Question 1

During the early 1920s in Germany, prices

Accepted Answer

A)  doubled annually. 
B)  doubled monthly. 
C)  tripled monthly. 
D)  tripled annually. 
A)  doubled annually. 
B)  doubled monthly. 
C)  tripled monthly. 
D)  tripled annually.

Question 2

What are the two reasons for the government to intervene in a market?

Accepted Answer

To promote

Question 3

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

Because economics is the study of how so

Question 4

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Accepted Answer

A)  the pie gets larger, and there will be more pie overall. 
B)  the pie gets smaller, and there will be less pie overall. 
C)  it increases the reward for working hard, resulting in people producing more goods and services. 
D)  those who earn more income pay less in taxes. 
A)  the pie gets larger, and there will be more pie overall. 
B)  the pie gets smaller, and there will be less pie overall. 
C)  it increases the reward for working hard, resulting in people producing more goods and services. 
D)  those who earn more income pay less in taxes.

Question 5

Which of the following is the primary cause of inflation?

Accepted Answer

A)  an increase in the quantity of money 
B)  an increase in government spending 
C)  an increase in unemployment 
D)  an increase in productivity 
A)  an increase in the quantity of money 
B)  an increase in government spending 
C)  an increase in unemployment 
D)  an increase in productivity

Question 6

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Accepted Answer

A)  is a basic principle regarding individual decisionmaking. 
B)  amounts to a denial of one of the basic principles regarding interactions among people. 
C)  supports the idea that the "invisible hand" should guide economic activity. 
D)  was promoted by the economist Adam Smith in a well-known 1776 book. 
A)  is a basic principle regarding individual decisionmaking. 
B)  amounts to a denial of one of the basic principles regarding interactions among people. 
C)  supports the idea that the "invisible hand" should guide economic activity. 
D)  was promoted by the economist Adam Smith in a well-known 1776 book.

Question 7

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

Accepted Answer

A)  compare the total cost of your education to the total benefits of your education. 
B)  compare the total cost of your education to the benefits of staying one more semester. 
C)  compare the cost of staying one more semester to the benefits of staying one more semester. 
D)  compare the total benefits of your education to the cost of staying one more semester. 
A)  compare the total cost of your education to the total benefits of your education. 
B)  compare the total cost of your education to the benefits of staying one more semester. 
C)  compare the cost of staying one more semester to the benefits of staying one more semester. 
D)  compare the total benefits of your education to the cost of staying one more semester.

Question 8

The basic principles of economics suggest that

Accepted Answer

A)  markets are seldom, if ever, a good way to organize economic activity. 
B)  government should become involved in markets when trade between countries is involved. 
C)  government should become involved in markets when those markets fail to produce efficient or fair outcomes. 
D)  All of the above are correct. 
A)  markets are seldom, if ever, a good way to organize economic activity. 
B)  government should become involved in markets when trade between countries is involved. 
C)  government should become involved in markets when those markets fail to produce efficient or fair outcomes. 
D)  All of the above are correct.

Question 9

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

Accepted Answer

A) True 
 B)False

Question 10

The "invisible hand" refers to

Accepted Answer

A)  the government. 
B)  the free market. 
C)  central planners. 
D)  large businesses. 
A)  the government. 
B)  the free market. 
C)  central planners. 
D)  large businesses.

Question 11

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

Accepted Answer

A)  $33,800. 
B)  $42,600. 
C)  $49,800. 
D)  $57,000. 
A)  $33,800. 
B)  $42,600. 
C)  $49,800. 
D)  $57,000.

Question 12

The study of how society manages its scarce resources is most closely associated with which field of study?

Accepted Answer

A)  environmental studies 
B)  economics 
C)  management 
D)  accounting 
A)  environmental studies 
B)  economics 
C)  management 
D)  accounting

Question 13

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Accepted Answer

A)  inefficiency 
B)  inequality 
C)  scarcity 
D)  market failure 
A)  inefficiency 
B)  inequality 
C)  scarcity 
D)  market failure

Question 14

Which is the most accurate statement about trade?

Accepted Answer

A)  Trade can make every nation better off. 
B)  Trade makes some nations better off and others worse off. 
C)  Trading for a good can make a nation better off only if the nation cannot produce that good itself. 
D)  Trade helps rich nations and hurts poor nations. 
A)  Trade can make every nation better off. 
B)  Trade makes some nations better off and others worse off. 
C)  Trading for a good can make a nation better off only if the nation cannot produce that good itself. 
D)  Trade helps rich nations and hurts poor nations.

Question 15

Scenario 1-4 You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $12.00 on a ticket and $4.75 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 15 points.
-Refer to Scenario 1-4. What is your opportunity cost of going to the movies?

Accepted Answer

$16.75 and

Question 16

Market economies are distinguished from other types of economies largely on the basis of

Accepted Answer

A)  the political affiliations of government officials. 
B)  the process by which government officials are elected or appointed. 
C)  the ways in which scarce resources are allocated. 
D)  the number of retail outlets available to consumers. 
A)  the political affiliations of government officials. 
B)  the process by which government officials are elected or appointed. 
C)  the ways in which scarce resources are allocated. 
D)  the number of retail outlets available to consumers.

Question 17

If the United States decides to trade with Yemen, we know that

Accepted Answer

A)  Yemen will benefit, but trade with a less developed country could not benefit the United States. 
B)  it will not benefit Yemen because workers in the United States are more productive. 
C)  Yemen and the United States can both benefit. 
D)  it will not benefit either country because their cultural differences are too vast. 
A)  Yemen will benefit, but trade with a less developed country could not benefit the United States. 
B)  it will not benefit Yemen because workers in the United States are more productive. 
C)  Yemen and the United States can both benefit. 
D)  it will not benefit either country because their cultural differences are too vast.

Question 18

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 19

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

Accepted Answer

A)  cost of leaving was greater than the marginal benefit. 
B)  benefit of leaving was greater than the marginal cost. 
C)  benefit of teaching was greater than the marginal cost. 
D)  All of the above are correct. 
A)  cost of leaving was greater than the marginal benefit. 
B)  benefit of leaving was greater than the marginal cost. 
C)  benefit of teaching was greater than the marginal cost. 
D)  All of the above are correct.

Question 20

The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. This is an example of

Accepted Answer

A)  a market failure caused by an externality. 
B)  a market failure caused by market power. 
C)  a market failure caused by equality. 
D)  There is no market failure in this case. 
A)  a market failure caused by an externality. 
B)  a market failure caused by market power. 
C)  a market failure caused by equality. 
D)  There is no market failure in this case.

Exam 1: Ten Principles of Economics

During the early 1920s in Germany, prices

What are the two reasons for the government to intervene in a market?

How does the study of economics depend upon the phenomenon of scarcity?

As a result of a successful attempt by government to cut the economic pie into more equal slices,

Which of the following is the primary cause of inflation?

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you should

The basic principles of economics suggest that

The goal of President Obama's stimulus package and increased government spending following the deep economic downturn in 2008 and 2009 was to reduce inflation.

The "invisible hand" refers to

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

The study of how society manages its scarce resources is most closely associated with which field of study?

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

Which is the most accurate statement about trade?

Market economies are distinguished from other types of economies largely on the basis of

If the United States decides to trade with Yemen, we know that

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

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

The price of diamonds is high, in part because the majority of the world's diamonds are controlled by a single firm. This is an example of

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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