Question 1

The inflation rate is the

Accepted Answer

A) price level. 
B) average price of goods and services in an economy. 
C) rate of growth of the price level. 
D) purchasing power of money. 
A) price level. 
B) average price of goods and services in an economy. 
C) rate of growth of the price level. 
D) purchasing power of money. C

Question 2

One trade-off society faces is between efficiency and equality.Define each term.If the South African 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 getting the most it can from its scarce resources. Equality is defined as the property of distributing economic prosperity evenly among the members of society. Often, these two goals conflict. When the government redistributes income from the rich to the poor, it reduces the reward for working hard. Fewer goods and services are produced, and the economic pie gets smaller. When the government tries to cut the economic pie into more equal slices, the pie gets smaller. Policies aimed at achieving a more equal distribution of economic well-being, such as the welfare system, try to help those members of society who are most in need. The individual income tax asks the financially successful to contribute more than others to support the government.

Question 3

Choices must be made in the use of resources

Accepted Answer

A) because they are limited in supply. 
B) because they are limited in demand. 
C) only if the resources are non-renewable. 
D) because they are in infinite supply. 
A) because they are limited in supply. 
B) because they are limited in demand. 
C) only if the resources are non-renewable. 
D) because they are in infinite supply. A

Question 4

When economists say, "There is no such thing as a free lunch," they mean that all economic decisions involve trade-offs.

Accepted Answer

A) True 
 B)False

Question 5

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Accepted Answer

A) fewer students will take degree courses in accounting and more will take education courses. 
B) fewer students will take degree courses in education and more will take accounting courses. 
C) fewer students will attend university. 
D) None of these answers. 
A) fewer students will take degree courses in accounting and more will take education courses. 
B) fewer students will take degree courses in education and more will take accounting courses. 
C) fewer students will attend university. 
D) None of these answers.

Question 6

Trade-offs are required because wants are unlimited and resources are

Accepted Answer

A) economical. 
B) unlimited. 
C) efficient. 
D) marginal. 
E) scarce. 
A) economical. 
B) unlimited. 
C) efficient. 
D) marginal. 
E) scarce.

Question 7

Economics is the study of how

Accepted Answer

A) society manages its unlimited resources. 
B) to reduce our wants until we are satisfied. 
C) society manages its scarce resources. 
D) to fully satisfy our unlimited wants. 
E) to avoid having to make trade-offs. 
A) society manages its unlimited resources. 
B) to reduce our wants until we are satisfied. 
C) society manages its scarce resources. 
D) to fully satisfy our unlimited wants. 
E) to avoid having to make trade-offs.

Question 8

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following involve a trade-off?

Accepted Answer

A) Taking a nap. 
B) All of these answers involve trade-offs. 
C) Watching a soccer game on Saturday afternoon. 
D) Going to university. 
E) Buying a new car. 
A) Taking a nap. 
B) All of these answers involve trade-offs. 
C) Watching a soccer game on Saturday afternoon. 
D) Going to university. 
E) Buying a new car.

Question 10

Which of the following products would be least capable of producing an externality?

Accepted Answer

A) Inoculations against disease. 
B) Cigarettes. 
C) Food. 
D) Education. 
E) Hi-fi equipment. 
A) Inoculations against disease. 
B) Cigarettes. 
C) Food. 
D) Education. 
E) Hi-fi equipment.

Question 11

Raising taxes and increasing welfare payments

Accepted Answer

A) reduces market power. 
B) proves that there is such a thing as a free lunch. 
C) improves efficiency at the expense of equity. 
D) None of these answers. 
E) improves equity at the expense of efficiency. 
A) reduces market power. 
B) proves that there is such a thing as a free lunch. 
C) improves efficiency at the expense of equity. 
D) None of these answers. 
E) improves equity at the expense of efficiency.

Question 12

South Africa will benefit economically if we eliminate trade with other countries because South African citizens will be forced to produce more of their own cars and clothes.

Accepted Answer

A) True 
 B)False

Question 13

Policymakers can affect inflation and unemployment in the short term by

Accepted Answer

A) eliminating externalities. 
B) giving the central bank independence. 
C) changing the amount that the government spends. 
D) encouraging firms to think at the margin. 
A) eliminating externalities. 
B) giving the central bank independence. 
C) changing the amount that the government spends. 
D) encouraging firms to think at the margin.

Question 14

For which of the following individuals would the opportunity cost of going to university be highest?

Accepted Answer

A) A promising young mathematician who will command a high salary once she earns her university degree. 
B) A student with average grades who has never held a job. 
C) A famous, highly-paid actor who wants to take time away from show business to finish university and earn a degree. 
D) A student who is the best player on his university rugby team, but who lacks the skills necessary to play professional rugby. 
A) A promising young mathematician who will command a high salary once she earns her university degree. 
B) A student with average grades who has never held a job. 
C) A famous, highly-paid actor who wants to take time away from show business to finish university and earn a degree. 
D) A student who is the best player on his university rugby team, but who lacks the skills necessary to play professional rugby.

Question 15

When the government redistributes income with taxes and welfare, the economy becomes more efficient.

Accepted Answer

A) True 
 B)False

Question 16

Foreign trade

Accepted Answer

A) increases the scarcity of resources. 
B) makes a country more equitable. 
C) allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home. 
D) allows a country to avoid trade-offs. 
A) increases the scarcity of resources. 
B) makes a country more equitable. 
C) allows a country to have a greater variety of products at a lower cost than if it tried to produce everything at home. 
D) allows a country to avoid trade-offs.

Question 17

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 18

When are markets not a good way to organise economic activity?

Accepted Answer

Markets are a poor way to organise econo

Question 19

With the understanding that people respond to incentives, outline the possible outcome for teachers if school holidays are reduced.

Accepted Answer

The concept of working longer per year w

Question 20

Economics deals primarily with the concept of

Accepted Answer

A) scarcity. 
B) money. 
C) poverty. 
D) banking. 
A) scarcity. 
B) money. 
C) poverty. 
D) banking.

The inflation rate is the

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

Choices must be made in the use of resources

When economists say, "There is no such thing as a free lunch," they mean that all economic decisions involve trade-offs.

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Trade-offs are required because wants are unlimited and resources are

Economics is the study of how

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Which of the following involve a trade-off?

Which of the following products would be least capable of producing an externality?

Raising taxes and increasing welfare payments

South Africa will benefit economically if we eliminate trade with other countries because South African citizens will be forced to produce more of their own cars and clothes.

Policymakers can affect inflation and unemployment in the short term by

For which of the following individuals would the opportunity cost of going to university be highest?

When the government redistributes income with taxes and welfare, the economy becomes more efficient.

Foreign trade

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

When are markets not a good way to organise economic activity?

With the understanding that people respond to incentives, outline the possible outcome for teachers if school holidays are reduced.

Economics deals primarily with the concept of

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters

Exam 1: What Is Economics

The inflation rate is the

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

Choices must be made in the use of resources

When economists say, "There is no such thing as a free lunch," they mean that all economic decisions involve trade-offs.

Since people respond to incentives, we would expect that, if the average salary of accountants increases by 50% while the average salary of teachers increases by 20%, then

Trade-offs are required because wants are unlimited and resources are

Economics is the study of how

Rational people act only when the marginal benefit of the action exceeds the marginal cost.

Which of the following involve a trade-off?

Which of the following products would be least capable of producing an externality?

Raising taxes and increasing welfare payments

South Africa will benefit economically if we eliminate trade with other countries because South African citizens will be forced to produce more of their own cars and clothes.

Policymakers can affect inflation and unemployment in the short term by

For which of the following individuals would the opportunity cost of going to university be highest?

When the government redistributes income with taxes and welfare, the economy becomes more efficient.

Foreign trade

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

When are markets not a good way to organise economic activity?

With the understanding that people respond to incentives, outline the possible outcome for teachers if school holidays are reduced.

Economics deals primarily with the concept of

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters