Question 1

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

Accepted Answer

They reduce the reward for wor

Question 2

When the government redistributes income from the wealthy to the poor,

Accepted Answer

A)  efficiency is improved, but equality is not. 
B)  equality is improved, but efficiency is not. 
C)  both efficiency and equality are improved. 
D)  neither efficiency nor equality are improved. 
A)  efficiency is improved, but equality is not. 
B)  equality is improved, but efficiency is not. 
C)  both efficiency and equality are improved. 
D)  neither efficiency nor equality are improved.

Question 3

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

Accepted Answer

A)  the Federal Reserve is worried about inflation. 
B)  the Federal Reserve is worried about unemployment. 
C)  the Federal Reserve is hoping to reduce the demand for goods and services. 
D)  the Federal Reserve is worried that the economy is growing too quickly. 
A)  the Federal Reserve is worried about inflation. 
B)  the Federal Reserve is worried about unemployment. 
C)  the Federal Reserve is hoping to reduce the demand for goods and services. 
D)  the Federal Reserve is worried that the economy is growing too quickly.

Question 4

Economics deals primarily with the concept of

Accepted Answer

A)  scarcity. 
B)  money. 
C)  poverty. 
D)  banking. 
A)  scarcity. 
B)  money. 
C)  poverty. 
D)  banking.

Question 5

In a particular country in 1998, the average worker needed to work 40 hours to produce 100 units of output. In that same country in 2008, the average worker needed to work 36 hours to produce 72 units of output. In that country, the productivity of the average worker

Accepted Answer

A)  decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly. 
B)  increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly. 
C)  decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly. 
D)  increased between 1998 and 2008, so we would expect inflation to have increased accordingly. 
A)  decreased between 1998 and 2008, so we would expect the standard of living to have decreased accordingly. 
B)  increased between 1998 and 2008, so we would expect the standard of living to have increased accordingly. 
C)  decreased between 1998 and 2008, so we would expect inflation to have decreased accordingly. 
D)  increased between 1998 and 2008, so we would expect inflation to have increased accordingly.

Question 6

A rational decisionmaker

Accepted Answer

A)  ignores marginal changes and focuses instead on "the big picture." 
B)  ignores the likely effects of government policies when he or she makes choices. 
C)  takes an action only if the marginal benefit of that action exceeds the marginal cost of that action. 
D)  takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions. 
A)  ignores marginal changes and focuses instead on "the big picture." 
B)  ignores the likely effects of government policies when he or she makes choices. 
C)  takes an action only if the marginal benefit of that action exceeds the marginal cost of that action. 
D)  takes an action only if the combined benefits of that action and previous actions exceed the combined costs of that action and previous actions.

Question 7

Scenario 1-2
Suppose that you have a choice between going to the movies with a friend for two hours or working at your job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If you choose to work, you will earn $10 an hour.
-Refer to Scenario 1-2. What is your opportunity cost of going to the movies?

Accepted Answer

The answer of Scenario 1-2
Suppose that you have a choice...

Question 8

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 9

Which of the following can lead to market failure?

Accepted Answer

A)  externalities and market power 
B)  externalities but not market power 
C)  market power but not externalities 
D)  neither externalities nor market power 
A)  externalities and market power 
B)  externalities but not market power 
C)  market power but not externalities 
D)  neither externalities nor market power

Question 10

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 11

Most economists believe that an increase in the quantity of money results in

Accepted Answer

A)  an increase in the demand for goods and services. 
B)  lower unemployment in the short run. 
C)  higher inflation in the long run. 
D)  All of the above are correct. 
A)  an increase in the demand for goods and services. 
B)  lower unemployment in the short run. 
C)  higher inflation in the long run. 
D)  All of the above are correct.

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

When the government prevents prices from adjusting naturally to supply and demand,

Accepted Answer

A)  it equates the amount buyers want to buy with the amount sellers want to sell. 
B)  it adversely affects the allocation of resources. 
C)  it improves equality and efficiency. 
D)  it improves efficiency but reduces equality. 
A)  it equates the amount buyers want to buy with the amount sellers want to sell. 
B)  it adversely affects the allocation of resources. 
C)  it improves equality and efficiency. 
D)  it improves efficiency but reduces equality.

Question 14

Trade between countries tends to

Accepted Answer

A)  reduce both competition and specialization. 
B)  reduce competition and increase specialization. 
C)  increase competition and reduce specialization. 
D)  increase both competition and specialization. 
A)  reduce both competition and specialization. 
B)  reduce competition and increase specialization. 
C)  increase competition and reduce specialization. 
D)  increase both competition and specialization.

Question 15

The increase in living standards of American workers over the past century is primarily due to

Accepted Answer

A)  the success of labor unions. 
B)  minimum-wage laws. 
C)  improvements in productivity. 
D)  None of the above are correct. 
A)  the success of labor unions. 
B)  minimum-wage laws. 
C)  improvements in productivity. 
D)  None of the above are correct.

Question 16

In the United States, incomes have historically grown

Accepted Answer

A)  about 0.5 percent per year. 
B)  about 2 percent per year. 
C)  about 4 percent per year. 
D)  about 6 percent per year. 
A)  about 0.5 percent per year. 
B)  about 2 percent per year. 
C)  about 4 percent per year. 
D)  about 6 percent per year.

Question 17

People are likely to respond to a policy change

Accepted Answer

A)  only if they think the policy is a good one. 
B)  only if the policy change changes the costs of their behavior. 
C)  only if the policy change changes the benefits of their behavior. 
D)  if the policy changes either the costs or benefits of their behavior. 
A)  only if they think the policy is a good one. 
B)  only if the policy change changes the costs of their behavior. 
C)  only if the policy change changes the benefits of their behavior. 
D)  if the policy changes either the costs or benefits of their behavior.

Question 18

Trade with any nation can be mutually beneficial.

Accepted Answer

A) True 
 B)False

Question 19

When the government attempts to improve equality in an economy the result is often

Accepted Answer

A)  an increase in overall output in the economy. 
B)  additional government revenue since overall income will increase. 
C)  a reduction in equality. 
D)  a reduction in efficiency. 
A)  an increase in overall output in the economy. 
B)  additional government revenue since overall income will increase. 
C)  a reduction in equality. 
D)  a reduction in efficiency.

Question 20

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

Accepted Answer

A)  The marginal benefit of going to Spain increases. 
B)  The marginal cost of going to Spain increases. 
C)  The marginal benefit of going to Ireland increases. 
D)  The marginal cost of going to Ireland decreases. 
A)  The marginal benefit of going to Spain increases. 
B)  The marginal cost of going to Spain increases. 
C)  The marginal benefit of going to Ireland increases. 
D)  The marginal cost of going to Ireland decreases.

Exam 1: Ten Principles of Economics

Explain how government policies that redistribute income from the rich to the poor might reduce efficiency.

When the government redistributes income from the wealthy to the poor,

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

Economics deals primarily with the concept of

In a particular country in 1998, the average worker needed to work 40 hours to produce 100 units of output. In that same country in 2008, the average worker needed to work 36 hours to produce 72 units of output. In that country, the productivity of the average worker

A rational decisionmaker

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

Which of the following can lead to market failure?

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

Most economists believe that an increase in the quantity of money results in

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

When the government prevents prices from adjusting naturally to supply and demand,

Trade between countries tends to

The increase in living standards of American workers over the past century is primarily due to

In the United States, incomes have historically grown

People are likely to respond to a policy change

Trade with any nation can be mutually beneficial.

When the government attempts to improve equality in an economy the result is often

After much consideration, you have chosen Ireland over Spain for your Study Abroad program next year. However, the deadline for your final decision is still months away and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

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

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

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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