Question 1

Two major policies used by the government to affect economic conditions are:

Accepted Answer

A)  acceleration and recalibration policy. 
B)  recalculation and normalization policy. 
C)  fiscal and monetary policy. 
D)  passive and active policy. 
A)  acceleration and recalibration policy. 
B)  recalculation and normalization policy. 
C)  fiscal and monetary policy. 
D)  passive and active policy.

Question 2

The Zimbabwean government printed money as fast as it could for years.As a result:

Accepted Answer

A)  prices fell rapidly in Zimbabwe. 
B)  the Zimbabwean economy grew rapidly. 
C)  Zimbabwe experienced mild inflation. 
D)  Zimbabwe experienced inflation at a rate of billions of percent per month. 
A)  prices fell rapidly in Zimbabwe. 
B)  the Zimbabwean economy grew rapidly. 
C)  Zimbabwe experienced mild inflation. 
D)  Zimbabwe experienced inflation at a rate of billions of percent per month.

Question 3

Economists believe that socially good outcomes arise whenever:

Accepted Answer

A)  self-interest is pursued. 
B)  either self-interest or social interest are pursued. 
C)  self-interest is pursued and it aligns with social interest. 
D)  self-interest is pursued and it does not align with social interest. 
A)  self-interest is pursued. 
B)  either self-interest or social interest are pursued. 
C)  self-interest is pursued and it aligns with social interest. 
D)  self-interest is pursued and it does not align with social interest.

Question 4

Using the concepts of incentives and good institutions,explain how a country might achieve economic growth.

Accepted Answer

Economic growth stems from having well-f

Question 5

Central banks can cause inflation.

Accepted Answer

A) True 
 B)False

Question 6

If the FDA enacts more stringent pharmaceutical drug tests,two costs of this policy would be:

Accepted Answer

A)  drug lag and drug lapse. 
B)  drug lapse and drug misallocation. 
C)  drug loss and drug lag. 
D)  drug misallocation and drug loss. 
A)  drug lag and drug lapse. 
B)  drug lapse and drug misallocation. 
C)  drug loss and drug lag. 
D)  drug misallocation and drug loss.

Question 7

A cell phone plan costs $50 per month for 1,000 minutes,and $0.30 per minute for each additional minute after 1,000.What is the marginal fee for the 1,001st minute used?

Accepted Answer

A)  $0.25 
B)  $0.30 
C)  $0.35 
D)  $0.40 
A)  $0.25 
B)  $0.30 
C)  $0.35 
D)  $0.40

Question 8

One of the drawbacks of inflation is that it creates a lot of uncertainty about prices.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following choices best illustrates the concept of Adam Smith's "invisible hand"?

Accepted Answer

A)  A Vietnamese farmer grows rice;an exporter ships it to the United States,and a grocer in New York sells it to a customer. 
B)  A fishery's stock of fish becomes depleted due to overfishing as boats from around the world converge. 
C)  A government regulates a firm to clean up the pollutants the firm has released as part of its production process. 
D)  An apartment building that provides much-needed housing is built on the site of the only playground for children in that town. 
A)  A Vietnamese farmer grows rice;an exporter ships it to the United States,and a grocer in New York sells it to a customer. 
B)  A fishery's stock of fish becomes depleted due to overfishing as boats from around the world converge. 
C)  A government regulates a firm to clean up the pollutants the firm has released as part of its production process. 
D)  An apartment building that provides much-needed housing is built on the site of the only playground for children in that town.

Question 10

When private interests in markets are not aligned with the social interest:

Accepted Answer

A)  the free market functions in the best interest of society. 
B)  regulatory action may improve upon the free market outcome. 
C)  the relevant market should be banned. 
D)  the relevant production process should be outsourced. 
A)  the free market functions in the best interest of society. 
B)  regulatory action may improve upon the free market outcome. 
C)  the relevant market should be banned. 
D)  the relevant production process should be outsourced.

Question 11

Inflation occurs largely as a result of:

Accepted Answer

A)  the government having a large debt. 
B)  a shortage in the supply of goods or services. 
C)  the government printing too much money. 
D)  a recession. 
A)  the government having a large debt. 
B)  a shortage in the supply of goods or services. 
C)  the government printing too much money. 
D)  a recession.

Question 12

In his book The Wealth of Nations,Adam Smith explained,"It is not from the benevolence of the butcher,the brewer,or the baker,that we expect our dinner,but from their regard to their own interest." Explain what Adam Smith meant by this.Be sure to tie your explanation to one or more of the "Big Ideas" in economics discussed in the text.

Accepted Answer

He meant that economists believe that pe

Question 13

Which option best explains why firms develop new ideas for production techniques and product features?

Accepted Answer

A)  because they are interested in sharing their new ideas with the world 
B)  because they are interested in making a profit 
C)  because it will be in the social interest 
D)  because doing so will make their customers happy 
A)  because they are interested in sharing their new ideas with the world 
B)  because they are interested in making a profit 
C)  because it will be in the social interest 
D)  because doing so will make their customers happy

Question 14

Recall Chapter 1's opening story about the British sea captains and the convicted felons.Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain,an economist suggested:

Accepted Answer

A)  paying for each prisoner who walked off the ship in Australia. 
B)  paying for food and water to reduce costs of caring for prisoners during the transit. 
C)  doing nothing,since the suggested change would not matter. 
D)  that new regulations be passed to require prisoner safety and health. 
A)  paying for each prisoner who walked off the ship in Australia. 
B)  paying for food and water to reduce costs of caring for prisoners during the transit. 
C)  doing nothing,since the suggested change would not matter. 
D)  that new regulations be passed to require prisoner safety and health.

Question 15

Why is it less costly to attend college during a recession?

Accepted Answer

A)  Tuition is much lower during a recession. 
B)  The opportunity cost is higher during a recession because there are more labor market opportunities. 
C)  The opportunity cost is lower during a recession because there are fewer labor market opportunities. 
D)  Colleges give out better grades during recessions,so the opportunity cost is lower. 
A)  Tuition is much lower during a recession. 
B)  The opportunity cost is higher during a recession because there are more labor market opportunities. 
C)  The opportunity cost is lower during a recession because there are fewer labor market opportunities. 
D)  Colleges give out better grades during recessions,so the opportunity cost is lower.

Question 16

One of the limitations of economics is that the principles only apply to the American economic system and not foreign economies.

Accepted Answer

A) True 
 B)False

Question 17

One of the "Big Ideas" in economic thinking is that there is an incentive to do something if the total benefit is bigger than the total cost.

Accepted Answer

A) True 
 B)False

Question 18

The central bank of the United States is known as the:

Accepted Answer

A)  Federal Reserve. 
B)  Financier. 
C)  Central Reserve Union. 
D)  Freddie Mac. 
A)  Federal Reserve. 
B)  Financier. 
C)  Central Reserve Union. 
D)  Freddie Mac.

Question 19

A student at a party deciding whether to stay a few more minutes is:

Accepted Answer

A)  thinking on the margin. 
B)  increasing the rate of unemployment. 
C)  aligning her self-interest with the social interest. 
D)  paying high interest rates. 
A)  thinking on the margin. 
B)  increasing the rate of unemployment. 
C)  aligning her self-interest with the social interest. 
D)  paying high interest rates.

Question 20

Which of the following is an example of self-interest that attempts to promote the public interest?

Accepted Answer

A)  A mother prevents her children from becoming vaccinated against measles,mumps,and rubella because of fears of autism. 
B)  The President of the United States restricts American consumers from buying foreign-made products. 
C)  The New York Yankees beat the Boston Red Sox. 
D)  An entrepreneur risks his life savings to open up a grocery store in an underserved area. 
A)  A mother prevents her children from becoming vaccinated against measles,mumps,and rubella because of fears of autism. 
B)  The President of the United States restricts American consumers from buying foreign-made products. 
C)  The New York Yankees beat the Boston Red Sox. 
D)  An entrepreneur risks his life savings to open up a grocery store in an underserved area.

Two major policies used by the government to affect economic conditions are:

The Zimbabwean government printed money as fast as it could for years.As a result:

Economists believe that socially good outcomes arise whenever:

Using the concepts of incentives and good institutions,explain how a country might achieve economic growth.

Central banks can cause inflation.

If the FDA enacts more stringent pharmaceutical drug tests,two costs of this policy would be:

A cell phone plan costs $50 per month for 1,000 minutes,and $0.30 per minute for each additional minute after 1,000.What is the marginal fee for the 1,001st minute used?

One of the drawbacks of inflation is that it creates a lot of uncertainty about prices.

Which of the following choices best illustrates the concept of Adam Smith's "invisible hand"?

When private interests in markets are not aligned with the social interest:

Inflation occurs largely as a result of:

Which option best explains why firms develop new ideas for production techniques and product features?

Recall Chapter 1's opening story about the British sea captains and the convicted felons.Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain,an economist suggested:

Why is it less costly to attend college during a recession?

One of the limitations of economics is that the principles only apply to the American economic system and not foreign economies.

One of the "Big Ideas" in economic thinking is that there is an incentive to do something if the total benefit is bigger than the total cost.

The central bank of the United States is known as the:

A student at a party deciding whether to stay a few more minutes is:

Which of the following is an example of self-interest that attempts to promote the public interest?

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

Two major policies used by the government to affect economic conditions are:

The Zimbabwean government printed money as fast as it could for years.As a result:

Economists believe that socially good outcomes arise whenever:

Using the concepts of incentives and good institutions,explain how a country might achieve economic growth.

Central banks can cause inflation.

If the FDA enacts more stringent pharmaceutical drug tests,two costs of this policy would be:

A cell phone plan costs $50 per month for 1,000 minutes,and $0.30 per minute for each additional minute after 1,000.What is the marginal fee for the 1,001st minute used?

One of the drawbacks of inflation is that it creates a lot of uncertainty about prices.

Which of the following choices best illustrates the concept of Adam Smith's "invisible hand"?

When private interests in markets are not aligned with the social interest:

Inflation occurs largely as a result of:

Which option best explains why firms develop new ideas for production techniques and product features?

Recall Chapter 1's opening story about the British sea captains and the convicted felons.Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain,an economist suggested:

Why is it less costly to attend college during a recession?

One of the limitations of economics is that the principles only apply to the American economic system and not foreign economies.

One of the "Big Ideas" in economic thinking is that there is an incentive to do something if the total benefit is bigger than the total cost.

The central bank of the United States is known as the:

A student at a party deciding whether to stay a few more minutes is:

Which of the following is an example of self-interest that attempts to promote the public interest?

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