Question 1

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

Question 2

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) C) and D)
F) A) and B)

Question 3

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

Question 4

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

Question 5

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

Question 6

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

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 10

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

Question 11

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

Question 12

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.E) B) and C)
F) None of the above

Question 13

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

Question 14

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 15

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

Question 16

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

Question 17

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) C) and D)

Question 18

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

Question 19

Explain the concept of externality and give an example.

Accepted Answer

The impact of one pe...

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: Ten Principles of Economics

England can benefit from trade

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

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

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In economics, the cost of something is

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

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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?

Correct AnswerverifiedShow Answer

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

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Inflation increases the value of money.

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Trade between the United States and Guatemala

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The term "market failure"

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

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Which of the following statements about markets is most accurate?

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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

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

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

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

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Explain the concept of externality and give an example.

Correct AnswerverifiedThe impact of one pe...View AnswerShow Answer

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

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

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

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The concept of working longer per year w...
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The impact of one pe...
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