Question 1

An 'increase in efficiency' suggests that an economy:

Accepted Answer

A)   is able to get more goods from a given amount of resources
B)   is able to get more services from a given amount of resources
C)   is able to get less goods and services from a given amount of resources
D)   is able to get more goods and services from a given amount of resourcesE) A) and D)
F) B) and C)

Question 2

What does the adage 'There is no such thing as a free lunch' mean?

Accepted Answer

A)   the government taxes firms that sell lunches
B)   lunches are indeed free
C)   lunches are not free
D)   every action involves an opportunity costE) B) and C)
F) A) and B)

Question 3

You have recently noticed the government talking about reducing its spending, and a number of your colleagues have been laid off in the last few weeks. What might be happening? Will this be a long-term situation?

Accepted Answer

This is a classic example of the Phillip...

Question 4

A benefit of trade is that it permits two parties to specialise in those tasks in which they have the highest productivity.

Accepted Answer

A) True 
 B)False

Question 5

The phrase 'there's no such thing as a free lunch' refers to the concept of scarcity.

Accepted Answer

A) True 
 B)False

Question 6

Equity means that:

Accepted Answer

A)   all members of society have the same income
B)   the benefits of society's resources are distributed fairly among its members
C)   society's goods and services are distributed according to need
D)   society is getting the most it can from its scarce resourcesE) All of the above
F) B) and C)

Question 7

The Australian government redistributes income from the rich to the poor. Explain how this action affects equity as well as efficiency in the economy.

Accepted Answer

Policies aimed at achieving a more equal...

Question 8

The scarcity problem:

Accepted Answer

A)   has been eliminated in the richest countries
B)   persists only because countries have failed to eliminate unemployment
C)   has been solved in all industrialised nations
D)   persists because society cannot give every individual the highest standard of living to which he or she might aspireE) A) and D)
F) C) and D)

Question 9

Define opportunity cost. What is the opportunity cost of a forestry company planting an area with seedlings?

Accepted Answer

The value of the best alternative use of...

Question 10

The two broad reasons for a government to intervene in the economy are: to promote efficiency, and to promote equity.

Accepted Answer

A) True 
 B)False

Question 11

One explanation of the trade-off between inflation and unemployment is that:

Accepted Answer

A)   prices are flexible
B)   prices are sticky
C)   prices always tend to rise
D)   unemployment increases demandE) A) and B)
F) All of the above

Question 12

Public policies often alter the costs and benefits of private actions. Why is it important for policymakers to consider both the direct and indirect effects of public policies?

Accepted Answer

If policymakers don't consider...

Question 13

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Accepted Answer

A)   In the short run, reducing inflation is associated with rising unemployment
B)   In the short run, reducing inflation is associated with falling unemployment
C)   In the long run, reducing inflation is associated with falling unemployment
D)   In the long run, reducing inflation is associated with rising unemploymentE) C) and D)
F) B) and D)

Question 14

Which of the following is important for policymakers to consider when designing public policy?

Accepted Answer

A)   the possibility that policies might change behaviour
B)   the direct effect of policies
C)   the indirect effect of policies
D)   all of the aboveE) All of the above
F) A) and D)

Question 15

Productivity is defined as the:

Accepted Answer

A)   actual amount of effort workers put into an hour of working time
B)   number of workers required to produce a given amount of goods and services
C)   amount of labour that can be saved by replacing workers with machines
D)   amount of goods and services produced from each hour of a worker's timeE) B) and D)
F) B) and C)

Question 16

If each person pursues their own self-interest through a market-institution, the resulting chaos would cause the market to collapse.

Accepted Answer

A) True 
 B)False

Question 17

Economists agree that monetary and fiscal policy, although not very powerful, are necessary instruments for controlling the economy.

Accepted Answer

A) True 
 B)False

Question 18

One trade-off that society faces is between efficiency and equity. Define each term and explain this trade-off.

Accepted Answer

Efficiency is the property of society ge...

Question 19

The study of economics is concerned with:

Accepted Answer

A)   keeping private businesses from losing money
B)   demonstrating that capitalist economies are superior to socialist economies
C)   how society manages its scarce resources
D)   determining the most equitable distribution of society's outputE) B) and C)
F) A) and C)

Question 20

Paid parental leave provides income to the mother to stay at home after having a baby. What might be the different incentives under a system providing benefits to the value of the minimum wage, compared to one where benefits are calculated as a portion of the mother's income?

Accepted Answer

The different policies will have an effe...

Exam 1: Ten Principles of Economics

An 'increase in efficiency' suggests that an economy:

Correct AnswerverifiedShow Answer

One trade-off that society faces is between efficiency and equity. Define each term and explain this trade-off.

Correct AnswerverifiedEfficiency is the property of society ge...View AnswerShow Answer

You have recently noticed the government talking about reducing its spending, and a number of your colleagues have been laid off in the last few weeks. What might be happening? Will this be a long-term situation?

Correct AnswerverifiedThis is a classic example of the Phillip...View AnswerShow Answer

One explanation of the trade-off between inflation and unemployment is that:

Correct AnswerverifiedShow Answer

Productivity is defined as the:

Correct AnswerverifiedShow Answer

Paid parental leave provides income to the mother to stay at home after having a baby. What might be the different incentives under a system providing benefits to the value of the minimum wage, compared to one where benefits are calculated as a portion of the mother's income?

Correct AnswerverifiedThe different policies will have an effe...View AnswerShow Answer

Which of the following is the most correct statement about the relationship between inflation and unemployment?

Correct AnswerverifiedShow Answer

Which of the following is important for policymakers to consider when designing public policy?

Correct AnswerverifiedShow Answer

What does the adage 'There is no such thing as a free lunch' mean?

Correct AnswerverifiedShow Answer

The phrase 'there's no such thing as a free lunch' refers to the concept of scarcity.

Correct AnswerverifiedShow Answer

The study of economics is concerned with:

Correct AnswerverifiedShow Answer

The two broad reasons for a government to intervene in the economy are: to promote efficiency, and to promote equity.

Correct AnswerverifiedShow Answer

If each person pursues their own self-interest through a market-institution, the resulting chaos would cause the market to collapse.

Correct AnswerverifiedShow Answer

The scarcity problem:

Correct AnswerverifiedShow Answer

Public policies often alter the costs and benefits of private actions. Why is it important for policymakers to consider both the direct and indirect effects of public policies?

Correct AnswerverifiedIf policymakers don't consider...View AnswerShow Answer

A benefit of trade is that it permits two parties to specialise in those tasks in which they have the highest productivity.

Correct AnswerverifiedShow Answer

Equity means that:

Correct AnswerverifiedShow Answer

Define opportunity cost. What is the opportunity cost of a forestry company planting an area with seedlings?

Correct AnswerverifiedThe value of the best alternative use of...View AnswerShow Answer

The Australian government redistributes income from the rich to the poor. Explain how this action affects equity as well as efficiency in the economy.

Correct AnswerverifiedPolicies aimed at achieving a more equal...View AnswerShow Answer

Economists agree that monetary and fiscal policy, although not very powerful, are necessary instruments for controlling the economy.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Efficiency is the property of society ge...
View Answer

Correct Answer
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This is a classic example of the Phillip...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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The different policies will have an effe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
If policymakers don't consider...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The value of the best alternative use of...
View Answer

Correct Answer
verified
Policies aimed at achieving a more equal...
View Answer

Correct Answer
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