Question 1

An example of a case in which free markets do not align self-interest with social interest is pollution-emitting production:

Accepted Answer

A) True 
 B)False

Question 2

Economists believe that people will not respond to nonmonetary incentives,like love or status.

Accepted Answer

A) True 
 B)False

Question 3

Economics is the study of:

Accepted Answer

A)  what is good and what is bad. 
B)  how to make everyone rich. 
C)  how to make the world most productive. 
D)  trade-offs when making decisions. 
A)  what is good and what is bad. 
B)  how to make everyone rich. 
C)  how to make the world most productive. 
D)  trade-offs when making decisions.

Question 4

Many industrialized nations have been pumping trillions of dollars into their economies in the form of stimulus packages,tax rebates,and bailouts,in order to stimulate additional consumer spending and business investment,and to ward off global recession.If a large portion of these funds are obtained through the printing of new money,explain whether or not this will help or hurt these economies in the long run.

Accepted Answer

If the stimulus packages and bailouts ar

Question 5

Adam Smith wrote,"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." He meant that:

Accepted Answer

A)  most of us no longer get our dinner directly from the butcher,the brewer,and the baker. 
B)  butchers,brewers,and bakers are not productive members of society. 
C)  high-interest payments mean that no one has to work anymore. 
D)  people work for the benefit of others because it benefits them to do so. 
A)  most of us no longer get our dinner directly from the butcher,the brewer,and the baker. 
B)  butchers,brewers,and bakers are not productive members of society. 
C)  high-interest payments mean that no one has to work anymore. 
D)  people work for the benefit of others because it benefits them to do so.

Question 6

In his book The Wealth of Nations,Adam Smith claimed that individuals:

Accepted Answer

A)  always act in an altruistic way. 
B)  always consider the effect of their actions on others. 
C)  are motivated by self-interest. 
D)  are not concerned with resources. 
A)  always act in an altruistic way. 
B)  always consider the effect of their actions on others. 
C)  are motivated by self-interest. 
D)  are not concerned with resources.

Question 7

The Federal Reserve has a dual mandate to promote maximum employment and stable prices.This can be hard because attempts to reduce unemployment can cause more inflation.

Accepted Answer

A) True 
 B)False

Question 8

If the costs of staying at a party a few more minutes are higher than the benefits,you should:

Accepted Answer

A)  stay longer. 
B)  leave the party. 
C)  never have attended the party in the first place. 
D)  have thrown your own party. 
A)  stay longer. 
B)  leave the party. 
C)  never have attended the party in the first place. 
D)  have thrown your own party.

Question 9

The main objective of a central bank is to:

Accepted Answer

A)  supply the right amount of money to keep the economy stable. 
B)  supply as much money as it can to help the economy grow. 
C)  supply the government with the money it needs to operate. 
D)  make sure every citizen has the amount of money he or she wants to have. 
A)  supply the right amount of money to keep the economy stable. 
B)  supply as much money as it can to help the economy grow. 
C)  supply the government with the money it needs to operate. 
D)  make sure every citizen has the amount of money he or she wants to have.

Question 10

How is the unemployment rate related to the opportunity cost of college?

Accepted Answer

A)  As the unemployment rate increases,the opportunity cost of attending college falls because fewer opportunities for employment exist. 
B)  As the unemployment rate decreases,the opportunity cost of attending college falls since it becomes easier to pay for tuition when employed. 
C)  As the unemployment rate increases,the opportunity cost of attending college increases because fewer people are giving up the opportunity of working to attend college. 
D)  As the unemployment rate increases,the opportunity cost of attending college increases because more people are giving up the opportunity of working to attend college. 
A)  As the unemployment rate increases,the opportunity cost of attending college falls because fewer opportunities for employment exist. 
B)  As the unemployment rate decreases,the opportunity cost of attending college falls since it becomes easier to pay for tuition when employed. 
C)  As the unemployment rate increases,the opportunity cost of attending college increases because fewer people are giving up the opportunity of working to attend college. 
D)  As the unemployment rate increases,the opportunity cost of attending college increases because more people are giving up the opportunity of working to attend college.

Question 11

North Korea and South Korea were equally poor in 1950,but today South Korea is ______ than North Korea.

Accepted Answer

A)  10 times richer 
B)  two times richer 
C)  two times poorer 
D)  10 times poorer 
A)  10 times richer 
B)  two times richer 
C)  two times poorer 
D)  10 times poorer

Question 12

The Great Depression:

Accepted Answer

A)  was the normal response of an economy to changing economic conditions. 
B)  could not have been lessened with appropriate monetary policy. 
C)  generated unemployment rates of more than 20 percent. 
D)  was not an important economic event. 
A)  was the normal response of an economy to changing economic conditions. 
B)  could not have been lessened with appropriate monetary policy. 
C)  generated unemployment rates of more than 20 percent. 
D)  was not an important economic event.

Question 13

The opportunity cost of a choice is:

Accepted Answer

A)  the value of the opportunities lost. 
B)  the net value of the opportunities gained. 
C)  the difference between the benefits and costs of the choice. 
D)  sometimes positive or negative. 
A)  the value of the opportunities lost. 
B)  the net value of the opportunities gained. 
C)  the difference between the benefits and costs of the choice. 
D)  sometimes positive or negative.

Question 14

Modern economic understanding allows us to avoid economic booms and busts,although political constraints prevent the needed policies from being implemented.

Accepted Answer

A) True 
 B)False

Question 15

Economists think that people are self-interested:

Accepted Answer

A)  only when monetary incentives are present. 
B)  because they respond to incentives in predictable ways. 
C)  only rarely in response to incentives. 
D)  unless they are being altruistic. 
A)  only when monetary incentives are present. 
B)  because they respond to incentives in predictable ways. 
C)  only rarely in response to incentives. 
D)  unless they are being altruistic.

Question 16

Among other things,an understanding of economics can help you better manage your finances.

Accepted Answer

A) True 
 B)False

Question 17

Markets align self-interest with the social interest as long as the government doesn't interfere.

Accepted Answer

A) True 
 B)False

Question 18

Inflation can be defined as:

Accepted Answer

A)  the general rise in the level of output in an economy. 
B)  the boom and bust cycles of an economy. 
C)  the rise and fall of the general level of prices in an economy. 
D)  the increase in the general level of prices in an economy. 
A)  the general rise in the level of output in an economy. 
B)  the boom and bust cycles of an economy. 
C)  the rise and fall of the general level of prices in an economy. 
D)  the increase in the general level of prices in an economy.

Question 19

Most people do not buy the safest car they can find.Why not?

Accepted Answer

A)  Other factors matter besides safety,such as comfort,cost,and fuel economy. 
B)  People do not take the time to understand the safety features of cars. 
C)  Consumers are unaware of the risks of different cars. 
D)  The statement is false.People do buy the safest car they can find. 
A)  Other factors matter besides safety,such as comfort,cost,and fuel economy. 
B)  People do not take the time to understand the safety features of cars. 
C)  Consumers are unaware of the risks of different cars. 
D)  The statement is false.People do buy the safest car they can find.

Question 20

The general manager of a Major League Baseball team reasons that hiring an all-star-caliber third baseman would allow the team to win 13 more games per season,generating more fan interest and higher ticket sales.The estimated increase in ticket and merchandise sales is $10.5 million per year,but it would cost the team $12 million a year to hire an all-star-caliber third baseman.Using marginal cost-benefit thinking,the general manager will not hire the all-star-caliber third baseman.

Accepted Answer

A) True 
 B)False

An example of a case in which free markets do not align self-interest with social interest is pollution-emitting production:

Economists believe that people will not respond to nonmonetary incentives,like love or status.

Economics is the study of:

Adam Smith wrote,"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." He meant that:

In his book The Wealth of Nations,Adam Smith claimed that individuals:

The Federal Reserve has a dual mandate to promote maximum employment and stable prices.This can be hard because attempts to reduce unemployment can cause more inflation.

If the costs of staying at a party a few more minutes are higher than the benefits,you should:

The main objective of a central bank is to:

How is the unemployment rate related to the opportunity cost of college?

North Korea and South Korea were equally poor in 1950,but today South Korea is ______ than North Korea.

The Great Depression:

The opportunity cost of a choice is:

Modern economic understanding allows us to avoid economic booms and busts,although political constraints prevent the needed policies from being implemented.

Economists think that people are self-interested:

Among other things,an understanding of economics can help you better manage your finances.

Markets align self-interest with the social interest as long as the government doesn't interfere.

Inflation can be defined as:

Most people do not buy the safest car they can find.Why not?

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

An example of a case in which free markets do not align self-interest with social interest is pollution-emitting production:

Economists believe that people will not respond to nonmonetary incentives,like love or status.

Economics is the study of:

Adam Smith wrote,"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." He meant that:

In his book The Wealth of Nations,Adam Smith claimed that individuals:

The Federal Reserve has a dual mandate to promote maximum employment and stable prices.This can be hard because attempts to reduce unemployment can cause more inflation.

If the costs of staying at a party a few more minutes are higher than the benefits,you should:

The main objective of a central bank is to:

How is the unemployment rate related to the opportunity cost of college?

North Korea and South Korea were equally poor in 1950,but today South Korea is ______ than North Korea.

The Great Depression:

The opportunity cost of a choice is:

Modern economic understanding allows us to avoid economic booms and busts,although political constraints prevent the needed policies from being implemented.

Economists think that people are self-interested:

Among other things,an understanding of economics can help you better manage your finances.

Markets align self-interest with the social interest as long as the government doesn't interfere.

Inflation can be defined as:

Most people do not buy the safest car they can find.Why not?

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