Question 1

Economic choice and competitive behavior are the result of

Accepted Answer

A)   basic human greed.
B)   poverty.
C)   private ownership of resources.
D)   scarcity.E) B) and C)
F) None of the above

Question 2

Which of the following statements best describes the scientific method?

Accepted Answer

A)   The use of modern electronic testing equipment to understand the world.
B)   The unbiased development and testing of theories about how the world works.
C)   The use of controlled laboratory experiments to understand the way the world works.
D)   Finding evidence to support preconceived theories about how the world works.E) A) and B)
F) All of the above

Question 3

Which one of the following states a central element of the economic way of thinking?

Accepted Answer

A)   Scarce goods are priceless.
B)   Incentives matter--human choice is influenced in predictable ways by changes in personal costs and benefits.
C)   The realism of the assumptions is the best test of an economic theory.
D)   When deciding how to allocate time, the concept of opportunity cost is meaningless.E) B) and C)
F) All of the above

Question 4

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

Accepted Answer

A)   One dollar.
B)   Less than one dollar because the administration of and compliance with the tax laws creates jobs for people.
C)   More than a dollar because collection of the taxes requires resources that would otherwise be available for private sector production.
D)   More than a dollar because of the excess burden resulting from the elimination of productive exchanges by the taxes.
E)   Both c and d are correct.F) C) and D)
G) A) and E)

Question 5

Which of the following is a normative economic statement?

Accepted Answer

A)   If we doubled the size of welfare payments, we would reduce the number of homeless persons.
B)   Companies should be concerned with more than just their profits.
C)   An increase in spending on airport security will reduce the number of hijackings.
D)   If social security were to be privatized, workers would earn a higher rate of return on their retirement contributions.E) C) and D)
F) A) and B)

Question 6

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Accepted Answer

Mother Theresa used the money to help th...

Question 7

Economists make assumptions in order to

Accepted Answer

A)   mimic the methodologies employed by other scientists.
B)   minimize the number of experiments that yield no useful data.
C)   minimize the likelihood that some aspect of the problem at hand is being overlooked.
D)   focus their thinking on the essence of the problem at hand.E) B) and C)
F) All of the above

Question 8

The share of Americans who pay no personal income tax

Accepted Answer

A)   has been relatively constant at approximately 33 percent throughout 1975-2000.
B)   was relatively constant near 33 percent between 1975 and 2000, but it has increased during the past decade, reaching nearly 60 percent of adult Americans in 2013.
C)   was relatively constant near 33 percent between 1975 and 2000, but it has fallen during the past decade, receding to only 18 percent in 2013.
D)   rose steadily from 18 percent in 1975 to nearly 50 percent of adult Americans in 2000, but it receded to less than 40 percent in 2013.E) B) and C)
F) B) and D)

Question 9

Concerning government spending, which of the following is true?

Accepted Answer

A)   In 1916, the per person real government expenditures were approximately 60 times greater than in 1800.
B)   Prior to 1929, government expenditures at the state and local levels were substantially smaller than federal expenditures.
C)   Real federal spending per person was approximately 75 times greater in the most recent fiscal year than in 1916.
D)   All of the above are true.E) B) and C)
F) A) and D)

Question 10

The opportunity cost of going to college is

Accepted Answer

A)   the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses.
B)   the value of the best opportunity a student gives up to attend college.
C)   zero for students who are fortunate enough to have all of their college expenses paid by someone else.
D)   zero, since a college education will allow a student to earn a larger income after graduation.E) A) and B)
F) B) and D)

Question 11

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

Accepted Answer

Poor William has made several errors. Fi...

Question 12

The basic difference between macroeconomics and microeconomics is that

Accepted Answer

A)   microeconomics is concerned with aggregate markets and the entire economy, while macroeconomics is concerned with specific individual markets.
B)   macroeconomics is concerned with policy decisions, while microeconomics applies only to theory.
C)   microeconomics is concerned with individual markets and the behavior of people and firms, while macroeconomics is concerned with aggregate markets and the entire economy.
D)   macroeconomics is concerned with positive economics, while microeconomics is concerned with normative economics.E) A) and B)
F) B) and D)

Question 13

The administrative, enforcement, and compliance costs of collecting taxes in the United States sum to

Accepted Answer

A)   between 1 and 2 percent of the revenues collected.
B)   between 5 and 6 percent of the revenues collected.
C)   between 12 and 15 percent of the revenues collected.
D)   more than half of the revenues collected.E) B) and C)
F) B) and D)

Question 14

Government expenditures for Social Security and unemployment benefits are examples of

Accepted Answer

A)   government consumption.
B)   government investment.
C)   government purchases.
D)   transfer payments.E) B) and C)
F) A) and D)

Question 15

Which of the following is the largest source of revenue for the federal government?

Accepted Answer

A)   Corporate income tax.
B)   Payroll tax.
C)   Personal income tax.
D)   User charges.E) A) and B)
F) C) and D)

Question 16

Compared to 1980, the top marginal federal income tax rate today is

Accepted Answer

A)   substantially lower and the rate structure is less progressive than in 1980.
B)   substantially lower and the rate structure is more progressive than in 1980.
C)   substantially higher and the rate structure is less progressive than in 1980.
D)   substantially higher and the rate structure is more progressive than in 1980.E) All of the above
F) A) and B)

Question 17

Which of the following is an example of a transfer payment?

Accepted Answer

A)   wages and salaries paid to the employees of the Internal Revenue Service
B)   purchase of automobiles by a local police department
C)   agriculture subsidies paid to farmers
D)   salaries paid to the college professors of state-operated universitiesE) None of the above
F) A) and B)

Question 18

While waiting in line to buy one cheeseburger for $1.50 and a medium drink for $1.00, Sally notices that she could get a value meal that contains both the cheeseburger and medium drink and also a medium order of fries for $2.75. She thinks to herself, "Is it worth the extra 25 cents to get the medium fries?" To an economist, Sally's decision is an example of

Accepted Answer

A)   marginal decision making.
B)   basing decisions on total, rather than marginal, value.
C)   an unintended consequence.
D)   the fallacy of composition.E) None of the above
F) C) and D)

Question 19

Which of the following is true about government spending?

Accepted Answer

A)   Real federal spending per person was approximately 50 times higher in 1900 than 1800.
B)   Real federal spending per person was approximately 75 times higher in the most recent fiscal year than 1916.
C)   Real federal spending per person grew slowly under the Reagan Administration during the 1980s, but it increased rapidly under the Clinton administration in the 1990s.
D)   In recent years, government expenditures at the state and local levels have been greater than government spending at the federal level.E) A) and B)
F) All of the above

Question 20

Isabella wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $1.50 per gallon, the car wash costs $1, but if she buys 10 gallons of gasoline, the car wash is free. For Isabella, the marginal cost of the tenth gallon of gasoline is

Accepted Answer

A)   zero.
B)   50 cents.
C)   $1.
D)   $1.50.E) C) and D)
F) B) and C)

Exam 1: The Economic Approach

Correct Answer
verified

The opportunity cost of going to college is

Correct Answer
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Which one of the following states a central element of the economic way of thinking?

Correct Answer
verified

Concerning government spending, which of the following is true?

Correct Answer
verified

The share of Americans who pay no personal income tax

Correct Answer
verified

Compared to 1980, the top marginal federal income tax rate today is

Correct Answer
verified

Government expenditures for Social Security and unemployment benefits are examples of

Correct Answer
verified

Which of the following is an example of a transfer payment?

Correct Answer
verified

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

Correct Answer
verified

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

Correct Answer
verified
Poor William has made several errors. Fi...
View Answer

The basic difference between macroeconomics and microeconomics is that

Correct Answer
verified

Isabella wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $1.50 per gallon, the car wash costs $1, but if she buys 10 gallons of gasoline, the car wash is free. For Isabella, the marginal cost of the tenth gallon of gasoline is

Correct Answer
verified

The administrative, enforcement, and compliance costs of collecting taxes in the United States sum to

Correct Answer
verified

Which of the following is a normative economic statement?

Correct Answer
verified

Which of the following statements best describes the scientific method?

Correct Answer
verified

Economic choice and competitive behavior are the result of

Correct Answer
verified

Which of the following is true about government spending?

Correct Answer
verified

Which of the following is the largest source of revenue for the federal government?

Correct Answer
verified

Economists make assumptions in order to

Correct Answer
verified

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Correct Answer
verified
Mother Theresa used the money to help th...
View Answer

Exam 1: The Economic Approach

Correct AnswerverifiedShow Answer

The opportunity cost of going to college is

Correct AnswerverifiedShow Answer

Which one of the following states a central element of the economic way of thinking?

Correct AnswerverifiedShow Answer

Concerning government spending, which of the following is true?

Correct AnswerverifiedShow Answer

The share of Americans who pay no personal income tax

Correct AnswerverifiedShow Answer

Compared to 1980, the top marginal federal income tax rate today is

Correct AnswerverifiedShow Answer

Government expenditures for Social Security and unemployment benefits are examples of

Correct AnswerverifiedShow Answer

Which of the following is an example of a transfer payment?

Correct AnswerverifiedShow Answer

How much does it cost to tax a dollar of revenue away from the private sector and transfer it to the government to finance a government program?

Correct AnswerverifiedShow Answer

William observes that a car in 1925 sold for an average of $500 versus $20,000 for a 2005 model. He concludes that 2005 cars must be 40 times better than 1925 cars. What's wrong with this way of thinking?

Correct AnswerverifiedPoor William has made several errors. Fi...View AnswerShow Answer

The basic difference between macroeconomics and microeconomics is that

Correct AnswerverifiedShow Answer

Isabella wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at $1.50 per gallon, the car wash costs $1, but if she buys 10 gallons of gasoline, the car wash is free. For Isabella, the marginal cost of the tenth gallon of gasoline is

Correct AnswerverifiedShow Answer

The administrative, enforcement, and compliance costs of collecting taxes in the United States sum to

Correct AnswerverifiedShow Answer

Which of the following is a normative economic statement?

Correct AnswerverifiedShow Answer

Which of the following statements best describes the scientific method?

Correct AnswerverifiedShow Answer

Economic choice and competitive behavior are the result of

Correct AnswerverifiedShow Answer

Which of the following is true about government spending?

Correct AnswerverifiedShow Answer

Which of the following is the largest source of revenue for the federal government?

Correct AnswerverifiedShow Answer

Economists make assumptions in order to

Correct AnswerverifiedShow Answer

When Mother Theresa won the Nobel Peace Prize, the monetary award was well in excess of $100,000. Did she accept the money? If so, what did she do with it?

Correct AnswerverifiedMother Theresa used the money to help th...View AnswerShow Answer

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Poor William has made several errors. Fi...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Mother Theresa used the money to help th...
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