Question 1

Wealthy countries tend to have ______ physical capital per worker and _______ human capital per worker.

Accepted Answer

A)  little;a lot of 
B)  a lot of;little 
C)  a lot of;a lot of 
D)  no;a lot of 
A)  little;a lot of 
B)  a lot of;little 
C)  a lot of;a lot of 
D)  no;a lot of

Question 2

When Angel has a comparative advantage over Blake in cooking,it means that:

Accepted Answer

A)  the opportunity cost of cooking is higher for Angel than Blake. 
B)  the opportunity cost of cooking is lower for Angel than Blake. 
C)  Angel can cook faster than Blake can. 
D)  Blake can cook faster than Angel can. 
A)  the opportunity cost of cooking is higher for Angel than Blake. 
B)  the opportunity cost of cooking is lower for Angel than Blake. 
C)  Angel can cook faster than Blake can. 
D)  Blake can cook faster than Angel can.

Question 3

The decisions made by the Federal Reserve Bank sometimes result in negative effects on the economy because:

Accepted Answer

A)  the economy is weakened when the Fed uses monetary policy. 
B)  the government uses money inefficiently when it comes to fiscal policy. 
C)  the Fed finds that forecasting economic conditions is easy but controlling the money supply is difficult. 
D)  too much money or too little money might induce inflation or unemployment due to bad timing of decisions. 
A)  the economy is weakened when the Fed uses monetary policy. 
B)  the government uses money inefficiently when it comes to fiscal policy. 
C)  the Fed finds that forecasting economic conditions is easy but controlling the money supply is difficult. 
D)  too much money or too little money might induce inflation or unemployment due to bad timing of decisions.

Question 4

People are rational and sometimes respond in unpredictable ways to incentives.

Accepted Answer

A) True 
 B)False

Question 5

In the 1800s,the federal government paid railroad companies for each mile of track built.This payment scheme created incentives for railroad companies to lay track:

Accepted Answer

A)  between points A and B using the most direct route. 
B)  between points A and B using the most indirect route. 
C)  as slowly as possible. 
D)  using the best materials possible. 
A)  between points A and B using the most direct route. 
B)  between points A and B using the most indirect route. 
C)  as slowly as possible. 
D)  using the best materials possible.

Question 6

Fluctuations in graduate school enrollment correlate positively with fluctuations in unemployment.What is the most likely reason why?

Accepted Answer

A)  When jobs are difficult to find,the opportunity cost of going to grad school is high. 
B)  When jobs are easy to find,there are strong incentives to go to grad school. 
C)  The opportunity cost of going to graduate school is low when jobs are hard to find. 
D)  Even if you have a job,the salary will be low that going to graduate school is worth the effort. 
A)  When jobs are difficult to find,the opportunity cost of going to grad school is high. 
B)  When jobs are easy to find,there are strong incentives to go to grad school. 
C)  The opportunity cost of going to graduate school is low when jobs are hard to find. 
D)  Even if you have a job,the salary will be low that going to graduate school is worth the effort.

Question 7

If there is high inflation,individual households will be hurt but economic disruptions on the national level will not result..

Accepted Answer

A) True 
 B)False

Question 8

If market incentives to produce are too weak,the market will end up producing:

Accepted Answer

A)  too much of the good. 
B)  too little of the good. 
C)  a quantity equal to the efficient outcome,as any incentive will result in economic efficiency. 
D)  zero output. 
A)  too much of the good. 
B)  too little of the good. 
C)  a quantity equal to the efficient outcome,as any incentive will result in economic efficiency. 
D)  zero output.

Question 9

Suppose the United States government wants to encourage individuals to save more of their income.The easiest way for the government to realize this goal is to:

Accepted Answer

A)  pass a law requiring people to save a larger percentage of their income. 
B)  decrease government spending in order to set an example for individuals. 
C)  increase the tax rate on savings in order to encourage more savings. 
D)  develop incentives such as tax breaks on savings in order to encourage more savings. 
A)  pass a law requiring people to save a larger percentage of their income. 
B)  decrease government spending in order to set an example for individuals. 
C)  increase the tax rate on savings in order to encourage more savings. 
D)  develop incentives such as tax breaks on savings in order to encourage more savings.

Question 10

When markets don't align self-interest with social interest:

Accepted Answer

A)  markets will still manage to reach an efficient outcome. 
B)  governments may improve the situation by changing incentives. 
C)  societal costs will always exceed individual benefits. 
D)  individual benefits will exceed societal benefits. 
A)  markets will still manage to reach an efficient outcome. 
B)  governments may improve the situation by changing incentives. 
C)  societal costs will always exceed individual benefits. 
D)  individual benefits will exceed societal benefits.

Question 11

An example of Adam Smith's "invisible hand" is self-interested businesspeople developing a better keyboard for the blind in hopes of making large profits.

Accepted Answer

A) True 
 B)False

Question 12

How are wealth and economic growth related?

Accepted Answer

A)  Increases in wealth help facilitate economic growth. 
B)  Economic growth causes increases in wealth. 
C)  Wealth and economic growth are negatively related. 
D)  Economic growth causes resource depletion and reduces society's wealth. 
A)  Increases in wealth help facilitate economic growth. 
B)  Economic growth causes increases in wealth. 
C)  Wealth and economic growth are negatively related. 
D)  Economic growth causes resource depletion and reduces society's wealth.

Question 13

Which of the following helped the most to bring an end to malaria in the United States?

Accepted Answer

A)  government aid to the poor 
B)  climate change 
C)  economic growth 
D)  spending on health care 
A)  government aid to the poor 
B)  climate change 
C)  economic growth 
D)  spending on health care

Question 14

The opportunity cost of attending college is:

Accepted Answer

A)  tuition and books. 
B)  travel expenses,tuition,and books. 
C)  psychic costs of missing your family and friends while in school. 
D)  lost wages from not working full time. 
A)  tuition and books. 
B)  travel expenses,tuition,and books. 
C)  psychic costs of missing your family and friends while in school. 
D)  lost wages from not working full time.

Question 15

In the opening story,the payment to captains of prisoner transport ships for each convict who arrived in Australia instead of for each convict who boarded the ship:

Accepted Answer

A)  made no difference. 
B)  saved the lives of hundreds of convicts. 
C)  increased the volume of slave trafficking. 
D)  shows that people care more about morality than about their self-interest. 
A)  made no difference. 
B)  saved the lives of hundreds of convicts. 
C)  increased the volume of slave trafficking. 
D)  shows that people care more about morality than about their self-interest.

Question 16

Bill Gates dropped out of college and founded Microsoft.His opportunity cost of continuing to attend college was

Accepted Answer

A)  tuition,the cost of books,and room and board. 
B)  tuition,the cost of books,and a low-paying job. 
C)  tuition,the cost of books,and the income from his Microsoft pursuits. 
D)  only the income from his Microsoft pursuits. 
A)  tuition,the cost of books,and room and board. 
B)  tuition,the cost of books,and a low-paying job. 
C)  tuition,the cost of books,and the income from his Microsoft pursuits. 
D)  only the income from his Microsoft pursuits.

Question 17

Institutions that promote economic growth include:

Accepted Answer

A)  policies that provide incentives for people to produce and trade. 
B)  the extent of government control in markets. 
C)  income redistribution from the rich to the poor. 
D)  the amount of goods and services that are provided citizens by their government. 
A)  policies that provide incentives for people to produce and trade. 
B)  the extent of government control in markets. 
C)  income redistribution from the rich to the poor. 
D)  the amount of goods and services that are provided citizens by their government.

Question 18

Suppose your teacher finishes class 30 minutes early on the day before an exam.She indicates that you may leave,or you may stay on for an optional study period that will last for the remaining 30 minutes of the scheduled class time.You should:

Accepted Answer

A)  always choose to stay for the study period,since you have already paid for the class time. 
B)  only choose to stay if you like the instructor,since the value obtained is higher than if you disliked the instructor. 
C)  only choose to stay if the benefits gained from the extra study session exceed the cost of another 30 minutes in class. 
D)  only choose to stay for the study session if you do not plan to study on your own for the exam. 
A)  always choose to stay for the study period,since you have already paid for the class time. 
B)  only choose to stay if you like the instructor,since the value obtained is higher than if you disliked the instructor. 
C)  only choose to stay if the benefits gained from the extra study session exceed the cost of another 30 minutes in class. 
D)  only choose to stay for the study session if you do not plan to study on your own for the exam.

Question 19

Marginal thinking was simultaneously described by three economists-Stanley Jevons,Carl Menger,and Adam Smith.

Accepted Answer

A) True 
 B)False

Question 20

Suppose a customer at a restaurant is deciding whether or not to order dessert.Marginal thinking means that the customer should compare:

Accepted Answer

A)  the total benefit from the entire meal and dessert with the additional cost of the dessert. 
B)  the total benefit from the entire meal and dessert with the total cost of the meal and dessert. 
C)  the additional benefit from the dessert with the additional cost of the dessert. 
D)  the marginal benefit from the meal with the marginal cost of the dessert. 
A)  the total benefit from the entire meal and dessert with the additional cost of the dessert. 
B)  the total benefit from the entire meal and dessert with the total cost of the meal and dessert. 
C)  the additional benefit from the dessert with the additional cost of the dessert. 
D)  the marginal benefit from the meal with the marginal cost of the dessert.

Exam 1: The Big Ideas

Wealthy countries tend to have ______ physical capital per worker and _______ human capital per worker.

When Angel has a comparative advantage over Blake in cooking,it means that:

The decisions made by the Federal Reserve Bank sometimes result in negative effects on the economy because:

People are rational and sometimes respond in unpredictable ways to incentives.

In the 1800s,the federal government paid railroad companies for each mile of track built.This payment scheme created incentives for railroad companies to lay track:

Fluctuations in graduate school enrollment correlate positively with fluctuations in unemployment.What is the most likely reason why?

If there is high inflation,individual households will be hurt but economic disruptions on the national level will not result..

If market incentives to produce are too weak,the market will end up producing:

Suppose the United States government wants to encourage individuals to save more of their income.The easiest way for the government to realize this goal is to:

When markets don't align self-interest with social interest:

An example of Adam Smith's "invisible hand" is self-interested businesspeople developing a better keyboard for the blind in hopes of making large profits.

How are wealth and economic growth related?

Which of the following helped the most to bring an end to malaria in the United States?

The opportunity cost of attending college is:

In the opening story,the payment to captains of prisoner transport ships for each convict who arrived in Australia instead of for each convict who boarded the ship:

Bill Gates dropped out of college and founded Microsoft.His opportunity cost of continuing to attend college was

Institutions that promote economic growth include:

Suppose your teacher finishes class 30 minutes early on the day before an exam.She indicates that you may leave,or you may stay on for an optional study period that will last for the remaining 30 minutes of the scheduled class time.You should:

Marginal thinking was simultaneously described by three economists-Stanley Jevons,Carl Menger,and Adam Smith.

Suppose a customer at a restaurant is deciding whether or not to order dessert.Marginal thinking means that the customer should compare:

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

Wealthy countries tend to have physical capital per worker and _ human capital per worker.