Question 1

In response to the deep economic downturn in the US in 2008 and 2009,the US

Accepted Answer

A) reduced taxes. 
B) increased government spending. 
C) increased the supply of money. 
D) All of the above are correct. 
A) reduced taxes. 
B) increased government spending. 
C) increased the supply of money. 
D) All of the above are correct. D

Question 2

Which of the following is the primary cause of inflation?

Accepted Answer

A) an increase in the quantity of money 
B) an increase in government spending 
C) an increase in unemployment 
D) an increase in productivity 
A) an increase in the quantity of money 
B) an increase in government spending 
C) an increase in unemployment 
D) an increase in productivity A

Question 3

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Accepted Answer

A) inflation 
B) unemployment 
C) both inflation and unemployment 
D) neither inflation nor unemployment 
A) inflation 
B) unemployment 
C) both inflation and unemployment 
D) neither inflation nor unemployment A

Question 4

In a particular country in 1999,the average worker had to work 20 hours to produce 55 units of output.In that same country in 2009,the average worker needed to work 28 hours to produce 77 units of output.In that country,the productivity of the average worker

Accepted Answer

A) increased by 2 percent between 1999 and 2009. 
B) increased by 5 percent between 1999 and 2009. 
C) remained unchanged between 1999 and 2009. 
D) decreased by 3 percent between 1999 and 2009. 
A) increased by 2 percent between 1999 and 2009. 
B) increased by 5 percent between 1999 and 2009. 
C) remained unchanged between 1999 and 2009. 
D) decreased by 3 percent between 1999 and 2009.

Question 5

In the early 1920s,

Accepted Answer

A) Germany experienced a very high rate of inflation. 
B) the quantity of German money was declining rapidly. 
C) the value of German money remained almost constant. 
D) All of the above are correct. 
A) Germany experienced a very high rate of inflation. 
B) the quantity of German money was declining rapidly. 
C) the value of German money remained almost constant. 
D) All of the above are correct.

Question 6

The primary determinant of a country's standard of living is

Accepted Answer

A) the country's ability to prevail over foreign competition. 
B) the country's ability to produce goods and services. 
C) the total supply of money in the economy. 
D) the average age of the country's labor force. 
A) the country's ability to prevail over foreign competition. 
B) the country's ability to produce goods and services. 
C) the total supply of money in the economy. 
D) the average age of the country's labor force.

Question 7

The relatively low inflation experienced in the United States in the 1990s is attributable to

Accepted Answer

A) slow growth of U.S.productivity during the 1990s. 
B) slow growth of the quantity of money in the U.S.in the 1990s. 
C) low levels of government spending in the U.S.in the 1980s and 1990s. 
D) the eight-year presidency of William Jefferson Clinton during the 1990s. 
A) slow growth of U.S.productivity during the 1990s. 
B) slow growth of the quantity of money in the U.S.in the 1990s. 
C) low levels of government spending in the U.S.in the 1980s and 1990s. 
D) the eight-year presidency of William Jefferson Clinton during the 1990s.

Question 8

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) equality 
A) the quantity of money 
B) the level of unemployment 
C) productivity 
D) equality

Question 9

In a particular country in 1998,the average worker needed to work 25 hours to produce 40 units of output.In that same country in 2008,the average worker needed to work 40 hours to produce 68 units of output.In that country,the productivity of the average worker

Accepted Answer

A) decreased by 1.7 percent between 1998 and 2008. 
B) remained unchanged between 1998 and 2008. 
C) increased by 4.75 percent between 1998 and 2008. 
D) increased by 6.25 percent between 1998 and 2008. 
A) decreased by 1.7 percent between 1998 and 2008. 
B) remained unchanged between 1998 and 2008. 
C) increased by 4.75 percent between 1998 and 2008. 
D) increased by 6.25 percent between 1998 and 2008.

Question 10

During the early 1920s in Germany,prices

Accepted Answer

A) doubled annually. 
B) doubled monthly. 
C) tripled monthly. 
D) tripled annually. 
A) doubled annually. 
B) doubled monthly. 
C) tripled monthly. 
D) tripled annually.

Question 11

US citizens have better nutrition,better healthcare,and a longer life expectancy than citizens of Ghana.Which of the following conclusions can be drawn from this statement?

Accepted Answer

A) Average income in the US is higher than the average income in Ghana. 
B) The US has a higher standard of living than Ghana. 
C) Productivity in the US is higher than productivity in Ghana. 
D) All of the above are correct. 
A) Average income in the US is higher than the average income in Ghana. 
B) The US has a higher standard of living than Ghana. 
C) Productivity in the US is higher than productivity in Ghana. 
D) All of the above are correct.

Question 12

An increase in the overall level of prices in an economy is referred to as

Accepted Answer

A) the income effect. 
B) inflation. 
C) deflation. 
D) the substitution effect. 
A) the income effect. 
B) inflation. 
C) deflation. 
D) the substitution effect.

Question 13

The short-run tradeoff between inflation and unemployment implies that,in the short run,

Accepted Answer

A) a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
B) an increase in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
C) policymakers are able to reduce the inflation rate and,at the same time,reduce the unemployment rate. 
D) policymakers can influence the inflation rate,but not the unemployment rate. 
A) a decrease in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
B) an increase in the growth rate of the quantity of money will be accompanied by an increase in the unemployment rate. 
C) policymakers are able to reduce the inflation rate and,at the same time,reduce the unemployment rate. 
D) policymakers can influence the inflation rate,but not the unemployment rate.

Question 14

In 2011,the average American earned about $48,000 while the average Nigerian earned about $1,200.Which of the following statements is likely?

Accepted Answer

A) The average American purchases more televisions than the average Nigerian. 
B) The average American has better nutrition and healthcare than the average Nigerian. 
C) The average American has a longer life expectancy than the average Nigerian. 
D) All of the above are correct. 
A) The average American purchases more televisions than the average Nigerian. 
B) The average American has better nutrition and healthcare than the average Nigerian. 
C) The average American has a longer life expectancy than the average Nigerian. 
D) All of the above are correct.

Question 15

Which of the following rates of growth in the money supply is likely to lead to the highest level of inflation in the economy?

Accepted Answer

A) 1 percent per year 
B) 2 percent per year 
C) 3 percent per year 
D) 4 percent per year 
A) 1 percent per year 
B) 2 percent per year 
C) 3 percent per year 
D) 4 percent per year

Question 16

The business cycle is the

Accepted Answer

A) relationship between unemployment and inflation. 
B) irregular fluctuations in economic activity. 
C) positive relationship between the quantity of money in an economy and inflation. 
D) predictable changes in economic activity due to changes in government spending and taxes. 
A) relationship between unemployment and inflation. 
B) irregular fluctuations in economic activity. 
C) positive relationship between the quantity of money in an economy and inflation. 
D) predictable changes in economic activity due to changes in government spending and taxes.

Question 17

For a very long time the country of Zeeland has had an inflation rate of 9%.Suddenly its inflation rate drops to 3%.The drop in the inflation rate

Accepted Answer

A) could be due to slower money supply growth.We would expect unemployment to be higher. 
B) could be due to slower money supply growth.We would expect unemployment to be lower. 
C) could be due to higher money supply growth.We would expect unemployment to be higher. 
D) could be due to higher money supply growth.We would expect unemployment to be lower. 
A) could be due to slower money supply growth.We would expect unemployment to be higher. 
B) could be due to slower money supply growth.We would expect unemployment to be lower. 
C) could be due to higher money supply growth.We would expect unemployment to be higher. 
D) could be due to higher money supply growth.We would expect unemployment to be lower.

Question 18

Which of the following claims is consistent with the views of mainstream economists?

Accepted Answer

A) If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will temporarily fall. 
B) If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will temporarily rise. 
C) If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will permanently fall. 
D) If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will permanently rise. 
A) If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will temporarily fall. 
B) If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will temporarily rise. 
C) If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will permanently fall. 
D) If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will permanently rise.

Question 19

In the United States,the overall level of prices more than doubled during the

Accepted Answer

A) 1950s. 
B) 1960s. 
C) 1970s. 
D) 1980s. 
A) 1950s. 
B) 1960s. 
C) 1970s. 
D) 1980s.

Question 20

To promote good economic outcomes,policymakers should strive to enact policies that

Accepted Answer

A) enhance productivity. 
B) enhance individuals' market power. 
C) result in a rapidly-growing quantity of money. 
D) All of the above are correct. 
A) enhance productivity. 
B) enhance individuals' market power. 
C) result in a rapidly-growing quantity of money. 
D) All of the above are correct.

Exam 1: Ten Principles of Economics: How the Economy As a Whole Works

In response to the deep economic downturn in the US in 2008 and 2009,the US

Which of the following is the primary cause of inflation?

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

In a particular country in 1999,the average worker had to work 20 hours to produce 55 units of output.In that same country in 2009,the average worker needed to work 28 hours to produce 77 units of output.In that country,the productivity of the average worker

In the early 1920s,

The primary determinant of a country's standard of living is

The relatively low inflation experienced in the United States in the 1990s is attributable to

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

In a particular country in 1998,the average worker needed to work 25 hours to produce 40 units of output.In that same country in 2008,the average worker needed to work 40 hours to produce 68 units of output.In that country,the productivity of the average worker

During the early 1920s in Germany,prices

US citizens have better nutrition,better healthcare,and a longer life expectancy than citizens of Ghana.Which of the following conclusions can be drawn from this statement?

An increase in the overall level of prices in an economy is referred to as

The short-run tradeoff between inflation and unemployment implies that,in the short run,

In 2011,the average American earned about $48,000 while the average Nigerian earned about $1,200.Which of the following statements is likely?

Which of the following rates of growth in the money supply is likely to lead to the highest level of inflation in the economy?

The business cycle is the

For a very long time the country of Zeeland has had an inflation rate of 9%.Suddenly its inflation rate drops to 3%.The drop in the inflation rate

Which of the following claims is consistent with the views of mainstream economists?

In the United States,the overall level of prices more than doubled during the

To promote good economic outcomes,policymakers should strive to enact policies that

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A