Question 1

Which term refers to a single entity that has the ability to influence market prices?

Accepted Answer

A)  competition 
B)  market power 
C)  efficiency 
D)  productivity 
A)  competition 
B)  market power 
C)  efficiency 
D)  productivity

Question 2

How do prices direct economic activity in a market economy?

Accepted Answer

A)  by influencing the actions of buyers and sellers 
B)  by reducing scarcity of the goods and services produced 
C)  by eliminating the need for government intervention 
D)  by allocating goods and services produced in the most equitable way 
A)  by influencing the actions of buyers and sellers 
B)  by reducing scarcity of the goods and services produced 
C)  by eliminating the need for government intervention 
D)  by allocating goods and services produced in the most equitable way

Question 3

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

Question 4

What can hinder the invisible hand's ability to coordinate the decisions of the firms and households in the economy?

Accepted Answer

A)  government actions that distort prices 
B)  increased competition in the market 
C)  extended periods of unemployment 
D)  a dramatic reduction in consumer spending 
A)  government actions that distort prices 
B)  increased competition in the market 
C)  extended periods of unemployment 
D)  a dramatic reduction in consumer spending

Question 5

Over the past century, how much has the average income in Canada risen by?

Accepted Answer

A)  twofold 
B)  fivefold 
C)  eightfold 
D)  tenfold 
A)  twofold 
B)  fivefold 
C)  eightfold 
D)  tenfold

Question 6

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

Accepted Answer

Whatever must be given up to obtain some

Question 7

What does the term "market failure" refer to?

Accepted Answer

A)  a situation in which the market on its own fails to allocate resources efficiently 
B)  an unsuccessful advertising campaign that reduces consumer demand 
C)  a situation in which competition among firms leads to bankruptcies 
D)  a firm that is forced out of business because of new by-laws 
A)  a situation in which the market on its own fails to allocate resources efficiently 
B)  an unsuccessful advertising campaign that reduces consumer demand 
C)  a situation in which competition among firms leads to bankruptcies 
D)  a firm that is forced out of business because of new by-laws

Question 8

What might a government do to enact a policy to increase living standards?

Accepted Answer

A)  allow corporate tax write-offs for money spent on worker safety 
B)  make it more difficult to receive unemployment benefits 
C)  increase educational opportunities for workers 
D)  prohibit unions from organizing 
A)  allow corporate tax write-offs for money spent on worker safety 
B)  make it more difficult to receive unemployment benefits 
C)  increase educational opportunities for workers 
D)  prohibit unions from organizing

Question 9

What does inflation cause?

Accepted Answer

A)  incomes to fall 
B)  productivity to increase 
C)  the government to lower taxes 
D)  the value of money to fall 
A)  incomes to fall 
B)  productivity to increase 
C)  the government to lower taxes 
D)  the value of money to fall

Question 10

What are economists illustrating when they use the phrase "There is no such thing as a free lunch"?

Accepted Answer

A)  how inflation increases prices 
B)  that to get one thing, we must give up something else 
C)  that nothing is free in a market economy 
D)  that if something looks too good to be true, it probably is 
A)  how inflation increases prices 
B)  that to get one thing, we must give up something else 
C)  that nothing is free in a market economy 
D)  that if something looks too good to be true, it probably is

Question 11

Guns and butter represent the classic societal tradeoff between spending on which two items?

Accepted Answer

A)  durable and nondurable goods 
B)  imports and exports 
C)  national defence and consumer goods 
D)  law enforcement and agriculture 
A)  durable and nondurable goods 
B)  imports and exports 
C)  national defence and consumer goods 
D)  law enforcement and agriculture

Question 12

What are two causes of market failure?

Accepted Answer

A)  externalities and market power 
B)  market power and incorrect forecasts of consumer demand 
C)  externalities and foreign competition 
D)  government intervention and foreign competition 
A)  externalities and market power 
B)  market power and incorrect forecasts of consumer demand 
C)  externalities and foreign competition 
D)  government intervention and foreign competition

Question 13

Which of the following is NOT a major area of study for economists?

Accepted Answer

A)  how people make decisions 
B)  how countries choose national leaders 
C)  how people interact with each other 
D)  how forces and trends affect the overall economy 
A)  how people make decisions 
B)  how countries choose national leaders 
C)  how people interact with each other 
D)  how forces and trends affect the overall economy

Question 14

What does the saying "There is no such thing as a free lunch" mean?

Accepted Answer

A)  Even people on welfare have to pay for food. 
B)  The cost of living is always increasing. 
C)  To get something we like, we usually have to give up another thing we like. 
D)  All costs are included in the price of a product. 
A)  Even people on welfare have to pay for food. 
B)  The cost of living is always increasing. 
C)  To get something we like, we usually have to give up another thing we like. 
D)  All costs are included in the price of a product.

Question 15

In Canada, incomes have historically grown about 2% per year. At this rate, how long will it take for incomes to double?

Accepted Answer

A)  10 years 
B)  25 years 
C)  35 years 
D)  50 years 
A)  10 years 
B)  25 years 
C)  35 years 
D)  50 years

Question 16

If France is better than Latvia at producing wine, but Latvia is better than France at producing lumber, what should happen?

Accepted Answer

A)  Latvia should sell lumber to France, and should buy French wine. 
B)  Latvia should impose a tariff on French wine in order to protect jobs in the Latvian lumber industry. 
C)  Latvia should subsidize its wine industry so that it can compete with French wine. 
D)  Latvia should put a quota on the amount of French wine imported. 
A)  Latvia should sell lumber to France, and should buy French wine. 
B)  Latvia should impose a tariff on French wine in order to protect jobs in the Latvian lumber industry. 
C)  Latvia should subsidize its wine industry so that it can compete with French wine. 
D)  Latvia should put a quota on the amount of French wine imported.

Question 17

Approximately what percentage of the world's economies experience scarcity?

Accepted Answer

A)  25 
B)  50 
C)  75 
D)  100 
A)  25 
B)  50 
C)  75 
D)  100

Question 18

A friend of yours asks you why market prices are better than government-determined prices. What do you say?

Accepted Answer

A)  Because they generally reflect the value of a good to society, but not the cost of making it. 
B)  Because they generally reflect the cost to society of making a good, but not its value. 
C)  Because they generally reflect both the value of a good to society and the cost of making it. 
D)  Because they generally reflect neither the value of a good to society nor the cost of making it. 
A)  Because they generally reflect the value of a good to society, but not the cost of making it. 
B)  Because they generally reflect the cost to society of making a good, but not its value. 
C)  Because they generally reflect both the value of a good to society and the cost of making it. 
D)  Because they generally reflect neither the value of a good to society nor the cost of making it.

Question 19

What term refers to the amount of goods and services produced from each hour of a worker's time?

Accepted Answer

A)  total output 
B)  productivity 
C)  marginal product 
D)  quantity 
A)  total output 
B)  productivity 
C)  marginal product 
D)  quantity

Question 20

What do households and economies have in common?

Accepted Answer

A)  They both must allocate scarce resources. 
B)  They both face difficulties saving money. 
C)  They both must sell the goods and services they produce. 
D)  They both must have a central decision maker. 
A)  They both must allocate scarce resources. 
B)  They both face difficulties saving money. 
C)  They both must sell the goods and services they produce. 
D)  They both must have a central decision maker.

Which term refers to a single entity that has the ability to influence market prices?

How do prices direct economic activity in a market economy?

Inflation increases the value of money.

What can hinder the invisible hand's ability to coordinate the decisions of the firms and households in the economy?

Over the past century, how much has the average income in Canada risen by?

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

What does the term "market failure" refer to?

What might a government do to enact a policy to increase living standards?

What does inflation cause?

What are economists illustrating when they use the phrase "There is no such thing as a free lunch"?

Guns and butter represent the classic societal tradeoff between spending on which two items?

What are two causes of market failure?

Which of the following is NOT a major area of study for economists?

What does the saying "There is no such thing as a free lunch" mean?

In Canada, incomes have historically grown about 2% per year. At this rate, how long will it take for incomes to double?

If France is better than Latvia at producing wine, but Latvia is better than France at producing lumber, what should happen?

Approximately what percentage of the world's economies experience scarcity?

A friend of yours asks you why market prices are better than government-determined prices. What do you say?

What term refers to the amount of goods and services produced from each hour of a worker's time?

What do households and economies have in common?

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

Which term refers to a single entity that has the ability to influence market prices?

How do prices direct economic activity in a market economy?

Inflation increases the value of money.

What can hinder the invisible hand's ability to coordinate the decisions of the firms and households in the economy?

Over the past century, how much has the average income in Canada risen by?

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

What does the term "market failure" refer to?

What might a government do to enact a policy to increase living standards?

What does inflation cause?

What are economists illustrating when they use the phrase "There is no such thing as a free lunch"?

Guns and butter represent the classic societal tradeoff between spending on which two items?

What are two causes of market failure?

Which of the following is NOT a major area of study for economists?

What does the saying "There is no such thing as a free lunch" mean?

In Canada, incomes have historically grown about 2% per year. At this rate, how long will it take for incomes to double?

If France is better than Latvia at producing wine, but Latvia is better than France at producing lumber, what should happen?

Approximately what percentage of the world's economies experience scarcity?

A friend of yours asks you why market prices are better than government-determined prices. What do you say?

What term refers to the amount of goods and services produced from each hour of a worker's time?

What do households and economies have in common?

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