Question 1

In Zimbabwe,price increases of 150,000 percent per year were caused by:

Accepted Answer

A)  the country's unsustainable trade deficit. 
B)  marginal tax rates as high as 90 percent. 
C)  large increases in the money supply. 
D)  deregulated prices. 
A)  the country's unsustainable trade deficit. 
B)  marginal tax rates as high as 90 percent. 
C)  large increases in the money supply. 
D)  deregulated prices.

Question 2

The ______ has the power to regulate the money supply in the United States.

Accepted Answer

A)  Federal Reserve 
B)  President 
C)  Senate 
D)  House of Representatives 
A)  Federal Reserve 
B)  President 
C)  Senate 
D)  House of Representatives

Question 3

When deciding whether to eat a second piece of pizza,you should compare the total benefit of the two pieces of pizza with the total cost.

Accepted Answer

A) True 
 B)False

Question 4

In the 2 hours between classes a student can do one of three things,ranking them from most to least desirable as: (1)chat with friends, (2)study economics,or (3)eat lunch.This student's opportunity cost of chatting with friends is:

Accepted Answer

A)  the total value of studying economics and eating lunch. 
B)  the value of studying economics. 
C)  the value of chatting with friends. 
D)  There is no opportunity cost because students do not pay their friends to chat with them. 
A)  the total value of studying economics and eating lunch. 
B)  the value of studying economics. 
C)  the value of chatting with friends. 
D)  There is no opportunity cost because students do not pay their friends to chat with them.

Question 5

It takes approximately _______ years and _______ to bring a new drug to the market.

Accepted Answer

A)  12;$1 billion 
B)  2;$100,000 
C)  4;$5 million 
D)  6;$20 billion 
A)  12;$1 billion 
B)  2;$100,000 
C)  4;$5 million 
D)  6;$20 billion

Question 6

America was so poor in past centuries that even George Washington caught malaria.

Accepted Answer

A) True 
 B)False

Question 7

Milton Friedman argued that:

Accepted Answer

A)  prices need to be regulated and set by the government to prevent inflation. 
B)  general price level increases result from the government printing too much money. 
C)  inflation is a phenomenon of capitalist economies. 
D)  appropriate antitrust policy can prevent businesses from causing inflation. 
A)  prices need to be regulated and set by the government to prevent inflation. 
B)  general price level increases result from the government printing too much money. 
C)  inflation is a phenomenon of capitalist economies. 
D)  appropriate antitrust policy can prevent businesses from causing inflation.

Question 8

Which of the following best characterizes rich countries?

Accepted Answer

A)  a very large number of workers 
B)  significant levels of human and physical capital per worker 
C)  strong government restrictions on private property rights 
D)  closed markets and the use of the latest technological knowledge 
A)  a very large number of workers 
B)  significant levels of human and physical capital per worker 
C)  strong government restrictions on private property rights 
D)  closed markets and the use of the latest technological knowledge

Question 9

If market incentives to produce are too strong,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 market incentives can never be considered too strong. 
D)  zero output. 
A)  too much of the good. 
B)  too little of the good. 
C)  a quantity equal to the efficient outcome,as market incentives can never be considered too strong. 
D)  zero output.

Question 10

The term "marginal" in economics means "additional."

Accepted Answer

A) True 
 B)False

Question 11

The Federal Reserve acted quickly and appropriately to diffuse the Great Depression.

Accepted Answer

A) True 
 B)False

Question 12

During the middle ages,expensive castle-based warfare was the dominant method of conflict.Warfare was also the main function of government.Which reason best explains why few universities were built during this time?

Accepted Answer

A)  The lack of professors meant there was no incentive to create universities. 
B)  The opportunity cost of building universities was fewer castles. 
C)  There were no benefits to attending college at the time. 
D)  Local rulers did not care about long-term growth. 
A)  The lack of professors meant there was no incentive to create universities. 
B)  The opportunity cost of building universities was fewer castles. 
C)  There were no benefits to attending college at the time. 
D)  Local rulers did not care about long-term growth.

Question 13

When the opportunity cost of a choice increases:

Accepted Answer

A)  individuals are more likely to choose that same option. 
B)  individuals are less likely to choose that same option. 
C)  the marginal benefits of that choice increase,as well. 
D)  the marginal benefits of that choice decrease. 
A)  individuals are more likely to choose that same option. 
B)  individuals are less likely to choose that same option. 
C)  the marginal benefits of that choice increase,as well. 
D)  the marginal benefits of that choice decrease.

Question 14

Economists assume that people respond to:

Accepted Answer

A)  other people. 
B)  social interest. 
C)  benevolence. 
D)  incentives. 
A)  other people. 
B)  social interest. 
C)  benevolence. 
D)  incentives.

Question 15

If there was no ______,the "invisible hand" would not function as Adam Smith describes.

Accepted Answer

A)  money 
B)  self-interest 
C)  trade 
D)  inflation 
A)  money 
B)  self-interest 
C)  trade 
D)  inflation

Question 16

A marginal change is a small incremental adjustment to an existing plan of action.

Accepted Answer

A) True 
 B)False

Question 17

A customer at a fast-food restaurant may choose to order a burger for $4.00 and fries for $1.50,or order a value meal (that includes the burger,fries,and a drink)for $6.00.What is the marginal cost of the drink if the customer orders the value meal?

Accepted Answer

A)  $6.00 
B)  $1.50 
C)  $0.00 
D)  $0.50 
A)  $6.00 
B)  $1.50 
C)  $0.00 
D)  $0.50

Question 18

In 1950,GDP per capita in South Korea was ______ GDP per capita in North Korea.

Accepted Answer

A)  10 times less than 
B)  two times less than 
C)  roughly equal to 
D)  two times greater than 
A)  10 times less than 
B)  two times less than 
C)  roughly equal to 
D)  two times greater than

Question 19

What factor is responsible for ending malaria in the United States?

Accepted Answer

A)  inflation 
B)  wealth 
C)  the gold standard 
D)  yardstick competition 
A)  inflation 
B)  wealth 
C)  the gold standard 
D)  yardstick competition

Question 20

The opportunity cost of committing a crime and spending 5 years in jail:

Accepted Answer

A)  is the same for everyone. 
B)  is higher for people who are employed than for the unemployed. 
C)  is zero because the costs of jail are paid for by the government. 
D)  equals the fines and legal fees. 
A)  is the same for everyone. 
B)  is higher for people who are employed than for the unemployed. 
C)  is zero because the costs of jail are paid for by the government. 
D)  equals the fines and legal fees.

Exam 1: The Big Ideas

In Zimbabwe,price increases of 150,000 percent per year were caused by:

The ______ has the power to regulate the money supply in the United States.

When deciding whether to eat a second piece of pizza,you should compare the total benefit of the two pieces of pizza with the total cost.

In the 2 hours between classes a student can do one of three things,ranking them from most to least desirable as: (1)chat with friends, (2)study economics,or (3)eat lunch.This student's opportunity cost of chatting with friends is:

It takes approximately _______ years and _______ to bring a new drug to the market.

America was so poor in past centuries that even George Washington caught malaria.

Milton Friedman argued that:

Which of the following best characterizes rich countries?

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

The term "marginal" in economics means "additional."

The Federal Reserve acted quickly and appropriately to diffuse the Great Depression.

During the middle ages,expensive castle-based warfare was the dominant method of conflict.Warfare was also the main function of government.Which reason best explains why few universities were built during this time?

When the opportunity cost of a choice increases:

Economists assume that people respond to:

If there was no ______,the "invisible hand" would not function as Adam Smith describes.

A marginal change is a small incremental adjustment to an existing plan of action.

A customer at a fast-food restaurant may choose to order a burger for $4.00 and fries for $1.50,or order a value meal (that includes the burger,fries,and a drink)for $6.00.What is the marginal cost of the drink if the customer orders the value meal?

In 1950,GDP per capita in South Korea was ______ GDP per capita in North Korea.

What factor is responsible for ending malaria in the United States?

The opportunity cost of committing a crime and spending 5 years in jail:

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

It takes approximately _ years and _ to bring a new drug to the market.