Econ 1500 Midterm
John Maynard Keynes wrote ___________while Adam Smith wrote__________: A. General Theory; Wealth of Nations. B. General Theory; Origin of Species. C. Moby Dick; Wealth of Nations. D. Wealth of Nations; General Theory.
A. General Theory; Wealth of Nations.
Which of the following is not one of the three economic questions faced by all societies? A. How to eliminate scarcity. B. What to produce. C. How to produce. D. Who gets what is produced.
A. How to eliminate scarcity.
In the U.S. market based economy, most economists would consider which of the following is an example of the U.S. government properly conducting its role as a referee? A. Prosecuting Sam Bankman-Fried for fraud. B. Building a highway. C. Building aircraft carriers. D. Subsidizing the production of sugar.
A. Prosecuting Sam Bankman-Fried for fraud.
The U.S. Government's response to the unemployment that emerged in 2020: A. Reflected a Keynesian view of the economy. B. Likely increased the time it took to reduce cyclical unemployment. C. Was consistent with a policy of Laissez Faire. D. All of the above are correct.
A. Reflected a Keynesian view of the economy.
A machinist who loses her job due to imports and cannot find another job due to the lack of jobs for machinists would most likely be classified as which type of unemployment? A. Structural B. Cyclical C. Frictional D. Classical
A. Structural
Which word or phrase best explains what determmines the average price and quantity sold per week in the U.S of the iPhone 14 Pro? A. The price mechanism B. fovernment control C. tradition D. All of the above
A. The price mechanism
Two countries that specialize their production based on comparative advantage and then trade with each other will be able to: A. both produce and consume more. B. produce more and consume less. C. produce less and consume more. D. both produce and consume less.
A. both produce and consume more.
When quantity supplied is greater than quantity demanded, prices tend to: A. fall. B. rise. C. stay the same. D. remain constant until the next season.
A. fall.
In a market system, as labor becomes more scarce, ceteris paribus (every thing else held constant): A. firms will use less labor and more capital to produce. B. firms will use more labor and less capital to produce. C. the price of labor (i.e., the wage rate) would decrease. D. All of the above are correct.
A. firms will use less labor and more capital to produce.
During the Covid recession, the unemployment rate reached 14.7% or 23 million people in April 2020. This level of unemployment: A. includes some cyclical unemployment. B. comprised of only frictional unemployment. C. comprised of only structural unemployment. D. comprised of only structural and frictional unemployment.
A. includes some cyclical unemployment.
An increase in the price of new cars would: A. increase the demand for used cars. B. increase the quantity demanded for used cars. C. increase the demand for new cars. D. None of the above are correct.
A. increase the demand for used cars.
Markets, without government intervention, likely will: A. Produce too many college graduates due to external benefits of education. B. Produce too few college graduates due to external benefits of education. C. Produce too many college graduates due to external costs of education. D. None of the above are correct.
B. Produce too few college graduates due to external benefits of education.
The phrase "price system" is often used to describe: A. Political forces. B. The Market System. C. Social forces. D. Feudalism.
B. The Market System.
To understand and appreciate the breadth of Economics (as well as perhaps significantly affecting howyour think of yourself), Professor Bowles suggested reading: A. A Monetary History of the United States by Milton Friedman. B. Thinking, Fast and Slow by Daniel Kahneman. C. Arguing with Zombies by Paul Krugman. D. Joe Biden: Promises Kept by Joe Biden.
B. Thinking, Fast and Slow by Daniel Kahneman.
A decrease in equilibrium price and a decrease in equilibrium quantity is most likely the result of: A. an increase in demand. B. a decrease in demand. C. an increase in supply. D. a decrease in supply.
B. a decrease in demand. *
Adam Smith argued: A. in favor of Mercantilism. B. against the Navigation Acts which controlled the trade of the American Colonies. C. in favor of government control of imports. D. All of the above are correct.
B. against the Navigation Acts which controlled the trade of the American Colonies.
A given decrease in the price of gas will cause: A. a decrease in quantity demanded. B. an increase in quantity demanded. C. an increase in demand. D. Both B and C are correct.
B. an increase in quantity demanded.
Which of the following is not associated with Keynesian economics? A. A policy prescription of Laissez Faire. B. The Great Depression. C. A focus on aggregate demand. D. A focus on the short run.
A. A policy prescription of Laissez Faire.
The principle of increasing marginal opportunity cost does not hold in which of the following cases? A. All inputs are equally useful in the production of all goods. B. Some inputs are more useful in the production of certain goods. C. Some inputs are less useful in the production of certain goods. D. Each input is useful in the production of a limited number of goods.
A. All inputs are equally useful in the production of all goods.
Which of the following will shift the PPC out? A. Better Institutions. B. Less trade. C. Population control. D. All of the above are correct.
A. Better Institutions.
A point outside of an existing PPC: A. is presently possible. B. could become possible with better technology. C. likely will never be possible. D. None of the above are correct.
B. could become possible with better technology.
An increase in consumer incomes would: A. decrease the demand for electric cars, a normal good. B. decrease the demand for used cars, an inferior good. C. decrease the quantity demanded for electric cars, a normal good. D. increase the quantity demanded for used cars, an inferior good.
B. decrease the demand for used cars, an inferior good.
Businesses are on the: A. supply side of factor markets and the demand side of goods markets. B. demand side of factor markets and the supply side of goods markets. C. supply side of both factor markets and goods markets. D. demand side of both factor markets and goods markets.
B. demand side of factor markets and the supply side of goods markets.
In the 20th century, socialism in practice (e.g., the Soviet Union) emerged as an economic system in which the three economic questions (what, how and for whom), were primarily answered by: A. peasants. B. government. C. the Lord of the Manor. D. markets.
B. government.
An improvement in the genetics of cows which causes them to give more milk will: A. increase the quantity supplied of milk. B. increase the supply of milk. C. increase the demand for milk. D. Both B and C are correct.
B. increase the supply of milk.
A policy of Laissez Faire will: A. lead to less trade. B. lead to more specialization. C. lead to gains for all individuals. D. Both A and C are correct but not B.
B. lead to more specialization.
In a Market economy, A. the government answers the questions of what, how, and for whom. B. markets answer the questions of what, how, and for whom. C. society as a whole owns the factors of production (resources). D. Laissez faire is not an acceptable principle.
B. markets answer the questions of what, how, and for whom.
Professor Bowles would argue that the timing and pattern of economic growth shown in Figure 2-6 in the text is a consequence of: A. Enlightenment ideas of individual freedom and reason. B. the development of the market system in Europe in the 18th century. C. a general rejection in Britain and North America of the ideas expressed in Smith's Wealth of Nations. D. A and B are correct but not C.
D. A and B are correct but not C.
Florida will have a comparative advantage in producing oranges compared to Idaho if: A. Florida is good at producing oranges. B. Florida has a lower opportunity cost of producing oranges. C. Idaho has a higher opportunity cost of producing oranges. D. Both B and C are correct.
D. Both B and C are correct.
Applying the economic decision rule, you would attend USU this semester rather than work full time for FedX if you perceive that the: A. Marginal benefit to society of you attending USU > marginal cost to you of attending USU B. Total benefit to you of attending USU > marginal cost to you of attending USU C. Marginal benefit to society of you attending USU < marginal cost to you of attending USU D. Marginal benefit to you of attending USU > marginal cost to you of attending USU
D. Marginal benefit to you of attending USU > marginal cost to you of attending USU
In the United States, which is primarily used to determine how cars are produced? A. Government Forces B. Tradition C. Political Forces D. Markets
D. Markets
In the United States, which is used to determine the wages of welders? A. Social Forces B. Tradition C. Political Forces D. Markets
D. Markets
If the hourly wage of U.S. workers is $16, the hourly wage of Mexican workers is $4, and U.S. workers produce 3 times as much output per hour as Mexican workers, then, other things equal, it would be efficient to locate production facilities in: A. the United States since the cost per unit of output will be higher. B. the United States since the cost per unit of output will be lower. C. Mexico since the cost per unit of output will be higher. D. Mexico since the cost per unit of output will be lower.
D. Mexico since the cost per unit of output will be lower.
The text attributes the growth of economies over the last 200 years largely to: A. the development of markets. B. the discovery of additional resources. C. a decrease in the size of the world population. D. Government social policies.
A. the development of markets.
Trade: A. is based on voluntary exchange. B. requires coercion. C. allows the world to solve the scarcity problem. D. All of the above are correct.
A. is based on voluntary exchange.
Households are on the: A. supply side of factor markets and the demand side of goods markets. B. demand side of factor markets and the supply side of goods markets. C. supply side of both factor markets and goods markets. D. demand side of both factor markets and goods markets.
A. supply side of factor markets and the demand side of goods markets.
If the price in a market is above its equilibrium level, there will be a: A. surplus and downward pressure on price. B. surplus and upward pressure on price. C. shortage and downward pressure on price. D. shortage and upward pressure on price.
A. surplus and downward pressure on price.
Households (i.e., consumers): A. ultimately determine the answer to the question, What to produce? B. are on the demand side of factor market and the supply side of goods market. C. are on the supply side of both the factor market and goods market. D. None of the above are correct.
A. ultimately determine the answer to the question, What to produce?
The law of supply states that, other things equal, as the price of a good goes: A. up, the quantity supplied goes up. B. up, the supply goes down. C. down, the quantity supplied goes up. D. down, the supply goes down.
A. up, the quantity supplied goes up.
Adam Smith
All of the above - Thought that a market based economic system was superior to Mercantilism for maximizing the wealth of a nation. - Thought a market system would result in goods being produced efficiently. - Thought a market system would tend to result in the correct combination of goods being produced.
he total labor force is 100,000 out of a possible working age population of 300,000. The total number of unemployed is 5,000. The labor force participation rate is: A. 10 percent B. 33 percent C. 50 percent D. 80 percent
B. 33 percent
If you make decisions as assumed by economists, you are working full time as a "sales bro" or "sales gal" for Fox Pest Control in Texas this semester rather than the alternative of attending USU in Logan becuase you percieve the __________ of being a "sales bro/gal" as less than the ____________ of being a "sales bro/gal" this semester A. Marginal Benefit; Marginal Cost B.Marginal Cost; Marginal Benefit C. Total Cost; Total Benefit D. Total Benefit; Total Cost
B. Marginal Cost; Marginal Benefit
The total labor force is 100,000 out of a possible working age population of 300,000. The total number of unemployed is 5,000. What is the unemployment rate? A. 2.5 percent B. 5.0 percent C. 8.0 percent D. 10.0 percent
B. 5.0 percent
Which of the following would cause a change in quantity demanded? A. A change in income. B. A change in the price of the good. C. A change in tastes and preferences. D. A change in the price of a substitute good.
B. A change in the price of the good.
In The Wealth of Nations, Adam Smith: A. Argued that Mercantilism was a system that produced wealthy nations. B. Argued in favor of the Market system as a source of economic growth and prosperity. C. Focused on the role of gold as an explanation of the nature and causes of the wealth of nations. D. All of the above are correct.
B. Argued in favor of the Market system as a source of economic growth and prosperity.
Typically, USU would have more juniors and seniors on its men's basketball team compared to Duke since: A. USU players are not rational. B. Duke players face a higher marginal cost of staying in college. C. USU players face a higher marginal cost of staying in college. D. Duke players face a higher marginal benefit of staying in college.
B. Duke players face a higher marginal cost of staying in college.
In terms of American institutions, the ___________ system is most closely connected with _________ and the __________ is connected with ______________. A. Economic; Locke; political; Smith. B. Economic; Smith; political; Locke. C. Economic; Marx; political; Jefferson. D. Legal; Smith; Economic; Locke.
B. Economic; Smith; political; Locke.
For which of the following questions can the discipline of economics provide an explanation as to the correct answer? A. For whome to produce? B. How to produce? C. What is the correct income distribution? D. None of the above
B. How to produce?
For a given opportunity cost to the person, a rational individual chooses the option that has: A. the lowest benefit. B. the highest benefit to that individual. C. the highest benefit to society. D. the highest social status.
B. the highest benefit to that individual.
In explaining why a typical taxpayer living in Park City, UT is helping to pay for your education at Utah State University, your best economic argument would rely on: A. some concept of fairness. B. the notion of external benefits. C. the notion of external costs. D. the coercive power of government.
B. the notion of external benefits.
Economics as a discipline A. is a very narrow discipline concerned primarily with three issues - interest rates, inflation and the stock market. B. typically assumes that individuals are capable of comparing costs and benefits associated with choices. C. typically assumes that individuals primarily make decisions based on a social as opposed to an individual perspective. D. All of the above correct.
B. typically assumes that individuals are capable of comparing costs and benefits associated with choices.
Keynesian economics holds that: A. the invisible hand is exceptionally effective at limiting the problem of unemployment. B. unemployment may develop in a market economy and persist. C. socialism is better than a market economy. D. the government should guarantee a job for everyone.
B. unemployment may develop in a market economy and persist.
In addition to The Wealth of Nations, Adam Smith is also the author of: A. On Human Understanding B. Two Treatises of Government C. A Theory of Moral Sentiments D. All of the above were written by the great Adam Smith
C. A Theory of Moral Sentiments
In the U.S. market based economy, most economists would consider which of the following is an example of the U.S. government properly performing its role as an actor? A. Establishing labor laws that restrict businesses' freedom to hire and fire whomever they want. B. Building a sports stadium and giving it away to the owner of the Dallas Cowboys. C. Building aircraft carriers for national defense. D. Establishing labor laws that restrict an individual's freedom to work for whom he/she wants.
C. Building aircraft carriers for national defense.
Which would most likely suggest that the current inflation problem in the U.S. is the fault of government policy? A. Krugman B. Keynes C. Friedman D. Both B and C are correct.
C. Friedman
Which of the following is (are) true? A. The number of individuals employed in December 2021 was lower than in December 2019. B. The number of individuals employed in December 2022 was higher than in December 2019 but by less than 0.5 percent. C. From December 2019 to December 2022, the U.S. labor force participation rate fell. D. All above are correct.
C. From December 2019 to December 2022, the U.S. labor force participation rate fell. *
Which statement best summarizes the Invisible Hand theory? A. Social forces channel individual self-interest to achieve the common or social good B. It requires political forces to channel individual self-interst to achieve the common good C. Markets typically channel individual self-interst to achieve the common of social good D. Socialism results in a more equitable distribuition of income
C. Markets typically channel individual self-interst to achieve the common of social good
Why doesn't Idaho produce cars? A. Technologically impossible. B. Too far from big markets. C. Opportunity cost is too high. D. Both A and B are correct.
C. Opportunity cost is too high.
Keynesian economics is most interested in: A. Economic growth. B. Technological Innovation. C. Recessions. D. A and B are both correct.
C. Recessions.
Graphically, a change in price causes: A. both supply and demand to shift. B. the demand curve to shift. C. a movement along a given supply curve, not a shift. D. the supply curve to shift.
C. a movement along a given supply curve, not a shift.
John Locke: A. argued that elites have the right to inform others of the truth. B. argued that some individuals have an inherent right to rule others. C. argued in favor of individual rights, equality and access to the truth. D. All of the above are correct.
C. argued in favor of individual rights, equality and access to the truth
Which of the following is/are true concerning trade and specialization? For two states to benefit from specialization and trade: A. all that is required is a differences in goods. B. all that is required is a differences in resources. C. both differences in goods and resources are required. D. All of the above are correct.
C. both differences in goods and resources are required
According to the Invisible Hand Theorem, the market system will A. distribute income equally B. eliminate scarcity C. produce goods efficiently D. None of the above
C. produce goods efficiently
According to the Invisible Hand Theorem, the market system will A. allocate resources inefficiently B. guarantee equality of opportunity C. produce goods that people want and demand D. eliminate scarcity
C. produce goods that people want and demand
The law of demand states that, other things equal, as the price of a good goes: A. up, the quantity demanded goes up. B. up, the demand goes down. C. down, the quantity demanded goes up. D. down, the supply goes down.
C. down, the quantity demanded goes up.
The more the current price is above the equilibrium price, the: A. greater the resulting shortage will be. B. smaller the resulting shortage will be. C. greater the resulting surplus will be. D. smaller the resulting surplus will be.
C. greater the resulting surplus will be.
Keynesian economists would likely suggest that the best government response to a recession would be to: A. do nothing. B. lower government spending. C. increase aggregate demand with higher government spending. D. raise interest rates.
C. increase aggregate demand with higher government spending.
In the supply and demand model, better technology causes a(n) _________ in ____________ which leads to ________ prices. A. decrease; demand; lower. B. increase; quantity supplied; lower. C. increase; supply; lower. D. increase; supply; higher.
C. increase; supply; lower.
Compared to the market system, both feudalism and mercantilism: A. relied on a central government to decide what and how to produce. B. relied on tradition to answer the three economic questions. C. relied much less on markets to allocate resources. D. produced rapid economic growth.
C. relied much less on markets to allocate resources.
Productive efficiency: A. requires production outside of the PPC. B. requires competition. C. requires production on the PPC. D. None of the above are correct.
C. requires production on the PPC.
As of December 2022, the U.S. economy: A. had an unemployment rate of 3.5 percent. B. has 25.0 million cyclically unemployed individuals. C. is experiencing no cyclical unemployment. D. Both A and C are correct.
D. Both A and C are correct. *
Markets: A. often have shortages but not surpluses. B. often have surpluses but not shortages. C. typically have neither shortages or surpluses that persist for very long. D. set fair prices.
C. typically have neither shortages or surpluses that persist for very long.
A Market economy: A. is based on coercion. B. aligns incentives in such a way that individual decisions result in socially undesirable outcomes. C. typically results in goods produced efficiently as inefficient producers are allowed to fail. D. typically results in goods produced efficiently as inefficient producers are subsidized by the government.
C. typically results in goods produced efficiently as inefficient producers are allowed to fail.
Classical economics was interested in: A. Economic growth. B. Technological Innovation. C. Recessions. D. A and B are both correct.
D. A and B are both correct.
Which of the following is the most likely cause of cyclical unemployment? A. Technological Innovation. B. International Trade. C. Increase in the labor force participation rate. D. A recession.
D. A recession.
Which of the following is(are) scarce? A. Clean water B. Electricity C. Workers D. All of the above
D. All of the above
In the sense of cause and effect, which of the following logically fit together? A. 20th century socialism; inefficient economy. B. Markets; Chinese economic growth. C. Mercantilism; American Revolution. D. All of the above are correct.
D. All of the above are correct
Scarcity results in: A. opportunity costs B. the no free lunch principle C. the necessity of choice D. All of the above are correct
D. All of the above are correct
Which of the following are associated with Adam Smith and his book, Wealth of Nations: A. Individual choice. B. The Invisible Hand. C. The Market System. D. All of the above are correct.
D. All of the above are correct
Adam Smith was of the opinion that which of the following was a source of national wealth? A. A policy of Laissez Faire. B. Specialization based on comparative advantage. C. Trade and markets. D. All of the above are correct.
D. All of the above are correct.
Classical economics would argue: A. that labor markets clear and therefore unemployment will not be a problem in the long run? B. Laissez Faire is the appropriate response to increases in the unemployment rate. C. supply is critical, demand is not. D. All of the above are correct.
D. All of the above are correct.
If President Biden argues that trade with China is killing the U.S. economy, he: A. probably doesn't appreciate the concept of comparative advantage. B. is wrong if he means the U.S. as a whole is hurt by trade. C. may be correct if he means that trade with China is hurting some U.S. workers. D. All of the above are correct.
D. All of the above are correct.
In the market system, prices inform which of the following decisions? A. What and how much of each good consumers purchase. B. Which jobs workers prepare for and accept. C. What firms produce. D. All of the above are correct.
D. All of the above are correct.
Prices: A. change based on changes in supply and demand. B. allocate resources. C. answer the question of what to produce. D. All of the above are correct.
D. All of the above are correct.
Which contributed to the development to of Keynesian economics? A. Persistent high unemployment of the 1930s. B. The Great Depression. C. The apparent ineffectiveness of Laissez Faire Policy by 1937. D. All of the above are correct.
D. All of the above are correct.
Which follow from John Locke's idea that individuals by nature are free and equal? A. The rule of law as opposed to the rule of the strong. B. A government of the people, by the people, for the people. C. Toleration of the views of others. D. All of the above.
D. All of the above.
Which of the following result in U.S. wages remaining significantly higher than wages in Mexico? A. Higher labor productivity in the U.S. B. Different economic institutions in the U.S. compared to Mexico. C. Technology is not completely transferable between the two nations. D. All of the above.
D. All of the above.
Which of the following was mentioned in the Chapter 3 lecture as an example of an American institution? A. English Common Law. B. The Electoral College. C. A culture of innovation and work. D. All of the above.
D. All of the above.
The U.S. Government has an economic justification to and typically does: A. Produce public goods. B. Promote competition. C. Limit fraud and corruption. D. All the above are correct.
D. All the above are correct.
Which explains why average income per capita in the world started to increase rapidly around 1750? A. Broader adoption of specialization and trade. B. Broader adoption of markets as the system for answering the questions of what, how, and for whom. C. Smarter Kings and Queens. D. Both A and B are correct but not C.
D. Both A and B are correct but not C.
Which of the following is a cause of structural unemployment? A. Technological Innovation. B. Competition from imports. C. Recessions. D. Both A and B but not C.
D. Both A and B but not C.
Which of the following will shift the PPC out? A. Better technology. B. Less capital. C. More labor. D. Both A and C are correct.
D. Both A and C are correct.
Why do farmers in Idaho produce potatoes not oranges? A. It is in their self interest to do so. B. Tradition. C. Potato production is profitable, oranges would not be. D. Both A and C are correct.
D. Both A and C are correct.
Which statement is not consistent with the law of supply? A. More of a good will be supplied, the higher the price, other things constant. B. Less of a good will be supplied, the lower the price, other things constant. C. Quantity supplied of a good is directly related to the good's price. D. Quantity supplied of a good is inversely related to the good's price.
D. Quantity supplied of a good is inversely related to the good's price.
The business cycle consists of several stages or phases. Which is the accurate sequence? A. Recession, peak, upturn, trough. B. Recession, peak, trough, upturn. C. Recession, upturn, peak, trough. D. Recession, trough, upturn, peak.
D. Recession, trough, upturn, peak.
If there were decreasing marginal opportunity costs, the production possibility curve would be: A. flat. B. straight. C. bowed out. D. bowed in.
D. bowed in.
The General Theory supported_________ ; Wealth of Nations argued ________ A. the notion that the labor market would clear quickly; in favor of the invisible hand. B. the invisible hand theory; that the labor market would clear quickly. C. active government fiscal policy; against a policy of Laissez Faire. D. government intervention in the economy; that the labor market would clear quickly.
D. government intervention in the economy; that the labor market would clear quickly.
In a Mercantilist system: A. markets, rather than political forces, decide what and how to produce. B. serfs make the central economic decisions. C. governments let the market decide what to produce. D. governments distributed the rights to produce.
D. governments distributed the rights to produce.
Suppose your employer tells you that it will be decreasing your wage from $20.00 per hour to $10.00 per hour and hence you decide to quit this job. Your behavior can best be explained by the fact that your supply of labor curve is: A. Horizontal. B. Vertical. C. Downward-sloping. D. Upward-sloping.
D.. Upward-sloping.
Adam Smith's book, The Wealth of Nations:
None of the above (Adam Smith was against Mercantilism and political forces controlling the economy)
