Question 1

Central planning refers to

Accepted Answer

A)   markets guiding economic activity. Today many countries that had this system have abandoned it.
B)   markets guiding economic activity. Today many countries that did not have this system have implemented it.
C)   government guiding economic activity. Today many countries that had this system have abandoned it.
D)   government guiding economic activity. Today many countries that did not have this system have implemented it.E) All of the above
F) A) and D)

Question 2

An increase in the overall level of prices in an economy is referred to as

Accepted Answer

A)   the income effect.
B)   inflation.
C)   deflation.
D)   the substitution effect.E) B) and C)
F) C) and D)

Question 3

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 activityE) B) and C)
F) C) and D)

Question 4

An increase in the marginal cost of an activity necessarily means that people will no longer engage in any of that activity.

Accepted Answer

A) True 
 B)False

Question 5

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Accepted Answer

A)   This loss of jobs has been detrimental to our economy.
B)   The government should provide subsidies to encourage more people to become farmers.
C)   This reduction in the number of farmers explains the increase in the price of food.
D)   This is progress because freed-up labor that is used to produce other goods.E) None of the above
F) All of the above

Question 6

Suppose that the average income of a Costa Rican is higher than the average income of a Guatemalan.You might conclude that

Accepted Answer

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

Question 7

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.E) B) and C)
F) A) and D)

Question 8

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Accepted Answer

A)   the 1970's and the 1990's
B)   the 1970's but not the 1990's
C)   the 1990's but not the 1970's
D)   neither the 1970's nor the 1990'sE) B) and C)
F) A) and B)

Question 9

Government policies can change the costs and benefits that people face.Those policies have the potential to

Accepted Answer

A)   alter people's behavior.
B)   alter people's decisions at the margin.
C)   produce results that policymakers did not intend.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Exam 1: Ten Principles of Economics.

Central planning refers to

Correct Answer
verified

An increase in the marginal cost of an activity necessarily means that people will no longer engage in any of that activity.

Correct Answer
verified

Government policies can change the costs and benefits that people face.Those policies have the potential to

Correct Answer
verified

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

Correct Answer
verified

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Correct Answer
verified

Suppose that the average income of a Costa Rican is higher than the average income of a Guatemalan.You might conclude that

Correct Answer
verified

An increase in the overall level of prices in an economy is referred to as

Correct Answer
verified

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?

Correct Answer
verified

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Correct Answer
verified

Exam 1: Ten Principles of Economics.

Central planning refers to

Correct AnswerverifiedShow Answer

An increase in the marginal cost of an activity necessarily means that people will no longer engage in any of that activity.

Correct AnswerverifiedShow Answer

Government policies can change the costs and benefits that people face.Those policies have the potential to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

It once took 90 percent of our population to grow our food.It now takes only 3 percent of the population to grow our food.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Suppose that the average income of a Costa Rican is higher than the average income of a Guatemalan.You might conclude that

Correct AnswerverifiedShow Answer

An increase in the overall level of prices in an economy is referred to as

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Correct AnswerverifiedShow Answer

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verified

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Correct Answer
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