Question 1

In economics, the cost of something is

Accepted Answer

A)  the dollar amount of obtaining it. 
B)  always measured in units of time given up to get it. 
C)  what you give up to get it. 
D)  often impossible to quantify, even in principle. 
A)  the dollar amount of obtaining it. 
B)  always measured in units of time given up to get it. 
C)  what you give up to get it. 
D)  often impossible to quantify, even in principle.

Question 2

In a particular country in 2000, the average worker needed to work 40 hours to produce 55 units of output. In that same country in 2008, the average worker needed to work 30 hours to produce 45 units of output. In that country, the productivity of the average worker

Accepted Answer

A)  decreased by about 6 percent between 2000 and 2008. 
B)  remained unchanged between 2000 and 2008. 
C)  increased by about 9 percent between 2000 and 2008. 
D)  increased by about 18 percent between 2000 and 2008. 
A)  decreased by about 6 percent between 2000 and 2008. 
B)  remained unchanged between 2000 and 2008. 
C)  increased by about 9 percent between 2000 and 2008. 
D)  increased by about 18 percent between 2000 and 2008.

Question 3

Explain the concept of externality and give an example.

Accepted Answer

The impact of one pe

Question 4

Trade between the United States and Guatemala

Accepted Answer

A)  benefits both the United States and Guatemala. 
B)  is a losing proposition for the United States because Guatemalan labor is less expensive than U.S. labor. 
C)  is a losing proposition for Guatemala because capital is much more abundant in the U.S. than in Guatemala. 
D)  is a losing proposition for Guatemala because U.S. workers are more productive than Guatemalan workers. 
A)  benefits both the United States and Guatemala. 
B)  is a losing proposition for the United States because Guatemalan labor is less expensive than U.S. labor. 
C)  is a losing proposition for Guatemala because capital is much more abundant in the U.S. than in Guatemala. 
D)  is a losing proposition for Guatemala because U.S. workers are more productive than Guatemalan workers.

Question 5

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Accepted Answer

A)  enhance equality. 
B)  enhance efficiency. 
C)  increase the reward for working hard. 
D)  All of the above are correct. 
A)  enhance equality. 
B)  enhance efficiency. 
C)  increase the reward for working hard. 
D)  All of the above are correct.

Question 6

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

Accepted Answer

A)  worried about inflation. 
B)  worried about unemployment. 
C)  hoping to increase the demand for goods and services. 
D)  worried that the economy is growing too slowly. 
A)  worried about inflation. 
B)  worried about unemployment. 
C)  hoping to increase the demand for goods and services. 
D)  worried that the economy is growing too slowly.

Question 7

The term "market failure"

Accepted Answer

A)  means the same thing as "market power." 
B)  refers to the dissolution of a market when firms decide to quit producing a certain product. 
C)  refers to the failure of a market to produce an efficient allocation of resources. 
D)  refers to government's failure to enforce the property rights of households or firms that participate in a certain market. 
A)  means the same thing as "market power." 
B)  refers to the dissolution of a market when firms decide to quit producing a certain product. 
C)  refers to the failure of a market to produce an efficient allocation of resources. 
D)  refers to government's failure to enforce the property rights of households or firms that participate in a certain market.

Question 8

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 9

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

Question 10

Which of these activities will most likely result in an external benefit?

Accepted Answer

A)  A college student buys a deck of cards to play solitaire in her dorm room. 
B)  An elderly woman plants a flower garden on the vacant lot next to her house. 
C)  An executive purchases a book to read on a business trip. 
D)  A ten-year-old uses his allowance to buy new Nike shoes. 
A)  A college student buys a deck of cards to play solitaire in her dorm room. 
B)  An elderly woman plants a flower garden on the vacant lot next to her house. 
C)  An executive purchases a book to read on a business trip. 
D)  A ten-year-old uses his allowance to buy new Nike shoes.

Question 11

In the short-run, society faces a tradeoff between inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 12

In the short run, which of the following is not correct?

Accepted Answer

A)  Increasing the money supply increases the demand for goods and services. 
B)  Increasing the money supply encourages firms to hire more workers. 
C)  Lowering the money supply leads to a higher level of unemployment. 
D)  Policies that encourage higher employment will also induce a lower rate of inflation. 
A)  Increasing the money supply increases the demand for goods and services. 
B)  Increasing the money supply encourages firms to hire more workers. 
C)  Lowering the money supply leads to a higher level of unemployment. 
D)  Policies that encourage higher employment will also induce a lower rate of inflation.

Question 13

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Melinda quits her job at a bank,...

Question 14

Equality means distributing society's resources in the most efficient manner.

Accepted Answer

A) True 
 B)False

Question 15

One advantage market economies have over centrally-planned economies is that market economies

Accepted Answer

A)  provide an equal distribution of goods and services to households. 
B)  establish a significant role for government in the allocation of resources. 
C)  solve the problem of scarcity. 
D)  are more efficient. 
A)  provide an equal distribution of goods and services to households. 
B)  establish a significant role for government in the allocation of resources. 
C)  solve the problem of scarcity. 
D)  are more efficient.

Question 16

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

Accepted Answer

A)  Coal is an unlimited resource. 
B)  Coal is a scarce resource. 
C)  Coal is a non-productive resource. 
D)  Coal is not a resource. 
A)  Coal is an unlimited resource. 
B)  Coal is a scarce resource. 
C)  Coal is a non-productive resource. 
D)  Coal is not a resource.

Question 17

The ability of an individual to own and exercise control over scarce resources is called

Accepted Answer

A)  market failure. 
B)  property rights. 
C)  externality. 
D)  market power. 
A)  market failure. 
B)  property rights. 
C)  externality. 
D)  market power.

Question 18

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 19

England can benefit from trade

Accepted Answer

A)  only with nations that can produce goods England cannot produce. 
B)  only with less developed nations. 
C)  only with nations outside of Europe. 
D)  with any nation. 
A)  only with nations that can produce goods England cannot produce. 
B)  only with less developed nations. 
C)  only with nations outside of Europe. 
D)  with any nation.

Question 20

Which of the following statements about markets is most accurate?

Accepted Answer

A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not an acceptable way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations, but not in less developed nations. 
A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not an acceptable way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations, but not in less developed nations.

Exam 1: Ten Principles of Economics

In economics, the cost of something is

In a particular country in 2000, the average worker needed to work 40 hours to produce 55 units of output. In that same country in 2008, the average worker needed to work 30 hours to produce 45 units of output. In that country, the productivity of the average worker

Explain the concept of externality and give an example.

Trade between the United States and Guatemala

A likely effect of government policies that redistribute income and wealth from the wealthy to the poor is that those policies

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

The term "market failure"

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

Inflation increases the value of money.

Which of these activities will most likely result in an external benefit?

In the short-run, society faces a tradeoff between inflation and unemployment.

In the short run, which of the following is not correct?

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

Equality means distributing society's resources in the most efficient manner.

One advantage market economies have over centrally-planned economies is that market economies

Coal is considered to be a non-renewable energy source. Which of the following statements is correct?

The ability of an individual to own and exercise control over scarce resources is called

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.

England can benefit from trade

Which of the following statements about markets is most accurate?

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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