Question 1

To promote good economic outcomes, policymakers should strive to enact policies that

Accepted Answer

A)  enhance productivity.
B)  enhance individuals' market power.
C)  result in a rapidly-growing quantity of money.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 2

The principle that trade can make everyone better off applies to

Accepted Answer

A)  individuals.
B)  families.
C)  countries.
D)  All of the aboveE) B) and D)
F) B) and C)

Question 3

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

Accepted Answer

A)  we should agree with Senator Brown.
B)  we should agree with Senator Johnson.
C)  a good decision requires that we recognize both viewpoints.
D)  there are no tradeoffs between equity and efficiency.E) C) and D)
F) A) and D)

Question 4

What is the most important factor that explains differences in living standards across countries?

Accepted Answer

A)  the quantity of money
B)  the level of unemployment
C)  productivity
D)  equalityE) A) and B)
F) B) and C)

Question 5

Both the production of goods and services and the unemployment rate are used to measure

Accepted Answer

A)  the business cycle.
B)  productivity.
C)  the interest rate.
D)  inflation.E) B) and D)
F) B) and C)

Question 6

A worker in Equador can earn $3 per day making cotton cloth on a hand loom. A worker in the United States can earn $70 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

Accepted Answer

A)  U.S. textile workers belong to a union.
B)  There is little demand for cotton cloth in Equador and great demand in the U.S.
C)  Labor is more productive making cotton cloth with a mechanical loom than with a hand loom.
D)  Equador has a low-wage policy to make its textile industry more competitive in world markets.E) A) and B)
F) All of the above

Question 7

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that

Accepted Answer

A)  trade can make everyone better off.
B)  people face trade-offs
C)  rational people think at the margin.
D)  people respond to incentives.E) A) and B)
F) A) and C)

Question 8

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 9

The amount of goods and services produced from each unit of labor input is called

Accepted Answer

A)  opportunity cost.
B)  productivity.
C)  externality.
D)  marginal benefit.E) B) and C)
F) A) and C)

Question 10

Senator Green argues that replacing the income tax with a national sales tax would increase the level of output. Senator Brown objects that this policy would benefit the rich at the expense of the poor.

Accepted Answer

A)  Both Senators' arguments are primarily about equality.
B)  Both Senators' arguments are primarily about efficiency.
C)  Senator Green's argument is primarily about equality, while Senator Brown's argument is primarily about efficiency.
D)  Senator Green's argument is primarily about efficiency, while Senator Brown's argument is primarily about equality.E) B) and D)
F) A) and B)

Question 11

The phenomenon of scarcity stems from the fact that

Accepted Answer

A)  most economies' production methods are not very good.
B)  in most economies, wealthy people consume disproportionate quantities of goods and services.
C)  governments restrict production of too many goods and services.
D)  resources are limited.E) A) and B)
F) A) and C)

Question 12

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.E) All of the above
F) B) and C)

Question 13

The principle that "trade can make everyone better off" applies to interactions and trade between

Accepted Answer

A)  families.
B)  states within the United States.
C)  nations.
D)  All of the above are correct.E) A) and C)
F) None of the above

Question 14

Market failure refers to a situation in which the market does not allocate resources efficiently.

Accepted Answer

A) True 
 B)False

Question 15

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 16

The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by

Accepted Answer

A)  unstable economic conditions in Eastern Europe.
B)  increased competition from abroad.
C)  a decline in the rate of increase in U.S. productivity.
D)  a strong U.S. dollar abroad, hurting U.S. exports.E) B) and D)
F) B) and C)

Question 17

Mark is refinishing an antique china cabinet and has already spent $180 on the restoration. He expects to be able to sell the cabinet for $360. Mark discovers that he needs to do an additional $200 of work to make the cabinet worth $360 to potential buyers. He could also sell the cabinet now, without completing the additional work, for $100. What should he do?

Accepted Answer

A)  He should sell the cabinet now for $100.
B)  He should keep the cabinet since it wouldn't be rational to spend $380 restoring a cabinet and then sell it for only $360.
C)  He should complete the additional work and sell the cabinet for $360.
D)  It does not matter which action he takes since the outcome will be the same either way.E) B) and D)
F) A) and B)

Question 18

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.E) A) and B)
F) All of the above

Question 19

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that

Accepted Answer

A)  the United Kingdom has a better education system than Turkey.
B)  the rate of growth of the quantity of money was slower in the United Kingdom than in Turkey.
C)  workers in Turkey are more productive than workers in the United Kingdom.
D)  there are more instances of market power in Turkey than in the United Kingdom.E) All of the above
F) A) and D)

Question 20

For a very long time Treeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Accepted Answer

A)  could be due to slower money supply growth. We would expect unemployment to be higher.
B)  could be due to slower money supply growth. We would expect unemployment to be lower.
C)  could be due to higher money supply growth. We would expect unemployment to be higher.
D)  could be due to higher money supply growth. We would expect unemployment to be lower.E) A) and B)
F) B) and D)

Exam 1: Ten Principles of Economics

The principle that trade can make everyone better off applies to

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by

Correct Answer
verified

The principle that "trade can make everyone better off" applies to interactions and trade between

Correct Answer
verified

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that

Correct Answer
verified

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.

Correct Answer
verified
The concept of working longer per year w...
View Answer

What is the most important factor that explains differences in living standards across countries?

Correct Answer
verified

Correct Answer
verified

A worker in Equador can earn $3 per day making cotton cloth on a hand loom. A worker in the United States can earn $70 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

Correct Answer
verified

In economics, the cost of something is

Correct Answer
verified

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that

Correct Answer
verified

Market failure refers to a situation in which the market does not allocate resources efficiently.

Correct Answer
verified

The amount of goods and services produced from each unit of labor input is called

Correct Answer
verified

For a very long time Treeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Correct Answer
verified

The phenomenon of scarcity stems from the fact that

Correct Answer
verified

To promote good economic outcomes, policymakers should strive to enact policies that

Correct Answer
verified

Both the production of goods and services and the unemployment rate are used to measure

Correct Answer
verified

Senator Green argues that replacing the income tax with a national sales tax would increase the level of output. Senator Brown objects that this policy would benefit the rich at the expense of the poor.

Correct Answer
verified

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

Correct Answer
verified

Exam 1: Ten Principles of Economics

The principle that trade can make everyone better off applies to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The slow growth of U.S. incomes during the 1970s and 1980s can best be explained by

Correct AnswerverifiedShow Answer

The principle that "trade can make everyone better off" applies to interactions and trade between

Correct AnswerverifiedShow Answer

During the 1990s, the United Kingdom experienced low levels of inflation while Turkey experienced high levels of inflation. A likely explanation of these facts is that

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedThe concept of working longer per year w...View AnswerShow Answer

What is the most important factor that explains differences in living standards across countries?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A worker in Equador can earn $3 per day making cotton cloth on a hand loom. A worker in the United States can earn $70 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

Correct AnswerverifiedShow Answer

In economics, the cost of something is

Correct AnswerverifiedShow Answer

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that

Correct AnswerverifiedShow Answer

Market failure refers to a situation in which the market does not allocate resources efficiently.

Correct AnswerverifiedShow Answer

The amount of goods and services produced from each unit of labor input is called

Correct AnswerverifiedShow Answer

For a very long time Treeland has had an inflation rate of 9%. Suddenly its inflation rate drops to 3%. The drop in the inflation rate

Correct AnswerverifiedShow Answer

The phenomenon of scarcity stems from the fact that

Correct AnswerverifiedShow Answer

To promote good economic outcomes, policymakers should strive to enact policies that

Correct AnswerverifiedShow Answer

Both the production of goods and services and the unemployment rate are used to measure

Correct AnswerverifiedShow Answer

Senator Green argues that replacing the income tax with a national sales tax would increase the level of output. Senator Brown objects that this policy would benefit the rich at the expense of the poor.

Correct AnswerverifiedShow Answer

Senator Brown wants to increase taxes on people with high incomes and use the money to help the poor. Senator Johnson argues that such a tax will discourage successful people from working and will therefore make society worse off. An economist would say that

Correct AnswerverifiedShow Answer

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The concept of working longer per year w...
View Answer

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