Macro A
Macro B
Macro C
Macro D
Macro E
100
2. Economics is the study of how evenly goods and services are distributed within society.
What is False
100
4. Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.
What is True
100
12. Government policies that improve equality usually increase efficiency at the same time.
What is False
100
4. The principle that trade can make everyone better off applies to a. individuals. b. families. c. countries. d. All of the above
What is d. All of the above
100
47. The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place.
What is True
200
3. Resources are a. scarce for households but plentiful for economies. b. plentiful for households but scarce for economies. c. scarce for households and scarce for economies. d. plentiful for households and plentiful for economies.
What is c. scarce for households and scarce for economies.
200
14. The fact that different countries experience different standards of living is largely explained by differ-ences in those countries' a. populations. b. productivity levels. c. locations. d. None of the above is correct. Economists are puzzled by differences in standards of living around the world.
What is b. productivity levels.
200
7. Sophia is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that a. people respond to incentives. b. rational people think at the margin. c. people face tradeoffs. d. improvements in efficiency sometimes come at the expense of equality.
What is c. people face tradeoffs.
200
14. Efficiency means that a. society is conserving resources in order to save them for the future. b. society's goods and services are distributed equally among society's members. c. society's goods and services are distributed fairly, though not necessarily equally, among society's members. d. society is getting the maximum benefits from its scarce resources.
What is d. society is getting the maximum benefits from its scarce resources.
200
20. A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between a. guns and butter. b. efficiency and equality. c. inflation and unemployment. d. work and leisure.
What is b. efficiency and equality.
300
12. Economics is the study of 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.
What is b. how society manages its scarce resources.
300
10. A tradeoff exists between a clean environment and a higher level of income in that a. studies show that individuals with higher levels of income pollute less than low-income individuals. b. efforts to reduce pollution typically are not completely successful. c. laws that reduce pollution raise costs of production and reduce incomes. d. employing individuals to clean up pollution causes increases in employment and income.
What is c. laws that reduce pollution raise costs of production and reduce incomes.
300
23. When the government redistributes income from the wealthy to the poor, a. efficiency is improved, but equality is not. b. both wealthy people and poor people benefit directly. c. people work less and produce fewer goods and services. d. the government collects more revenue in total.
What is c. people work less and produce fewer goods and services.
300
28. Government policies resulting in reduced efficiency include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax a. (i) only b. (ii) only c. (i) and (ii) only d. (i), (ii), and (iii)
What is d. (i), (ii), and (iii)
300
41. Ellie decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is a. the value of the knowledge she would have received had she attended class. b. the $24 she could have earned if she had worked at her job for those two hours. c. the value of her nap less the value of attending class. d. nothing, since she valued sleep more than attendance at class.
What is a. the value of the knowledge she would have received had she attended class.
400
47. When you calculate your true costs of going to college, what portion of your room-and-board ex-penses should be included? a. Your full room-and-board expenses should always be included. b. None of your room-and-board expenses should ever be included. c. You should include only the amount by which your room-and-board expenses exceed the income you earn while attending college. d. You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.
What is d. You should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college.
400
31. Senator Green argues that replacing the income tax with a national sales tax would increase the level of output. Senator Brown objects that this policy would benefit the rich at the expense of the poor. a. Both Senators’ arguments are primarily about equality. b. Both Senators’ arguments are primarily about efficiency. c. Senator Green’s argument is primarily about equality, while Senator Brown’s argument is primarily about efficiency. d. Senator Green’s argument is primarily about efficiency, while Senator Brown’s argument is primarily about equality.
What is d. Senator Green’s argument is primarily about efficiency, while Senator Brown’s argument is primarily about equality.
400
18. Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typ-ical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that a. worker productivity in Bangladesh is higher than in India. b. the standard of living will likely be higher in India than in Bangladesh. c. productivity is 4 units per hour for the worker in Bangladesh and 3 units per hour for the worker in India. d. there will be no difference between the standard of living in India and Bangladesh.
What is b. the standard of living will likely be higher in India than in Bangladesh.
400
30. Communist countries worked under the premise that a. markets were the best way to organize economic activity. b. central planners were in the best position to determine the allocation of scarce resources in the economy. c. households and firms, guided by an “invisible hand,” could achieve the most efficient allocation of scarce resources. d. allowing the market forces of supply and demand to operate with no government intervention would achieve the most efficient allocation of scarce resources.
What is b. central planners were in the best position to determine the allocation of scarce resources in the economy.
400
58. A rational decision maker takes an action only if the a. marginal benefit is less than the marginal cost. b. marginal benefit is greater than the marginal cost. c. average benefit is greater than the average cost. d. marginal benefit is greater than both the average cost and the marginal cost.
What is b. marginal benefit is greater than the marginal cost.
500
72. Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $5800. Bill discovers that he needs to do an additional $2400 of work to make the car worth $5800 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do? a. He should sell the car now for $3800. b. He should keep the car since it wouldn’t be rational to spend $6400 restoring a car and then sell it for only $5800. c. He should complete the additional work and sell the car for $5800. d. It does not matter which action he takes since the outcome will be the same either way.
What is a. He should sell the car now for $3800.
500
110. According to a recent study of Chilean bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which prin-ciple of economics? a. People face tradeoffs. b. The cost of something is what you give up to get it. c. Rational people think at the margin. d. People respond to incentives.
What is d. People respond to incentives.
500
88. Kyle is planning to take a roadtrip. After he makes his plans, he has to make some unexpected auto repairs. Also, he sees the price of gas has gone up. Which of these two events should Kyle consider in deciding if it is still worthwhile to go on the trip? a. the unexpected repairs and the increase in the price of gas b. the unexpected increase for repairs, but not the increase in the price of gas c. the increase in the price of gas, but not the unexpected repairs d. neither the unexpected increase in the price of gas nor the unexpected repairs
What is c. the increase in the price of gas, but not the unexpected repairs
500
27. Market economies are distinguished from other types of economies largely on the basis of a. the political affiliations of government officials. b. the process by which government officials are elected or appointed. c. the ways in which scarce resources are allocated. d. the number of retail outlets available to consumers.
What is c. the ways in which scarce resources are allocated.
500
77. The term "market failure" a. means the same thing as "market power." b. refers to the dissolution of a market when firms decide to quit producing a certain product. c. refers to the failure of a market to produce an efficient allocation of resources. d. refers to government's failure to enforce the property rights of households or firms that participate in a certain market.
What is c. refers to the failure of a market to produce an efficient allocation of resources.
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