Question 1

The "invisible hand" directs economic activity through

Accepted Answer

A)   advertising.
B)   prices.
C)   central planning.
D)   government regulations.E) C) and D)
F) B) and D)

Question 2

Prices usually reflect

Accepted Answer

A)   only the value of a good to society.
B)   only the cost to society of making a good.
C)   both the value of a good to society and the cost to society of making the good.
D)   neither the value of a good to society nor the cost to society of making the good.E) A) and B)
F) B) and D)

Question 3

Which of the following is an example of something economists study?

Accepted Answer

A)   Mitch chooses to work overtime to earn extra income for his family.
B)   Megan sells her physics textbook from last semester to her roommate for half the price of a new textbook.
C)   The unemployment rate in the United States has fallen by two percentage points in the last few years.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 4

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Accepted Answer

A)   is a basic principle regarding individual decisionmaking.
B)   amounts to a denial of one of the basic principles regarding interactions among people.
C)   supports the idea that the "invisible hand" should guide economic activity.
D)   was promoted by the economist Adam Smith in a well-known 1776 book.E) A) and D)
F) C) and D)

Question 5

The tradeoff between inflation and unemployment

Accepted Answer

A)   implies that policies designed to reduce unemployment also reduce inflation.
B)   was eliminated by improved economic policies in the 1900s.
C)   is a long-run tradeoff, persisting for decades, according to most economists.
D)   None of the above are correct.E) A) and D)
F) All of the above

Question 6

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

Accepted Answer

A)   $32,000.
B)   $42,000.
C)   $50,000.
D)   $58,000.E) All of the above
F) A) and B)

Question 7

Economics is the study of

Accepted Answer

A)   production methods.
B)   how society manages its scarce resources.
C)   how households decide who performs which tasks.
D)   the interaction of business and government.E) All of the above
F) A) and B)

Question 8

Katie is planning to sell her house, and she is considering making two upgrades to the house before listing it for sale. Replacing the carpeting will cost her $2,500 and replacing the roof will cost her $9,000. Katie expects the new carpeting to increase the value of her house by $3,000 and the new roof to increase the value of her house by $7,000.

Accepted Answer

A)   She should make both improvements to her house.
B)   She should replace the carpeting but not replace the roof.
C)   She should replace the roof but not replace the carpeting.
D)   She should not make either improvement to her house.E) All of the above
F) A) and B)

Question 9

Which of the following can policy do?

Accepted Answer

A)   alter incentives
B)   alter trade-offs
C)   change opportunity costs
D)   All of the above are correct.E) All of the above
F) A) and C)

Question 10

The English word that comes from the Greek word for "one who manages a household" is

Accepted Answer

A)   market.
B)   consumer.
C)   producer.
D)   economy.E) C) and D)
F) A) and D)

Question 11

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.E) A) and D)
F) A) and C)

Question 12

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.E) B) and D)
F) None of the above

Question 13

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Accepted Answer

A)   $0.
B)   $15.
C)   $305.
D)   $315.E) B) and D)
F) None of the above

Question 14

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Accepted Answer

A)   the Federal Reserve is worried about inflation.
B)   the Federal Reserve is worried about unemployment.
C)   the Federal Reserve is hoping to reduce the demand for goods and services.
D)   the Federal Reserve is worried that the economy is growing too quickly.E) C) and D)
F) B) and D)

Question 15

Which is the most accurate statement about trade?

Accepted Answer

A)   Trade can make every nation better off.
B)   Trade makes some nations better off and others worse off.
C)   Trading for a good can make a nation better off only if the nation cannot produce that good itself.
D)   Trade helps rich nations and hurts poor nations.E) A) and C)
F) All of the above

Question 16

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Accepted Answer

The answer of Zack quits his job at a consulting...

Question 17

In most societies, resources are allocated by

Accepted Answer

A)   a single central planner.
B)   a small number of central planners.
C)   those firms that use resources to provide goods and services.
D)   the combined actions of millions of households and firms.E) B) and D)
F) A) and C)

Question 18

For most students, the largest single cost of a college education is

Accepted Answer

A)   the wages given up to attend school.
B)   tuition, fees, and books.
C)   room and board.
D)   transportation, parking, and entertainment.E) None of the above
F) B) and D)

Question 19

Invisible hand is a term used by the economist to describe how the decisions of households and firms lead to desirable market outcomes.

Accepted Answer

The answer of Invisible hand is a term used by...

Question 20

The study of how society manages its scarce resources is most closely associated with which field of study?

Accepted Answer

A)   environmental studies
B)   economics
C)   management
D)   accountingE) A) and B)
F) All of the above

Exam 1: Ten Principles of Economics

The "invisible hand" directs economic activity through

Correct Answer
verified

Which of the following can policy do?

Correct Answer
verified

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Correct Answer
verified

Prices usually reflect

Correct Answer
verified

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Correct Answer
verified

Which is the most accurate statement about trade?

Correct Answer
verified

Which of the following is an example of something economists study?

Correct Answer
verified

For most students, the largest single cost of a college education is

Correct Answer
verified

Correct Answer
verified

Economics is the study of

Correct Answer
verified

Invisible hand is a term used by the economist to describe how the decisions of households and firms lead to desirable market outcomes.

Correct Answer
verified

The tradeoff between inflation and unemployment

Correct Answer
verified

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

Correct Answer
verified

The English word that comes from the Greek word for "one who manages a household" is

Correct Answer
verified

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Correct Answer
verified

The study of how society manages its scarce resources is most closely associated with which field of study?

Correct Answer
verified

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

Correct Answer
verified

In most societies, resources are allocated by

Correct Answer
verified

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

Correct Answer
verified

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Correct Answer
verified

Exam 1: Ten Principles of Economics

The "invisible hand" directs economic activity through

Correct AnswerverifiedShow Answer

Which of the following can policy do?

Correct AnswerverifiedShow Answer

Zack quits his job at a consulting firm, which pays $40,000 a year, to enroll in a two-year graduate program. His annual school expenses are $30,000 for tuition, $2,000 for books, and $600 for food. What is his opportunity cost of attending the two-year graduate program?

Correct AnswerverifiedShow Answer

Prices usually reflect

Correct AnswerverifiedShow Answer

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

Correct AnswerverifiedShow Answer

Which is the most accurate statement about trade?

Correct AnswerverifiedShow Answer

Which of the following is an example of something economists study?

Correct AnswerverifiedShow Answer

For most students, the largest single cost of a college education is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economics is the study of

Correct AnswerverifiedShow Answer

Invisible hand is a term used by the economist to describe how the decisions of households and firms lead to desirable market outcomes.

Correct AnswerverifiedShow Answer

The tradeoff between inflation and unemployment

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The English word that comes from the Greek word for "one who manages a household" is

Correct AnswerverifiedShow Answer

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Correct AnswerverifiedShow Answer

The study of how society manages its scarce resources is most closely associated with which field of study?

Correct AnswerverifiedShow Answer

Consider Mandy's decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, she will earn $18,000 working in a store and spend $8,000 on room and board. Mandy's cost of going to college is

Correct AnswerverifiedShow Answer

In most societies, resources are allocated by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Correct AnswerverifiedShow Answer

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