Question 1

The failure of communism in a large number of countries is at least partly explained by

Accepted Answer

A)  the fact that those countries relied absolutely on the invisible hand. 
B)  the fact that those countries did little or nothing to restrict trade with other countries. 
C)  the lack of information, on the part of central planners in those countries, about tastes and preferences in their economies. 
D)  the lack of information, on the part of central planners in those countries, about how much authority the government had in affecting economic outcomes. 
A)  the fact that those countries relied absolutely on the invisible hand. 
B)  the fact that those countries did little or nothing to restrict trade with other countries. 
C)  the lack of information, on the part of central planners in those countries, about tastes and preferences in their economies. 
D)  the lack of information, on the part of central planners in those countries, about how much authority the government had in affecting economic outcomes.

Question 2

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is correct?

Accepted Answer

A)  The word economy comes from the Greek word for "rational thinker." 
B)  Economists study the management of scarce resources. 
C)  Because economists believe that people pursue their best interests, they are not interested in how people interact. 
D)  All of the above are correct. 
A)  The word economy comes from the Greek word for "rational thinker." 
B)  Economists study the management of scarce resources. 
C)  Because economists believe that people pursue their best interests, they are not interested in how people interact. 
D)  All of the above are correct.

Question 4

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Accepted Answer

The concept of working longer per year w

Question 5

Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.

Accepted Answer

A) True 
 B)False

Question 6

Communist countries worked under the premise that

Accepted Answer

A)  markets were the best way to organize economic activity. 
B)  central planners were in the best position to determine the allocation of scarce resources in the economy. 
C)  households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce resources. 
D)  allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources. 
A)  markets were the best way to organize economic activity. 
B)  central planners were in the best position to determine the allocation of scarce resources in the economy. 
C)  households and firms, guided by an "invisible hand," could achieve the most efficient allocation of scarce resources. 
D)  allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources.

Question 7

The phenomenon of scarcity stems from the fact that

Accepted Answer

A)  most economies' production methods are not very good. 
B)  in most economies, wealthy people consume disproportionate quantities of goods and services. 
C)  governments restrict production of too many goods and services. 
D)  resources are limited. 
A)  most economies' production methods are not very good. 
B)  in most economies, wealthy people consume disproportionate quantities of goods and services. 
C)  governments restrict production of too many goods and services. 
D)  resources are limited.

Question 8

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Accepted Answer

A)  An individual's probability of surviving an auto accident rose. 
B)  There was an increase in pedestrian deaths. 
C)  There was an increase in automobile accidents. 
D)  All of the above are correct. 
A)  An individual's probability of surviving an auto accident rose. 
B)  There was an increase in pedestrian deaths. 
C)  There was an increase in automobile accidents. 
D)  All of the above are correct.

Question 9

Trade can make everyone better off except in the case where one person is better at doing everything.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following could reduce economic efficiency?

Accepted Answer

A)  laws that encourage lawsuits 
B)  policies that redistribute income 
C)  policies that impose significant restrictions on international trade 
D)  All of the above are correct 
A)  laws that encourage lawsuits 
B)  policies that redistribute income 
C)  policies that impose significant restrictions on international trade 
D)  All of the above are correct

Question 11

Which of the following words and phrases best captures the notion of equality?

Accepted Answer

A)  minimum waste 
B)  maximum benefit 
C)  sameness 
D)  efficiency 
A)  minimum waste 
B)  maximum benefit 
C)  sameness 
D)  efficiency

Question 12

Economics is the study of how evenly goods and services are distributed within society.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements exemplifies a principle of individual decisionmaking?

Accepted Answer

A)  Trade can make everyone better off. 
B)  Governments can sometimes improve market outcomes. 
C)  The cost of something is what you give up to get it. 
D)  All of the above are correct. 
A)  Trade can make everyone better off. 
B)  Governments can sometimes improve market outcomes. 
C)  The cost of something is what you give up to get it. 
D)  All of the above are correct.

Question 14

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Accepted Answer

A)  the value of a good to society, but not the cost of making it. 
B)  the cost of making a good to society, but not its value. 
C)  both the value of a good to society and the cost of making it. 
D)  neither the value of a good to society nor the cost of making it. 
A)  the value of a good to society, but not the cost of making it. 
B)  the cost of making a good to society, but not its value. 
C)  both the value of a good to society and the cost of making it. 
D)  neither the value of a good to society nor the cost of making it.

Question 15

In considering how to allocate its scarce resources among its various members, a household considers

Accepted Answer

A)  each member's abilities. 
B)  each member's efforts. 
C)  each member's desires. 
D)  All of the above are correct. 
A)  each member's abilities. 
B)  each member's efforts. 
C)  each member's desires. 
D)  All of the above are correct.

Question 16

The business cycle is the

Accepted Answer

A)  relationship between unemployment and inflation. 
B)  irregular fluctuations in economic activity. 
C)  positive relationship between the quantity of money in an economy and inflation. 
D)  predictable changes in economic activity due to changes in government spending and taxes. 
A)  relationship between unemployment and inflation. 
B)  irregular fluctuations in economic activity. 
C)  positive relationship between the quantity of money in an economy and inflation. 
D)  predictable changes in economic activity due to changes in government spending and taxes.

Question 17

The term "invisible hand" was coined by

Accepted Answer

A)  Adam Smith. 
B)  David Ricardo. 
C)  Karl Marx. 
D)  Benjamin Franklin. 
A)  Adam Smith. 
B)  David Ricardo. 
C)  Karl Marx. 
D)  Benjamin Franklin.

Question 18

Which of the following is correct concerning opportunity cost?

Accepted Answer

A)  Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway. 
B)  To compute opportunity costs, you should subtract benefits from costs. 
C)  Opportunity costs and the idea of trade-offs are not closely related. 
D)  Rational people should compare various options without considering opportunity costs. 
A)  Except to the extent that you pay more for them, opportunity costs should not include the cost of things you would have purchased anyway. 
B)  To compute opportunity costs, you should subtract benefits from costs. 
C)  Opportunity costs and the idea of trade-offs are not closely related. 
D)  Rational people should compare various options without considering opportunity costs.

Question 19

Betty's Bakery bakes fresh bread every morning. Any bread not sold by the end of the day is thrown away. A loaf of bread costs Betty $2.00 to produce, and she prices loaves of bread at $3.50 per loaf. Suppose near the end of one day Betty still has 12 loaves of bread on hand. Which of the following is correct?

Accepted Answer

A)  Betty should only sell the remaining bread for $3.50 per loaf since that is the regular price. 
B)  Betty should only sell the remaining bread for $2.00 per loaf or more since that is what the bread costs to make. 
C)  Betty should be willing to sell the remaining bread for any price above $0 per loaf since she will have to throw it away if she does not sell it for something. 
D)  Betty should just throw the bread away and change the price of her bread starting tomorrow to make sure she sells all of her bread each day. 
A)  Betty should only sell the remaining bread for $3.50 per loaf since that is the regular price. 
B)  Betty should only sell the remaining bread for $2.00 per loaf or more since that is what the bread costs to make. 
C)  Betty should be willing to sell the remaining bread for any price above $0 per loaf since she will have to throw it away if she does not sell it for something. 
D)  Betty should just throw the bread away and change the price of her bread starting tomorrow to make sure she sells all of her bread each day.

Question 20

Which of the following is true?

Accepted Answer

A)  Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 
B)  Government policies usually improve upon both equality and efficiency. 
C)  As long as the economic pie continually gets larger, no one will have to go hungry. 
D)  Efficiency and equality can both be achieved if the economic pie is cut into equal pieces. 
A)  Efficiency refers to the size of the economic pie; equality refers to how the pie is divided. 
B)  Government policies usually improve upon both equality and efficiency. 
C)  As long as the economic pie continually gets larger, no one will have to go hungry. 
D)  Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.

The failure of communism in a large number of countries is at least partly explained by

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Which of the following is correct?

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.

Communist countries worked under the premise that

The phenomenon of scarcity stems from the fact that

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Trade can make everyone better off except in the case where one person is better at doing everything.

Which of the following could reduce economic efficiency?

Which of the following words and phrases best captures the notion of equality?

Economics is the study of how evenly goods and services are distributed within society.

Which of the following statements exemplifies a principle of individual decisionmaking?

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

In considering how to allocate its scarce resources among its various members, a household considers

The business cycle is the

The term "invisible hand" was coined by

Which of the following is correct concerning opportunity cost?

Which of the following is true?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Exam 1: Ten Principles of Economics

The failure of communism in a large number of countries is at least partly explained by

Efficiency means everyone in the economy should receive an equal share of the goods and services produced.

Which of the following is correct?

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 9 months per year.

Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.

Communist countries worked under the premise that

The phenomenon of scarcity stems from the fact that

Following the implementation of laws requiring automobiles to have seat belts, which of the following occurred?

Trade can make everyone better off except in the case where one person is better at doing everything.

Which of the following could reduce economic efficiency?

Which of the following words and phrases best captures the notion of equality?

Economics is the study of how evenly goods and services are distributed within society.

Which of the following statements exemplifies a principle of individual decisionmaking?

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

In considering how to allocate its scarce resources among its various members, a household considers

The business cycle is the

The term "invisible hand" was coined by

Which of the following is correct concerning opportunity cost?

Which of the following is true?

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters