Question 1

One tradeoff society faces is between efficiency and equality.Define each term.If a government redistributes income from the rich to the poor,explain how this action affects equality as well as efficiency in the economy.

Accepted Answer

Efficiency is the property of society ge...

Question 2

Define opportunity cost.What is the opportunity cost to you of attending college?
 What was your opportunity cost of coming to class today?

Accepted Answer

Whatever must be given up to obtain some...

Question 3

Trade

Accepted Answer

A)  allows specialization,which increases costs.
B)  allows specialization,which reduces costs.
C)  reduces specialization,which increases costs.
D)  reduces specialization,which reduces costs.E) B) and D)
F) B) and C)

Question 4

The term "productivity"

Accepted Answer

A)  means the same thing as "efficiency."
B)  is seldom used by economists,as its meaning is not precise.
C)  refers to the quantity of goods and services produced from each unit of labor input.
D)  refers to the variety of goods and services from which households can choose when they shop.E) B) and C)
F) None of the above

Question 5

What is the most important factor that explains differences in living standards across countries?

Accepted Answer

A)  the quantity of money
B)  the level of unemployment
C)  productivity
D)  equalityE) B) and D)
F) B) and C)

Question 6

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 ch...

Question 7

The business cycle refers to fluctuations in economic activity such as employment and production.

Accepted Answer

A) True 
 B)False

Question 8

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 C)
F) A) and B)

Question 9

Trade with any nation can be mutually beneficial.

Accepted Answer

A) True 
 B)False

Question 10

How does the study of economics depend upon the phenomenon of scarcity?

Accepted Answer

Because economics is the study of how so...

Question 11

Because resources are scarce,a society cannot give all individuals the standard of living to which each aspires.

Accepted Answer

A) True 
 B)False

Question 12

A student 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 he chose to study rather than to watch tv,the value of studying must have been greater than the value of watching tv.E) None of the above
F) A) and D)

Question 13

The principle that "people face tradeoffs" applies to

Accepted Answer

A)  individuals.
B)  families.
C)  societies.
D)  All of the above are correct.E) A) and B)
F) B) and C)

Question 14

The classic tradeoff between "guns and butter" states that when a society spends more on national defense,it has less to spend on consumer goods to raise the standard of living.

Accepted Answer

A) True 
 B)False

Question 15

In the short run,an increase in the money supply is likely to lead to

Accepted Answer

A)  lower unemployment and lower inflation.
B)  lower unemployment and higher inflation.
C)  higher unemployment and lower inflation.
D)  higher unemployment and higher inflation.E) None of the above
F) C) and D)

Question 16

Following the implementation of laws requiring automobiles to have seat belts,which of the following occurred?

Accepted Answer

A)  An individual's probability of surviving an auto accident rose.
B)  There was an increase in pedestrian deaths.
C)  There was an increase in automobile accidents.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The opportunity cost of an item is

Accepted Answer

A)  the number of hours needed to earn money to buy the item.
B)  what you give up to get that item.
C)  usually less than the dollar value of the item.
D)  the dollar value of the item.E) None of the above
F) A) and B)

Question 20

When the government attempts to improve equality in an economy the result is often

Accepted Answer

A)  an increase in overall output in the economy.
B)  additional government revenue since overall income will increase.
C)  a reduction in equality.
D)  a reduction in efficiency.E) B) and C)
F) B) and D)

Exam 1: Ten Principles of Economics

Trade with any nation can be mutually beneficial.

Correct AnswerverifiedShow Answer

One tradeoff society faces is between efficiency and equality.Define each term.If a government redistributes income from the rich to the poor,explain how this action affects equality as well as efficiency in the economy.

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

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

Correct AnswerverifiedShow Answer

Because resources are scarce,a society cannot give all individuals the standard of living to which each aspires.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The business cycle refers to fluctuations in economic activity such as employment and production.

Correct AnswerverifiedShow Answer

In the short run,an increase in the money supply is likely to lead to

Correct AnswerverifiedShow Answer

Following the implementation of laws requiring automobiles to have seat belts,which of the following occurred?

Correct AnswerverifiedShow Answer

What is the most important factor that explains differences in living standards across countries?

Correct AnswerverifiedShow Answer

How does the study of economics depend upon the phenomenon of scarcity?

Correct AnswerverifiedBecause economics is the study of how so...View AnswerShow 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 ch...View AnswerShow Answer

Trade

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The opportunity cost of an item is

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A student spends an hour studying instead of watching tv with his friends.The opportunity cost to him of studying is

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The principle that "people face tradeoffs" applies to

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The term "productivity"

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The classic tradeoff between "guns and butter" states that when a society spends more on national defense,it has less to spend on consumer goods to raise the standard of living.

Correct AnswerverifiedShow Answer

Define opportunity cost.What is the opportunity cost to you of attending college? What was your opportunity cost of coming to class today?

Correct AnswerverifiedWhatever must be given up to obtain some...View AnswerShow Answer

When the government attempts to improve equality in an economy the result is often

Correct AnswerverifiedShow Answer

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Efficiency is the property of society ge...
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Because economics is the study of how so...
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To lower inflation,the government may ch...
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Correct Answer
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Whatever must be given up to obtain some...
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Correct Answer
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