." 
C)  monetary phenomenon." 
D)  situation caused by haphazard technological growth."

Question 10

Among the most powerful institutions for supporting good incentives are:

Accepted Answer

A)  government price controls. 
B)  monopolies. 
C)  legal limits on excessive profits. 
D)  property rights. 
A)  government price controls. 
B)  monopolies. 
C)  legal limits on excessive profits. 
D)  property rights.

Question 11

Joe runs a landscape business.He knows that providing landscaping services costs him $100 per hour on average,while the cost of providing such services is $150 per hour after 5 PM (due to overtime pay,reduced productivity,and the added wear and tear on his equipment).A potential client offers Joe $130 per hour to provide services but needs him to provide the services after 5 PM due to circumstances at the property.

Accepted Answer

A)  Joe should take the job,since $130 exceeds his average cost of production. 
B)  Joe should take the job,since he is making a $30 profit per hour. 
C)  Joe should decline the job,since he would lose $150 per hour worked on the job. 
D)  Joe should decline the job,since he would lose $20 per hour worked. 
A)  Joe should take the job,since $130 exceeds his average cost of production. 
B)  Joe should take the job,since he is making a $30 profit per hour. 
C)  Joe should decline the job,since he would lose $150 per hour worked on the job. 
D)  Joe should decline the job,since he would lose $20 per hour worked.

Question 12

What is a plausible economic explanation as to why Braille "dots" are commonly found on drive-up automatic teller machines although blind customers likely will not use a drive-up automatic teller machine?

Accepted Answer

A)  Blind people must be able use such machines due to government regulations requiring such dots on the keys under the Americans with Disabilities Act. 
B)  The marginal cost of making two different types of keypads is substantial,and the benefit of providing keypads without the Braille dots is a mere inconvenience to ATM users. 
C)  The marginal cost of making the keys with the Braille dots is less than making the keys without the Braille dots. 
D)  There is no economic concept that explains why the keypads have Braille dots. 
A)  Blind people must be able use such machines due to government regulations requiring such dots on the keys under the Americans with Disabilities Act. 
B)  The marginal cost of making two different types of keypads is substantial,and the benefit of providing keypads without the Braille dots is a mere inconvenience to ATM users. 
C)  The marginal cost of making the keys with the Braille dots is less than making the keys without the Braille dots. 
D)  There is no economic concept that explains why the keypads have Braille dots.

Question 13

Which of the following best explains economists' concern over their understanding the determinants of economic wealth?

Accepted Answer

A)  Economists,like everyone else,are self-interested. 
B)  As overall wealth increases,distribution of wealth tends to equalize as well. 
C)  Higher levels of wealth tend to generate better health and human rights' outcomes across countries. 
D)  The determinants of economic wealth are easier to study than the determinants of economic growth. 
A)  Economists,like everyone else,are self-interested. 
B)  As overall wealth increases,distribution of wealth tends to equalize as well. 
C)  Higher levels of wealth tend to generate better health and human rights' outcomes across countries. 
D)  The determinants of economic wealth are easier to study than the determinants of economic growth.

Question 14

Monetary and fiscal policies are among a government's tools for mitigating economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 15

You are given a ticket to a Bob Dylan concert with a face value of $50.You only value the ticket at $40,sell it to a friend for $40,and attend a U2 concert priced at $60.The opportunity cost of attending the U2 concert is:

Accepted Answer

A)  $20 worth of alternative goods and services. 
B)  $40 worth of alternative goods and services. 
C)  $50 worth of alternative goods and services. 
D)  $60 worth of alternative goods and services. 
A)  $20 worth of alternative goods and services. 
B)  $40 worth of alternative goods and services. 
C)  $50 worth of alternative goods and services. 
D)  $60 worth of alternative goods and services.

Question 16

The Federal Reserve's attempts to combat a recession and high unemployment could result in faster inflation.

Accepted Answer

A) True 
 B)False

Question 17

The invisible hand concept is:

Accepted Answer

A)  always present as a force in market outcomes. 
B)  never present as a force in market outcomes. 
C)  frequently present as a force in market outcomes. 
D)  not well understood as it relates to market outcomes. 
A)  always present as a force in market outcomes. 
B)  never present as a force in market outcomes. 
C)  frequently present as a force in market outcomes. 
D)  not well understood as it relates to market outcomes.

Question 18

The environment best suited for economic growth is one with well-functioning competitive markets,property rights,and creativity in its firms.

Accepted Answer

A) True 
 B)False

Question 19

The Fed's decisions:

Accepted Answer

A)  are always right. 
B)  affect the economy with no lag at all. 
C)  often take months for their effects to be felt in the economy. 
D)  never help avoid recessions. 
A)  are always right. 
B)  affect the economy with no lag at all. 
C)  often take months for their effects to be felt in the economy. 
D)  never help avoid recessions.

Question 20

A dependable legal system and competitive,open markets help to:

Accepted Answer

A)  shape incentives that induce economic growth. 
B)  reduce liberty and varied freedoms. 
C)  bring about honest government and political stability. 
D)  increase inefficiencies. 
A)  shape incentives that induce economic growth. 
B)  reduce liberty and varied freedoms. 
C)  bring about honest government and political stability. 
D)  increase inefficiencies.

Central banking in the United States refers to:

The opportunity cost of playing two hours of Super Mario Galaxy 2 is the value of the opportunities lost from the two hours of play.

An automobile gets 40 miles per gallon,and a gallon of fuel costs $4.00.What is the marginal fuel cost for a typical mile of driving with this vehicle?

Adam Smith's metaphor of the "invisible hand" refers to the notion that:

Which of the following would be the most likely to cause inflation?

The legendary rock band KISS,which sold more than 100 million albums worldwide,is often said to be only concerned about making as much money as possible.This example highlights the idea that:

How do self-interested businesses benefit society?

According to Milton Friedman,"Inflation is always and everywhere a:

Among the most powerful institutions for supporting good incentives are:

What is a plausible economic explanation as to why Braille "dots" are commonly found on drive-up automatic teller machines although blind customers likely will not use a drive-up automatic teller machine?

Which of the following best explains economists' concern over their understanding the determinants of economic wealth?

Monetary and fiscal policies are among a government's tools for mitigating economic fluctuations.

You are given a ticket to a Bob Dylan concert with a face value of $50.You only value the ticket at $40,sell it to a friend for $40,and attend a U2 concert priced at $60.The opportunity cost of attending the U2 concert is:

The Federal Reserve's attempts to combat a recession and high unemployment could result in faster inflation.

The invisible hand concept is:

The environment best suited for economic growth is one with well-functioning competitive markets,property rights,and creativity in its firms.

The Fed's decisions:

A dependable legal system and competitive,open markets help to:

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 1: The Big Ideas

Central banking in the United States refers to:

The opportunity cost of playing two hours of Super Mario Galaxy 2 is the value of the opportunities lost from the two hours of play.

An automobile gets 40 miles per gallon,and a gallon of fuel costs $4.00.What is the marginal fuel cost for a typical mile of driving with this vehicle?

Adam Smith's metaphor of the "invisible hand" refers to the notion that:

Which of the following would be the most likely to cause inflation?

The legendary rock band KISS,which sold more than 100 million albums worldwide,is often said to be only concerned about making as much money as possible.This example highlights the idea that:

How do self-interested businesses benefit society?

According to Milton Friedman,"Inflation is always and everywhere a:

Among the most powerful institutions for supporting good incentives are:

What is a plausible economic explanation as to why Braille "dots" are commonly found on drive-up automatic teller machines although blind customers likely will not use a drive-up automatic teller machine?

Which of the following best explains economists' concern over their understanding the determinants of economic wealth?

Monetary and fiscal policies are among a government's tools for mitigating economic fluctuations.

You are given a ticket to a Bob Dylan concert with a face value of $50.You only value the ticket at $40,sell it to a friend for $40,and attend a U2 concert priced at $60.The opportunity cost of attending the U2 concert is:

The Federal Reserve's attempts to combat a recession and high unemployment could result in faster inflation.

The invisible hand concept is:

The environment best suited for economic growth is one with well-functioning competitive markets,property rights,and creativity in its firms.

The Fed's decisions:

A dependable legal system and competitive,open markets help to:

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters