Question 1

A student spends four years in college.College tuition,fees,and room and board cost $10,000 per year.This student's opportunity cost of attending college is $10,000.

Accepted Answer

A) True 
 B)False

Question 2

People in developing countries are more vulnerable to illness and disease than people in developed countries mainly because they lack the ability to pay for preventative interventions.

Accepted Answer

A) True 
 B)False

Question 3

In a large class,each student's opportunity cost of taking an exam is likely to be the same.

Accepted Answer

A) True 
 B)False

Question 4

When deciding how much to study for an economics class,students should study until:

Accepted Answer

A)  the total benefits exceed the total costs. 
B)  the total costs equal the total benefits. 
C)  the marginal benefits exceed marginal costs. 
D)  the marginal costs exceed marginal benefits. 
A)  the total benefits exceed the total costs. 
B)  the total costs equal the total benefits. 
C)  the marginal benefits exceed marginal costs. 
D)  the marginal costs exceed marginal benefits.

Question 5

During a recession,we expect that the opportunity cost of attending college:

Accepted Answer

A)  rises. 
B)  falls. 
C)  remains the same. 
D)  cannot be determined from the information given. 
A)  rises. 
B)  falls. 
C)  remains the same. 
D)  cannot be determined from the information given.

Question 6

Inflation makes it more difficult to figure out the real value of goods.

Accepted Answer

A) True 
 B)False

Question 7

When two people voluntarily trade with each other:

Accepted Answer

A)  one person will be better off and the other person will be worse off. 
B)  both of them will be better off. 
C)  both of them will be worse off. 
D)  whether they will be better off or worse off depends on how they negotiate with each other. 
A)  one person will be better off and the other person will be worse off. 
B)  both of them will be better off. 
C)  both of them will be worse off. 
D)  whether they will be better off or worse off depends on how they negotiate with each other.

Question 8

Deciding whether to study an additional hour for an exam by comparing the additional benefits to the additional costs of an extra hour of study is an example of:

Accepted Answer

A)  the social interest. 
B)  the invisible hand. 
C)  marginal thinking. 
D)  the power of trade. 
A)  the social interest. 
B)  the invisible hand. 
C)  marginal thinking. 
D)  the power of trade.

Question 9

An economy in which entrepreneurs are free to experiment with new ideas and bring innovative products to the market will:

Accepted Answer

A)  help economic growth but not affect living standards. 
B)  lead to improved living standards and increased economic growth. 
C)  lead to increased living standards but stagnate economic growth. 
D)  help stagnate living standards but increase economic growth. 
A)  help economic growth but not affect living standards. 
B)  lead to improved living standards and increased economic growth. 
C)  lead to increased living standards but stagnate economic growth. 
D)  help stagnate living standards but increase economic growth.

Question 10

In the long run,excess money printing by the government causes inflation and economic busts.

Accepted Answer

A) True 
 B)False

Question 11

High inflation in Zimbabwe in 2009 was a result of the Zimbabwean government's printing too much money.

Accepted Answer

A) True 
 B)False

Question 12

People in wealthier economies tend to lead richer and more fulfilled lives.

Accepted Answer

A) True 
 B)False

Question 13

In the market for pharmaceuticals,the issue of "drug loss" illustrates which of the following ideas?

Accepted Answer

A)  The longer a drug is tested for safety,the lower is the opportunity cost in terms of lives lost. 
B)  If a drug is not tested for safety,it might kill more people. 
C)  Because of the higher the cost of testing a drug,fewer drugs are made,and more lives are lost. 
D)  Lives are being lost because safe drugs that are still in the testing stage have not been approved. 
A)  The longer a drug is tested for safety,the lower is the opportunity cost in terms of lives lost. 
B)  If a drug is not tested for safety,it might kill more people. 
C)  Because of the higher the cost of testing a drug,fewer drugs are made,and more lives are lost. 
D)  Lives are being lost because safe drugs that are still in the testing stage have not been approved.

Question 14

You must decide whether to attend class tomorrow morning or take your friend to the airport.Your decision highlights the following "big idea" in economics.

Accepted Answer

A)  Institutions matter. 
B)  Incentives matter. 
C)  Economics is fun. 
D)  Trade-offs are everywhere. 
A)  Institutions matter. 
B)  Incentives matter. 
C)  Economics is fun. 
D)  Trade-offs are everywhere.

Question 15

A period marked by falling wages,falling national output,and rising unemployment is called a recession.

Accepted Answer

A) True 
 B)False

Question 16

What are the institutions that help foster the appropriate incentives for economic growth?

Accepted Answer

A)  regulated labor and credit markets;and unions 
B)  communal property rights and absence of a profit-loss system 
C)  a dependable legal system,property rights,and competitive and open markets 
D)  production and export quotas;and supply and demand 
A)  regulated labor and credit markets;and unions 
B)  communal property rights and absence of a profit-loss system 
C)  a dependable legal system,property rights,and competitive and open markets 
D)  production and export quotas;and supply and demand

Question 17

What you give up to obtain an item is called your:

Accepted Answer

A)  opportunity cost. 
B)  explicit cost. 
C)  true cost. 
D)  direct cost. 
A)  opportunity cost. 
B)  explicit cost. 
C)  true cost. 
D)  direct cost.

Question 18

A high-school graduate deciding to go to college makes that decision by:

Accepted Answer

A)  comparing the total income earned per year after graduating from college with the total cost of going to college. 
B)  comparing the additional income earned per year after graduating from college with the additional cost of going to college. 
C)  thinking about the benefit to society if she goes to college. 
D)  following what her friends do. 
A)  comparing the total income earned per year after graduating from college with the total cost of going to college. 
B)  comparing the additional income earned per year after graduating from college with the additional cost of going to college. 
C)  thinking about the benefit to society if she goes to college. 
D)  following what her friends do.

Question 19

In an episode of DuckTales (a Disney cartoon starring Scrooge McDuck)entitled "Dough Ray Me," one of the characters invented a duplicating machine.Other characters used the machine to start duplicating money at a phenomenal rate.What would you expect to happen? (And indeed,the episode does show this happening. )

Accepted Answer

A)  More people would save money. 
B)  The government would print more money. 
C)  It would create massive inflation. 
D)  Wages would fall. 
A)  More people would save money. 
B)  The government would print more money. 
C)  It would create massive inflation. 
D)  Wages would fall.

Question 20

If North Korea and South Korea were both equally poor in 1950,why has South Korea developed so much faster since then?

Accepted Answer

A)  The two countries have different language,cultural,and historical backgrounds. 
B)  North Korea has an economic system that develops incentives. 
C)  South Korea has maintained a more market-based economic system. 
D)  South Korea began with a higher per capita GDP. 
A)  The two countries have different language,cultural,and historical backgrounds. 
B)  North Korea has an economic system that develops incentives. 
C)  South Korea has maintained a more market-based economic system. 
D)  South Korea began with a higher per capita GDP.

A student spends four years in college.College tuition,fees,and room and board cost $10,000 per year.This student's opportunity cost of attending college is $10,000.

People in developing countries are more vulnerable to illness and disease than people in developed countries mainly because they lack the ability to pay for preventative interventions.

In a large class,each student's opportunity cost of taking an exam is likely to be the same.

When deciding how much to study for an economics class,students should study until:

During a recession,we expect that the opportunity cost of attending college:

Inflation makes it more difficult to figure out the real value of goods.

When two people voluntarily trade with each other:

Deciding whether to study an additional hour for an exam by comparing the additional benefits to the additional costs of an extra hour of study is an example of:

An economy in which entrepreneurs are free to experiment with new ideas and bring innovative products to the market will:

In the long run,excess money printing by the government causes inflation and economic busts.

High inflation in Zimbabwe in 2009 was a result of the Zimbabwean government's printing too much money.

People in wealthier economies tend to lead richer and more fulfilled lives.

In the market for pharmaceuticals,the issue of "drug loss" illustrates which of the following ideas?

You must decide whether to attend class tomorrow morning or take your friend to the airport.Your decision highlights the following "big idea" in economics.

A period marked by falling wages,falling national output,and rising unemployment is called a recession.

What are the institutions that help foster the appropriate incentives for economic growth?

What you give up to obtain an item is called your:

A high-school graduate deciding to go to college makes that decision by:

If North Korea and South Korea were both equally poor in 1950,why has South Korea developed so much faster since then?

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

A student spends four years in college.College tuition,fees,and room and board cost $10,000 per year.This student's opportunity cost of attending college is $10,000.

People in developing countries are more vulnerable to illness and disease than people in developed countries mainly because they lack the ability to pay for preventative interventions.

In a large class,each student's opportunity cost of taking an exam is likely to be the same.

When deciding how much to study for an economics class,students should study until:

During a recession,we expect that the opportunity cost of attending college:

Inflation makes it more difficult to figure out the real value of goods.

When two people voluntarily trade with each other:

Deciding whether to study an additional hour for an exam by comparing the additional benefits to the additional costs of an extra hour of study is an example of:

An economy in which entrepreneurs are free to experiment with new ideas and bring innovative products to the market will:

In the long run,excess money printing by the government causes inflation and economic busts.

High inflation in Zimbabwe in 2009 was a result of the Zimbabwean government's printing too much money.

People in wealthier economies tend to lead richer and more fulfilled lives.

In the market for pharmaceuticals,the issue of "drug loss" illustrates which of the following ideas?

You must decide whether to attend class tomorrow morning or take your friend to the airport.Your decision highlights the following "big idea" in economics.

A period marked by falling wages,falling national output,and rising unemployment is called a recession.

What are the institutions that help foster the appropriate incentives for economic growth?

What you give up to obtain an item is called your:

A high-school graduate deciding to go to college makes that decision by:

If North Korea and South Korea were both equally poor in 1950,why has South Korea developed so much faster since then?

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