Question 1

For a college student who wishes to calculate the true costs of going to college,the costs of room and board

Accepted Answer

A)   should be counted in full, regardless of the costs of eating and sleeping elsewhere.
B)   should be counted only to the extent that they are more expensive at college than elsewhere.
C)   usually exceed the opportunity cost of going to college.
D)   plus the cost of tuition, equals the opportunity cost of going to college.E) B) and C)
F) A) and B)

Question 2

Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level.Which country can benefit?

Accepted Answer

A)   only the one with a low level of output per person.
B)   only the one with a high level of output per person.
C)   both
D)   neitherE) A) and B)
F) A) and C)

Question 3

Which of the following is a decision that economists study?

Accepted Answer

A)   how much people work
B)   what people buy
C)   how much money people save
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 4

The phrase "no such thing as a free lunch" means

Accepted Answer

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

Question 5

Prior to the collapse of communism,communist countries worked on the premise that economic well-being could be best attained by

Accepted Answer

A)   a market economy.
B)   a strong reliance on prices and individuals' self-interests.
C)   a system of large privately-owned firms.
D)   the actions of government central planners.E) A) and B)
F) C) and D)

Question 6

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Accepted Answer

A)   inflation
B)   unemployment
C)   both inflation and unemployment
D)   neither inflation nor unemploymentE) C) and D)
F) All of the above

Question 7

When the government implements programs such as progressive income tax rates,which of the following is likely to occur?

Accepted Answer

A)   equality is increased and efficiency is increased.
B)   equality is increased and efficiency is decreased.
C)   equality is decreased and efficiency is increased.
D)   equality is decreased and efficiency is decreased.E) A) and D)
F) All of the above

Question 8

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others.This extra benefit society gets from vaccinating its citizens is known as

Accepted Answer

A)   productivity.
B)   an externality.
C)   market power.
D)   property rights.E) None of the above
F) B) and D)

Question 9

In less than two years in the early 1920s,the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks.This is a spectacular example of

Accepted Answer

A)   market power caused by a change in the country's standard of living.
B)   market power caused by a single firm controlling the newspaper production.
C)   inflation caused by increased productivity in the economy.
D)   inflation caused by an increase in the quantity of money in the economy.E) C) and D)
F) None of the above

Question 10

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

Question 11

Productivity is defined as the

Accepted Answer

A)   amount of goods and services produced from each unit of labor input.
B)   number of workers required to produce a given amount of goods and services.
C)   amount of labor that can be saved by replacing workers with machines.
D)   actual amount of effort workers put into an hour of working time.E) B) and C)
F) C) and D)

Question 12

President Gerald Ford referred to inflation as

Accepted Answer

A)   a blight on our nation's economy.
B)   a necessary evil to combat high unemployment.
C)   public enemy number one.
D)   a fly in the ointment.E) B) and C)
F) A) and B)

Question 13

The U.S.president who referred to inflation as "public enemy number one" was

Accepted Answer

A)   Richard Nixon.
B)   Gerald Ford.
C)   Jimmy Carter.
D)   Ronald Reagan.E) C) and D)
F) All of the above

Question 14

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 B)
F) None of the above

Question 15

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Accepted Answer

A) True 
 B)False

Question 16

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it,the regulations come at the cost of reducing the incomes of the regulated firms' owners,workers,and customers.This statement illustrates the principle that

Accepted Answer

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

Question 17

Causes of market failure include

Accepted Answer

A)   externalities and market power.
B)   market power and incorrect forecasts of consumer demand.
C)   externalities and foreign competition.
D)   incorrect forecasts of consumer demand and foreign competition.E) C) and D)
F) A) and B)

Question 18

In the United States,incomes have historically grown

Accepted Answer

A)   about 0.5 percent per year.
B)   about 2 percent per year.
C)   about 4 percent per year.
D)   about 6 percent per year.E) B) and C)
F) A) and B)

Question 19

Market power and externalities are two possible causes of market failure.

Accepted Answer

A) True 
 B)False

Question 20

The increase in living standards of American workers over the past century is primarily due to

Accepted Answer

A)   the success of labor unions.
B)   minimum-wage laws.
C)   improvements in productivity.
D)   None of the above are correct.E) B) and C)
F) C) and D)

Exam 1: Ten Principles of Economics.

Prior to the collapse of communism,communist countries worked on the premise that economic well-being could be best attained by

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Causes of market failure include

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For a college student who wishes to calculate the true costs of going to college,the costs of room and board

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Which of the following is a decision that economists study?

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Productivity is defined as the

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Suppose that a country that has a high average wage level agrees to trade with a country that has a low average wage level.Which country can benefit?

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When the government implements programs such as progressive income tax rates,which of the following is likely to occur?

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?

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Market power and externalities are two possible causes of market failure.

Correct AnswerverifiedShow Answer

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others.This extra benefit society gets from vaccinating its citizens is known as

Correct AnswerverifiedShow Answer

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it,the regulations come at the cost of reducing the incomes of the regulated firms' owners,workers,and customers.This statement illustrates the principle that

Correct AnswerverifiedShow Answer

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

Correct AnswerverifiedShow Answer

The U.S.president who referred to inflation as "public enemy number one" was

Correct AnswerverifiedShow Answer

The phrase "no such thing as a free lunch" means

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President Gerald Ford referred to inflation as

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Which of the following would a permanent increase in the growth rate of the money supply change permanently?

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

Correct AnswerverifiedShow Answer

In the United States,incomes have historically grown

Correct AnswerverifiedShow Answer

The increase in living standards of American workers over the past century is primarily due to

Correct AnswerverifiedShow Answer

In less than two years in the early 1920s,the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks.This is a spectacular example of

Correct AnswerverifiedShow Answer

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