Question 1

In the United States, the overall level of prices more than doubled during the

Accepted Answer

A)  1950s. 
B)  1960s. 
C)  1970s. 
D)  1980s. 
A)  1950s. 
B)  1960s. 
C)  1970s. 
D)  1980s.

Question 2

Economists use the word equality to describe a situation in which

Accepted Answer

A)  each member of society has the same income. 
B)  each member of society has access to abundant quantities of goods and services, regardless of his or her income. 
C)  society is getting the maximum benefits from its scarce resources. 
D)  society's resources are used efficiently. 
A)  each member of society has the same income. 
B)  each member of society has access to abundant quantities of goods and services, regardless of his or her income. 
C)  society is getting the maximum benefits from its scarce resources. 
D)  society's resources are used efficiently.

Question 3

Economics is the study of how society allocates its unlimited resources.

Accepted Answer

A) True 
 B)False

Question 4

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Accepted Answer

A) True 
 B)False

Question 5

The English word that comes from the Greek word for "one who manages a household" is

Accepted Answer

A)  market. 
B)  consumer. 
C)  producer. 
D)  economy. 
A)  market. 
B)  consumer. 
C)  producer. 
D)  economy.

Question 6

What are the two basic types of economies?

Accepted Answer

Centrally

Question 7

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Accepted Answer

A)  goods are scarce. 
B)  people face tradeoffs. 
C)  income must be earned. 
D)  households face many decisions. 
A)  goods are scarce. 
B)  people face tradeoffs. 
C)  income must be earned. 
D)  households face many decisions.

Question 8

Which of the following statements about market economies is correct?

Accepted Answer

A)  In a market economy, no one is looking out for the economic well-being of society as a whole. 
B)  Market economies are characterized by decentralized decision making and self-interested decision makers. 
C)  Market economies have proven remarkably successful in promoting overall economic well-being. 
D)  All of the above are correct. 
A)  In a market economy, no one is looking out for the economic well-being of society as a whole. 
B)  Market economies are characterized by decentralized decision making and self-interested decision makers. 
C)  Market economies have proven remarkably successful in promoting overall economic well-being. 
D)  All of the above are correct.

Question 9

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Accepted Answer

A)  every person is entitled to life, liberty, and the pursuit of happiness. 
B)  individuals are best left to their own devices without the government guiding their actions. 
C)  the government plays a central role in organizing a market economy. 
D)  because of human nature a strong legal system is necessary for a market system to survive. 
A)  every person is entitled to life, liberty, and the pursuit of happiness. 
B)  individuals are best left to their own devices without the government guiding their actions. 
C)  the government plays a central role in organizing a market economy. 
D)  because of human nature a strong legal system is necessary for a market system to survive.

Question 10

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

Accepted Answer

A) True 
 B)False

Question 11

The primary determinant of a country's standard of living is

Accepted Answer

A)  the country's ability to prevail over foreign competition. 
B)  the country's ability to produce goods and services. 
C)  the total supply of money in the economy. 
D)  the average age of the country's labor force. 
A)  the country's ability to prevail over foreign competition. 
B)  the country's ability to produce goods and services. 
C)  the total supply of money in the economy. 
D)  the average age of the country's labor force.

Question 12

DeShawn has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. DeShawn discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?

Accepted Answer

A)  He should sell the boat as it is now for $400. 
B)  He should keep the boat since it would not be rational to spend $1,000 on repairs and then sell the boat for $900. 
C)  He should complete the repairs and sell the boat for $900. 
D)  It does not matter which action he takes; the outcome is the same either way. 
A)  He should sell the boat as it is now for $400. 
B)  He should keep the boat since it would not be rational to spend $1,000 on repairs and then sell the boat for $900. 
C)  He should complete the repairs and sell the boat for $900. 
D)  It does not matter which action he takes; the outcome is the same either way.

Question 13

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?

Accepted Answer

A)  People respond to incentives 
B)  Rational people think at the margin 
C)  Trade can make everyone better off 
D)  Markets are usually a good way to organize economic activity 
A)  People respond to incentives 
B)  Rational people think at the margin 
C)  Trade can make everyone better off 
D)  Markets are usually a good way to organize economic activity

Question 14

The "broken window fallacy"

Accepted Answer

A)  explains why inflation is so high. 
B)  is a justification for the government to print more money. 
C)  is illustrated when a government program is justified not on its merits but on the number of jobs it will create. 
D)  has nothing to do with public policy. 
A)  explains why inflation is so high. 
B)  is a justification for the government to print more money. 
C)  is illustrated when a government program is justified not on its merits but on the number of jobs it will create. 
D)  has nothing to do with public policy.

Question 15

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society ge

Question 16

Something that induces a person to act is called

Accepted Answer

A)  a trade-off. 
B)  a policy. 
C)  an incentive. 
D)  an opportunity cost. 
A)  a trade-off. 
B)  a policy. 
C)  an incentive. 
D)  an opportunity cost.

Question 17

When society requires that firms reduce pollution, there is

Accepted Answer

A)  a tradeoff because of reduced incomes to the firms' owners and workers. 
B)  a tradeoff only if some firms are forced to close. 
C)  no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements. 
D)  no tradeoff, since everyone benefits from reduced pollution. 
A)  a tradeoff because of reduced incomes to the firms' owners and workers. 
B)  a tradeoff only if some firms are forced to close. 
C)  no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements. 
D)  no tradeoff, since everyone benefits from reduced pollution.

Question 18

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Accepted Answer

A)  Polish firms are faced with stricter government regulations than Romanian firms. 
B)  total income is divided among fewer workers in Poland since it has a smaller labor force than Romania. 
C)  Romania's climate allows for longer growing seasons and therefore Romania can produce large quantities of grain and other crops. 
D)  productivity in Poland is higher than in Romania. 
A)  Polish firms are faced with stricter government regulations than Romanian firms. 
B)  total income is divided among fewer workers in Poland since it has a smaller labor force than Romania. 
C)  Romania's climate allows for longer growing seasons and therefore Romania can produce large quantities of grain and other crops. 
D)  productivity in Poland is higher than in Romania.

Question 19

Which of the following is not an example of a group responding to an incentive?

Accepted Answer

A)  Students attend class because of an attendance policy that reduces their grade for absences. 
B)  Consumers buy more of a product when it is on sale at a reduced price. 
C)  Universities offer fewer online classes when they generate more revenue than traditional classes. 
D)  Employees work harder to earn higher commissions. 
A)  Students attend class because of an attendance policy that reduces their grade for absences. 
B)  Consumers buy more of a product when it is on sale at a reduced price. 
C)  Universities offer fewer online classes when they generate more revenue than traditional classes. 
D)  Employees work harder to earn higher commissions.

Question 20

In a market economy, who makes the decisions that guide most economic activity?

Accepted Answer

A)  firms only 
B)  households only 
C)  firms and households 
D)  government 
A)  firms only 
B)  households only 
C)  firms and households 
D)  government

In the United States, the overall level of prices more than doubled during the

Economists use the word equality to describe a situation in which

Economics is the study of how society allocates its unlimited resources.

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

The English word that comes from the Greek word for "one who manages a household" is

What are the two basic types of economies?

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Which of the following statements about market economies is correct?

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

The primary determinant of a country's standard of living is

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?

The "broken window fallacy"

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Something that induces a person to act is called

When society requires that firms reduce pollution, there is

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Which of the following is not an example of a group responding to an incentive?

In a market economy, who makes the decisions that guide most economic activity?

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

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Exam 1: Ten Principles of Economics

In the United States, the overall level of prices more than doubled during the

Economists use the word equality to describe a situation in which

Economics is the study of how society allocates its unlimited resources.

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

The English word that comes from the Greek word for "one who manages a household" is

What are the two basic types of economies?

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Which of the following statements about market economies is correct?

Both The Wealth of Nations and the Declaration of Independence share the point of view that

Productivity is defined as the quantity of goods and services produced from each unit of labor input.

The primary determinant of a country's standard of living is

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?

The "broken window fallacy"

One tradeoff society faces is between efficiency and equality. Define each term. If the U.S. government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

Something that induces a person to act is called

When society requires that firms reduce pollution, there is

Suppose the average income of a citizen of Poland is higher than the average income of a citizen of Romania. You might conclude that

Which of the following is not an example of a group responding to an incentive?

In a market economy, who makes the decisions that guide most economic activity?

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