Question 1

The business cycle is the

Accepted Answer

A)   relationship between unemployment and inflation.
B)   irregular fluctuations in economic activity.
C)   positive relationship between the quantity of money in an economy and inflation.
D)   predictable changes in economic activity due to changes in government spending and taxes.

Question 2

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Accepted Answer

A)   Melissa needs to pay her rent and her electric bill.
B)   Kevin must choose between buying a new flat screen television and buying his textbooks for this semester.
C)   Robert must decide between studying for his psychology exam and working at his part-time joc.
D)   Lisa can spend her money on a new smart phone or on a weekend trip.

Question 3

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.

Question 4

The invisible hand ensures that economic prosperity is distributed equally.

Accepted Answer

A) True 
 B)False

Question 5

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Accepted Answer

To lower inflation, the government may c...

Question 6

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.

Question 7

Variations in the standard of living across countries are due almost entirely to differences in each nation's total output of goods and services.

Accepted Answer

A) True 
 B)False

Question 8

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Accepted Answer

A)   goods are scarce.
B)   people face tradeoffs.
C)   income must be earned.
D)   households face many decisions.

Question 9

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Accepted Answer

A)   is more efficient and more equal for society.
B)   is more efficient but less equal for society.
C)   is more equal but less efficient for society.
D)   is less equal and less efficient for society.

Question 10

One of the 20th century's worst episodes of inflation occurred in

Accepted Answer

A)   the United States in the 1960s.
B)   Italy in the 1950s.
C)   Russia in the 1930s.
D)   Germany in the 1920s.

Question 11

Suppose one county in Missouri decides it wants to reduce alcohol consumption, so the county passes a law that raises the price of a bottle of beer by $1. As a result, people drive to other counties to drink alcohol, which results in an increase in drunk driving. This illustrates the principle that people respond to incentives.

Accepted Answer

A) True 
 B)False

Question 12

Most economists believe that an increase in the quantity of money results in

Accepted Answer

A)   an increase in the demand for goods and services.
B)   lower unemployment in the short run.
C)   higher inflation in the long run.
D)   All of the above are correct.

Question 13

Which of the following statements about market economies is correct?

Accepted Answer

A)   In a market economy, no one is looking out for the economic well-being of society as a whole.
B)   Market economies are characterized by decentralized decision making and self-interested decision makers.
C)   Market economies have proven remarkably successful in promoting overall economic well-being.
D)   All of the above are correct.

Question 14

Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is

Accepted Answer

A)   the improvement in his grades from studying for the hour.
B)   the improvement in his grades from studying minus the enjoyment of watching TV.
C)   the enjoyment he would have received if he had watched TV with his friends.
D)   zero. Since Hamid chose to study rather than to watch TV, the value of studying must have been greater to him than the value of watching TV.

Question 15

Which of the following is not an example of the opportunity cost of going to school?

Accepted Answer

A)   The money a student could have earned by working if he had not gone to college.
B)   The nap a student could have enjoyed if he had not attended class.
C)   The party a student could have enjoyed if he had not stayed in to study for his exam.
D)   The money a student spends on rent for his apartment while attending school.

Question 16

Trade between countries tends to

Accepted Answer

A)   reduce both competition and specialization.
B)   reduce competition and increase specialization.
C)   increase competition and reduce specialization.
D)   increase both competition and specialization.

Question 17

When calculating the cost of college, which of the following should you probably include?

Accepted Answer

A)   The cost of your meal plan for the cafeteria.
B)   The cost of books required for college classes
C)   The income you earn at your part-time joc.
D)   The cost of living in the dormitory.

Question 18

Explain the concept of market failure.

Accepted Answer

Market failure is a situation ...

Question 19

Which of the following firms is likely to have the greatest market power?

Accepted Answer

A)   an electric company
B)   a farmer
C)   a grocery store
D)   a local electronics retailer

Question 20

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.

Exam 1: Ten Principles of Economics

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

Correct Answer
verified

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

Correct Answer
verified

One of the 20th century's worst episodes of inflation occurred in

Correct Answer
verified

Which of the following statements about market economies is correct?

Correct Answer
verified

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Correct Answer
verified

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Correct Answer
verified
To lower inflation, the government may c...
View Answer

Correct Answer
verified

Trade between countries tends to

Correct Answer
verified

Explain the concept of market failure.

Correct Answer
verified
Market failure is a situation ...
View Answer

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Correct Answer
verified

When calculating the cost of college, which of the following should you probably include?

Correct Answer
verified

Which of the following firms is likely to have the greatest market power?

Correct Answer
verified

Most economists believe that an increase in the quantity of money results in

Correct Answer
verified

The invisible hand ensures that economic prosperity is distributed equally.

Correct Answer
verified

Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is

Correct Answer
verified

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Correct Answer
verified

The business cycle is the

Correct Answer
verified

Variations in the standard of living across countries are due almost entirely to differences in each nation's total output of goods and services.

Correct Answer
verified

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

Correct Answer
verified

Which of the following is not an example of the opportunity cost of going to school?

Correct Answer
verified

Exam 1: Ten Principles of Economics

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One of the 20th century's worst episodes of inflation occurred in

Correct AnswerverifiedShow Answer

Which of the following statements about market economies is correct?

Correct AnswerverifiedShow Answer

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Correct AnswerverifiedShow Answer

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Correct AnswerverifiedTo lower inflation, the government may c...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Trade between countries tends to

Correct AnswerverifiedShow Answer

Explain the concept of market failure.

Correct AnswerverifiedMarket failure is a situation ...View AnswerShow Answer

The adage, "There is no such thing as a free lunch," is used to illustrate the principle that

Correct AnswerverifiedShow Answer

When calculating the cost of college, which of the following should you probably include?

Correct AnswerverifiedShow Answer

Which of the following firms is likely to have the greatest market power?

Correct AnswerverifiedShow Answer

Most economists believe that an increase in the quantity of money results in

Correct AnswerverifiedShow Answer

The invisible hand ensures that economic prosperity is distributed equally.

Correct AnswerverifiedShow Answer

Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is

Correct AnswerverifiedShow Answer

Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"?

Correct AnswerverifiedShow Answer

The business cycle is the

Correct AnswerverifiedShow Answer

Variations in the standard of living across countries are due almost entirely to differences in each nation's total output of goods and services.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is not an example of the opportunity cost of going to school?

Correct AnswerverifiedShow Answer

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To lower inflation, the government may c...
View Answer

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Market failure is a situation ...
View Answer

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