Question 1

In the early 1980s, U.S. economic policy was directed toward reducing inflation. What would you have expected to observe during this short period of time?

Accepted Answer

A)  Inflation fell and unemployment fell.
B)  Inflation and unemployment were both unaffected.
C)  Inflation fell and unemployment increased.
D)  Inflation fell and unemployment was unchanged.E) A) and C)
F) A) and D)

Question 2

If Switzerland chooses to engage in trade, it

Accepted Answer

A)  will only benefit if it trades with countries that produce goods Switzerland cannot produce.
B)  cannot benefit if it trades with less developed countries.
C)  should first attempt to produce the good itself.
D)  can benefit by trading with any other country.E) None of the above
F) B) and C)

Question 3

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 D)
F) A) and B)

Question 4

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) A) and D)
F) All of the above

Question 5

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

Accepted Answer

A)  Ted purchases a dilapidated house and cleans up the yard and exterior of the house.
B)  Tim purchases an iPhone and downloads new apps.
C)  Terri purchases a new SUV and drives it to work every day.
D)  Thomas purchases a suit and wears it on his interviews.E) A) and B)
F) None of the above

Question 6

Give an example of government intervention that is intended to improve equality.

Accepted Answer

The income...

Question 7

To increase living standards, public policy should

Accepted Answer

A)  ensure that workers are well educated and have the necessary tools and technology.
B)  make unemployment benefits more generous.
C)  move workers into jobs directly from high school.
D)  ensure a greater degree of equality, taking all income-earners into account.E) A) and C)
F) B) and C)

Question 8

The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.​

Accepted Answer

A) True 
 B)False

Question 9

Approximately what percentage of the world's economies experience scarcity?

Accepted Answer

A)  10%
B)  40%
C)  85%
D)  100%E) A) and B)
F) A) and C)

Question 10

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Accepted Answer

A)  "unimportant."
B)  "slow."
C)  "edge."
D)  "irrational."E) All of the above
F) C) and D)

Question 11

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Accepted Answer

A)  $0.
B)  $15.
C)  $305.
D)  $315.E) C) and D)
F) A) and C)

Question 12

College-age athletes who drop out of college to play professional sports

Accepted Answer

A)  are not rational decision makers.
B)  are well aware that their opportunity cost of attending college is very high.
C)  are concerned more about present circumstances than their future.
D)  underestimate the value of a college education.E) B) and D)
F) B) and C)

Question 13

Inflation is the primary determinant of a country's living standards.

Accepted Answer

A) True 
 B)False

Question 14

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Zack quits his job at a consulting...

Question 15

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Accepted Answer

A)  the value of a good to society, but not the cost of making it.
B)  the cost of making a good to society, but not its value.
C)  both the value of a good to society and the cost of making it.
D)  neither the value of a good to society nor the cost of making it.E) B) and C)
F) A) and B)

Question 16

When society gets the most it can from its scarce resources, then the outcome is called

Accepted Answer

A)  equitable.
B)  efficient.
C)  normal.
D)  efficacious.E) All of the above
F) A) and B)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 D)
F) A) and C)

Question 19

Which of the following is an example of something economists study?

Accepted Answer

A)  Mitch chooses to work overtime to earn extra income for his family.
B)  Megan sells her physics textbook from last semester to her roommate for half the price of a new textbook.
C)  The unemployment rate in the United States has fallen by two percentage points in the last few years.
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 20

If the government were to intervene and set the price of a dozen eggs above the market price, then we would expect, relative to the market outcome,

Accepted Answer

A)  an increase in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell.
B)  an increase in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell.
C)  a decrease in the number of eggs people want to buy and an increase in the number of eggs farmers want to sell.
D)  a decrease in the number of eggs people want to buy and a decrease in the number of eggs farmers want to sell.E) A) and D)
F) B) and C)

Exam 1: Ten Principles of Economics

College-age athletes who drop out of college to play professional sports

Correct AnswerverifiedShow Answer

Give an example of government intervention that is intended to improve equality.

Correct AnswerverifiedThe income...View AnswerShow Answer

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Correct AnswerverifiedShow Answer

Inflation is the primary determinant of a country's living standards.

Correct AnswerverifiedShow Answer

A friend of yours asks you why market prices are better than government-determined prices. Because you understand economic principles, you say that market-determined prices are better because they generally reflect

Correct AnswerverifiedShow Answer

Which of the following is an example of something economists study?

Correct AnswerverifiedShow Answer

Approximately what percentage of the world's economies experience scarcity?

Correct AnswerverifiedShow Answer

If the government were to intervene and set the price of a dozen eggs above the market price, then we would expect, relative to the market outcome,

Correct AnswerverifiedShow Answer

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

The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.​

Correct AnswerverifiedShow Answer

If Switzerland chooses to engage in trade, it

Correct AnswerverifiedShow Answer

When society gets the most it can from its scarce resources, then the outcome is called

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the context of decisionmaking, the word "marginal" is most closely associated with the word

Correct AnswerverifiedShow Answer

In the early 1980s, U.S. economic policy was directed toward reducing inflation. What would you have expected to observe during this short period of time?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

To increase living standards, public policy should

Correct AnswerverifiedShow Answer

The phenomenon of scarcity stems from the fact that

Correct AnswerverifiedShow Answer

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Correct AnswerverifiedShow Answer

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The income...
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The opportunity cost of working out for one hour is the value of the next-best activity that you could have done in that hour.

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