Question 1

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 B

Question 2

What can cause market failure?

Accepted Answer

A)  low consumer demand 
B)  government intervention and price controls 
C)  externalities and market power 
D)  high prices and foreign competition 
A)  low consumer demand 
B)  government intervention and price controls 
C)  externalities and market power 
D)  high prices and foreign competition C

Question 3

How does trade affect the well-being of the nations involved?

Accepted Answer

A)  Trade makes every nation better off. 
B)  Trade makes exporting nations better off and importing nations worse off. 
C)  Trade makes a nation better off only if the nation cannot produce that good itself. 
D)  Trade makes rich nations better off and poor nations worse off. 
A)  Trade makes every nation better off. 
B)  Trade makes exporting nations better off and importing nations worse off. 
C)  Trade makes a nation better off only if the nation cannot produce that good itself. 
D)  Trade makes rich nations better off and poor nations worse off. A

Question 4

What is the effect of a trade between Canada and India?

Accepted Answer

A)  benefits for both Canada and India 
B)  a losing proposition for Canada because India has cheaper labour 
C)  trade between the two countries would be inefficient due to the high cost of transporting the goods 
D)  a losing proposition for India because Canadian workers are more productive 
A)  benefits for both Canada and India 
B)  a losing proposition for Canada because India has cheaper labour 
C)  trade between the two countries would be inefficient due to the high cost of transporting the goods 
D)  a losing proposition for India because Canadian workers are more productive

Question 5

What does economics study?

Accepted Answer

A)  finance 
B)  how society manages its scarce resources 
C)  central planning 
D)  government regulation 
A)  finance 
B)  how society manages its scarce resources 
C)  central planning 
D)  government regulation

Question 6

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.Why has he decided to take the job?

Accepted Answer

A)  The marginal cost of leaving was greater than the marginal benefit. 
B)  The marginal benefit of leaving was greater than the marginal cost. 
C)  The marginal benefit of teaching was greater than the marginal cost. 
D)  The marginal cost of teaching was greater than the marginal benefit. 
A)  The marginal cost of leaving was greater than the marginal benefit. 
B)  The marginal benefit of leaving was greater than the marginal cost. 
C)  The marginal benefit of teaching was greater than the marginal cost. 
D)  The marginal cost of teaching was greater than the marginal benefit.

Question 7

Mike has spent $800 purchasing and repairing an old motorcycle,which he expects to sell for $1,200.He discovers that he needs an additional repair,which will cost $200.He can sell the motorcycle as it is now for $400.What should he do?

Accepted Answer

A)  He should take the $400. 
B)  He should never sell something for less than it cost. 
C)  He should complete the repairs and sell the motorcycle. 
D)  It doesn't matter which action he takes; the outcome is the same either way. 
A)  He should take the $400. 
B)  He should never sell something for less than it cost. 
C)  He should complete the repairs and sell the motorcycle. 
D)  It doesn't matter which action he takes; the outcome is the same either way.

Question 8

From which of the following is the word "economy" derived?

Accepted Answer

A)  environment 
B)  one who manages a household 
C)  one who participates in a market 
D)  allocation 
A)  environment 
B)  one who manages a household 
C)  one who participates in a market 
D)  allocation

Question 9

What is the definition of productivity?

Accepted Answer

A)  the amount of goods and services produced from each hour of a worker's time 
B)  the amount of labour that can be saved by replacing workers with machines 
C)  the actual amount of effort workers put into an hour of working time 
D)  the estimated amount of effort workers put into an hour of working time 
A)  the amount of goods and services produced from each hour of a worker's time 
B)  the amount of labour that can be saved by replacing workers with machines 
C)  the actual amount of effort workers put into an hour of working time 
D)  the estimated amount of effort workers put into an hour of working time

Question 10

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 11

With careful planning,we can usually get something that we like without having to give up something else that we like.

Accepted Answer

A) True 
 B)False

Question 12

How good are markets at organizing economic activity?

Accepted Answer

A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not a good way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations,but not in less developed nations. 
A)  Markets are usually a good way to organize economic activity. 
B)  Markets are usually inferior to central planning as a way to organize economic activity. 
C)  Markets fail and are therefore not a good way to organize economic activity. 
D)  Markets are a good way to organize economic activity in developed nations,but not in less developed nations.

Question 13

What happens when the government prevents prices from adjusting naturally to supply and demand?

Accepted Answer

A)  It stabilizes the economy by reducing market uncertainties. 
B)  It adversely affects the allocation of resources. 
C)  There is an improvement in equity that justifies the reduction in efficiency. 
D)  There is an improvement in efficiency that justifies the reduction in equity. 
A)  It stabilizes the economy by reducing market uncertainties. 
B)  It adversely affects the allocation of resources. 
C)  There is an improvement in equity that justifies the reduction in efficiency. 
D)  There is an improvement in efficiency that justifies the reduction in equity.

Question 14

When the government attempts to improve equity in an economy,what is often the result?

Accepted Answer

A)  an increase in overall output in the economy 
B)  additional government revenue since overall income will increase 
C)  an actual reduction in equity 
D)  reduced efficiency in the economy 
A)  an increase in overall output in the economy 
B)  additional government revenue since overall income will increase 
C)  an actual reduction in equity 
D)  reduced efficiency in the economy

Question 15

What did Ralph Nader's book Unsafe at Any Speed cause the U.S.government to require?

Accepted Answer

A)  child booster seats in all new cars 
B)  seat belts in all new cars 
C)  air bags in all new cars 
D)  stricter drunk driving laws 
A)  child booster seats in all new cars 
B)  seat belts in all new cars 
C)  air bags in all new cars 
D)  stricter drunk driving laws

Question 16

According to Adam Smith,what is the success of decentralized market economies primarily due to?

Accepted Answer

A)  the basic benevolence of society 
B)  society's justice (legal)system 
C)  individuals' self-interest 
D)  basic human survival instincts 
A)  the basic benevolence of society 
B)  society's justice (legal)system 
C)  individuals' self-interest 
D)  basic human survival instincts

Question 17

How does a market economy reward people?

Accepted Answer

A)  according to their need for goods and services 
B)  according to their willingness to work 
C)  according to their ability to produce things that other people are willing to pay for 
D)  according to their ability to produce things of cultural importance 
A)  according to their need for goods and services 
B)  according to their willingness to work 
C)  according to their ability to produce things that other people are willing to pay for 
D)  according to their ability to produce things of cultural importance

Question 18

What causes almost all variation in living standards in different countries?

Accepted Answer

A)  population growth rates 
B)  endowments of natural resources 
C)  proximity to foreign markets 
D)  productivity 
A)  population growth rates 
B)  endowments of natural resources 
C)  proximity to foreign markets 
D)  productivity

Question 19

For most students,what is the largest single cost of a university education?

Accepted Answer

A)  the wages given up to attend school 
B)  tuition,fees,and books 
C)  room and board 
D)  transportation,parking,and entertainment 
A)  the wages given up to attend school 
B)  tuition,fees,and books 
C)  room and board 
D)  transportation,parking,and entertainment

Question 20

Inflation increases the value of money.

Accepted Answer

A) True 
 B)False

What does trade NOT achieve?

What can cause market failure?

How does trade affect the well-being of the nations involved?

What is the effect of a trade between Canada and India?

What does economics study?

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.Why has he decided to take the job?

Mike has spent $800 purchasing and repairing an old motorcycle,which he expects to sell for $1,200.He discovers that he needs an additional repair,which will cost $200.He can sell the motorcycle as it is now for $400.What should he do?

From which of the following is the word "economy" derived?

What is the definition of productivity?

To increase living standards,what should public policy do?

With careful planning,we can usually get something that we like without having to give up something else that we like.

How good are markets at organizing economic activity?

What happens when the government prevents prices from adjusting naturally to supply and demand?

When the government attempts to improve equity in an economy,what is often the result?

What did Ralph Nader's book Unsafe at Any Speed cause the U.S.government to require?

According to Adam Smith,what is the success of decentralized market economies primarily due to?

How does a market economy reward people?

What causes almost all variation in living standards in different countries?

For most students,what is the largest single cost of a university education?

Inflation increases the value of money.

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

Exam 1: Ten Principles of Economics

What does trade NOT achieve?

What can cause market failure?

How does trade affect the well-being of the nations involved?

What is the effect of a trade between Canada and India?

What does economics study?

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.Why has he decided to take the job?

Mike has spent $800 purchasing and repairing an old motorcycle,which he expects to sell for $1,200.He discovers that he needs an additional repair,which will cost $200.He can sell the motorcycle as it is now for $400.What should he do?

From which of the following is the word "economy" derived?

What is the definition of productivity?

To increase living standards,what should public policy do?

With careful planning,we can usually get something that we like without having to give up something else that we like.

How good are markets at organizing economic activity?

What happens when the government prevents prices from adjusting naturally to supply and demand?

When the government attempts to improve equity in an economy,what is often the result?

What did Ralph Nader's book Unsafe at Any Speed cause the U.S.government to require?

According to Adam Smith,what is the success of decentralized market economies primarily due to?

How does a market economy reward people?

What causes almost all variation in living standards in different countries?

For most students,what is the largest single cost of a university education?

Inflation increases the value of money.

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