Question 1

Although the tenth principle of economics is controversial, what do most economists believe?

Accepted Answer

A)  Society faces a tradeoff between unemployment and inflation in the short run only. 
B)  Society faces a tradeoff between unemployment and inflation in the long run only. 
C)  No tradeoff exists between unemployment and inflation. 
D)  Society faces a continuous tradeoff between unemployment and inflation. 
A)  Society faces a tradeoff between unemployment and inflation in the short run only. 
B)  Society faces a tradeoff between unemployment and inflation in the long run only. 
C)  No tradeoff exists between unemployment and inflation. 
D)  Society faces a continuous tradeoff between unemployment and inflation.

Question 2

What happens when the government attempts to cut the economic pie into more equal slices?

Accepted Answer

A)  It is easier to cut the pie, and therefore the economy can produce a larger pie. 
B)  The government can more easily allocate the pie to those most in need. 
C)  The pie gets smaller, and there will be less pie for everyone. 
D)  The economy will spend too much time cutting the pie and lose the ability to produce enough pie for everyone. 
A)  It is easier to cut the pie, and therefore the economy can produce a larger pie. 
B)  The government can more easily allocate the pie to those most in need. 
C)  The pie gets smaller, and there will be less pie for everyone. 
D)  The economy will spend too much time cutting the pie and lose the ability to produce enough pie for everyone.

Question 3

Economics is the study of how fairly goods and services are distributed within society.

Accepted Answer

A) True 
 B)False

Question 4

According to an economic principle, what is the effect of government intervention in the presence of a market failure?

Accepted Answer

A)  Government action does not improve on the market outcome because sometimes public policies simply reward the politically powerful. 
B)  Government action does not improve on the market outcome because some leaders are not fully informed. 
C)  Government action can sometimes improve on the market outcome. 
D)  Government action will always improve on the market outcome. 
A)  Government action does not improve on the market outcome because sometimes public policies simply reward the politically powerful. 
B)  Government action does not improve on the market outcome because some leaders are not fully informed. 
C)  Government action can sometimes improve on the market outcome. 
D)  Government action will always improve on the market outcome.

Question 5

What will be the probable outcome if Japan chooses to engage in trade?

Accepted Answer

A)  It will only benefit if it trades with countries that produce goods it cannot produce. 
B)  It cannot benefit if it trades with less developed countries. 
C)  It will only benefit if it trades with countries that are geographically close Japan. 
D)  It can benefit by trading with any other country. 
A)  It will only benefit if it trades with countries that produce goods it cannot produce. 
B)  It cannot benefit if it trades with less developed countries. 
C)  It will only benefit if it trades with countries that are geographically close Japan. 
D)  It can benefit by trading with any other country.

Question 6

What does economics study?

Accepted Answer

A)  how society manages its scarce resources 
B)  the government's role in society 
C)  how to increase production 
D)  how firms make profits 
A)  how society manages its scarce resources 
B)  the government's role in society 
C)  how to increase production 
D)  how firms make profits

Question 7

To increase living standards, what should public policy do?

Accepted Answer

A)  ensure that workers are well educated and have the necessary tools and technology 
B)  make unemployment benefits easier to obtain 
C)  move workers into jobs directly from high school 
D)  ensure that workers have access to union membership and benefits 
A)  ensure that workers are well educated and have the necessary tools and technology 
B)  make unemployment benefits easier to obtain 
C)  move workers into jobs directly from high school 
D)  ensure that workers have access to union membership and benefits

Question 8

Equity refers to how the pie is divided, and efficiency refers to the size of the economic pie.

Accepted Answer

A) True 
 B)False

Question 9

Which policy target will NOT affect the combination of inflation and unemployment the economy experiences?

Accepted Answer

A)  taxes 
B)  government spending 
C)  the money supply 
D)  market prices 
A)  taxes 
B)  government spending 
C)  the money supply 
D)  market prices

Question 10

How could you justify higher income tax rates on rich people in Canada?

Accepted Answer

A)  on the basis of market efficiency 
B)  on the basis of the lack of other sources of government revenue 
C)  on the basis of equity for society 
D)  on the basis of government bias against the wealthy 
A)  on the basis of market efficiency 
B)  on the basis of the lack of other sources of government revenue 
C)  on the basis of equity for society 
D)  on the basis of government bias against the wealthy

Question 11

Which concept best defines efficiency?

Accepted Answer

A)  absolute fairness 
B)  equal distribution 
C)  minimum waste 
D)  consumer satisfaction 
A)  absolute fairness 
B)  equal distribution 
C)  minimum waste 
D)  consumer satisfaction

Question 12

Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society's resources.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following displays a direct, or positive, relationship?

Accepted Answer

A)  a country's productivity and its standard of living 
B)  a country's government spending and its tax rates 
C)  a country's total population and its per-capita income 
D)  a country's prices for its goods and services and its exports 
A)  a country's productivity and its standard of living 
B)  a country's government spending and its tax rates 
C)  a country's total population and its per-capita income 
D)  a country's prices for its goods and services and its exports

Question 14

A typical worker in Italy can produce 24 units of product in an eight-hour day, where a typical worker in Poland produces 25 units of product in a 10-hour day. What can we conclude?

Accepted Answer

A)  Worker productivity in Poland is higher than in Italy. 
B)  The standard of living will be higher in Italy than in Poland. 
C)  Productivity for the Polish worker is three units per hour and 2.5 units per hour for the Italian worker. 
D)  There will be no difference between the standard of living in Italy and Poland. 
A)  Worker productivity in Poland is higher than in Italy. 
B)  The standard of living will be higher in Italy than in Poland. 
C)  Productivity for the Polish worker is three units per hour and 2.5 units per hour for the Italian worker. 
D)  There will be no difference between the standard of living in Italy and Poland.

Question 15

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

Accepted Answer

Efficiency is the property of society ge

Question 16

What is the best example of a marginal change?

Accepted Answer

A)  After graduating from university, Neville's income increases from $1000 per month to $1,100 per month. 
B)  Jadelyn completes the six-month probationary period at her job and is now paid $11.25 per hour instead of $11.00. 
C)  Housing prices in an area increase by 50% when a new freeway is built in a small town. 
D)  A hard freeze wipes out half of the potato crop in Prince Edward Island and the price of potatoes doubles. 
A)  After graduating from university, Neville's income increases from $1000 per month to $1,100 per month. 
B)  Jadelyn completes the six-month probationary period at her job and is now paid $11.25 per hour instead of $11.00. 
C)  Housing prices in an area increase by 50% when a new freeway is built in a small town. 
D)  A hard freeze wipes out half of the potato crop in Prince Edward Island and the price of potatoes doubles.

Question 17

What does trade NOT achieve?

Accepted Answer

A)  increased competition 
B)  equal gains for both countries involved 
C)  some gains for both countries involved 
D)  greater production efficiency 
A)  increased competition 
B)  equal gains for both countries involved 
C)  some gains for both countries involved 
D)  greater production efficiency

Question 18

Which statement best describes the concept represented by the adage "There is no such thing as a free lunch"?

Accepted Answer

A)  Melissa can only attend the concert if she takes her sister with her. 
B)  Greg is hungry and homeless. 
C)  Brian must repair the tire on his bike before he can ride it to class. 
D)  Olivia must decide between skiing at Whistler or Lake Louise for spring break. 
A)  Melissa can only attend the concert if she takes her sister with her. 
B)  Greg is hungry and homeless. 
C)  Brian must repair the tire on his bike before he can ride it to class. 
D)  Olivia must decide between skiing at Whistler or Lake Louise for spring break.

Question 19

When the government redistributes income from the rich to the poor, what is the result?

Accepted Answer

A)  Efficiency is improved, but equity is not. 
B)  Both rich people and poor people benefit directly. 
C)  People work less and produce fewer goods and services. 
D)  Rich people consume fewer goods, but poor people consume more goods, resulting in no real change. 
A)  Efficiency is improved, but equity is not. 
B)  Both rich people and poor people benefit directly. 
C)  People work less and produce fewer goods and services. 
D)  Rich people consume fewer goods, but poor people consume more goods, resulting in no real change.

Question 20

The government can potentially improve market outcomes if market inequalities or market failure exist.

Accepted Answer

A) True 
 B)False

Although the tenth principle of economics is controversial, what do most economists believe?

What happens when the government attempts to cut the economic pie into more equal slices?

Economics is the study of how fairly goods and services are distributed within society.

According to an economic principle, what is the effect of government intervention in the presence of a market failure?

What will be the probable outcome if Japan chooses to engage in trade?

What does economics study?

To increase living standards, what should public policy do?

Equity refers to how the pie is divided, and efficiency refers to the size of the economic pie.

Which policy target will NOT affect the combination of inflation and unemployment the economy experiences?

How could you justify higher income tax rates on rich people in Canada?

Which concept best defines efficiency?

Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society's resources.

Which of the following displays a direct, or positive, relationship?

A typical worker in Italy can produce 24 units of product in an eight-hour day, where a typical worker in Poland produces 25 units of product in a 10-hour day. What can we conclude?

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

What is the best example of a marginal change?

What does trade NOT achieve?

Which statement best describes the concept represented by the adage "There is no such thing as a free lunch"?

When the government redistributes income from the rich to the poor, what is the result?

The government can potentially improve market outcomes if market inequalities or market failure exist.

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 1: Ten Principles of Economics

Although the tenth principle of economics is controversial, what do most economists believe?

What happens when the government attempts to cut the economic pie into more equal slices?

Economics is the study of how fairly goods and services are distributed within society.

According to an economic principle, what is the effect of government intervention in the presence of a market failure?

What will be the probable outcome if Japan chooses to engage in trade?

What does economics study?

To increase living standards, what should public policy do?

Equity refers to how the pie is divided, and efficiency refers to the size of the economic pie.

Which policy target will NOT affect the combination of inflation and unemployment the economy experiences?

How could you justify higher income tax rates on rich people in Canada?

Which concept best defines efficiency?

Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society's resources.

Which of the following displays a direct, or positive, relationship?

A typical worker in Italy can produce 24 units of product in an eight-hour day, where a typical worker in Poland produces 25 units of product in a 10-hour day. What can we conclude?

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

What is the best example of a marginal change?

What does trade NOT achieve?

Which statement best describes the concept represented by the adage "There is no such thing as a free lunch"?

When the government redistributes income from the rich to the poor, what is the result?

The government can potentially improve market outcomes if market inequalities or market failure exist.

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters