ECON252 Summer

Approximately what percentage of the world's economies experience scarcity?

100%

Adam Smith's book "The Wealth of Nations" was published in

1776

In addition to advising the president, one duty of the Council of Economic Advisers is to a. write government regulations b. write the annual Economic Report of the President c. advise Congress on economic matters d. prepare the federal budget

B

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is NOT one of those propositions? a. Fiscal policy has a significant stimulative impact on a less than fully employed economy. b. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. c. The United States should implement universal health care for its citizens. d. A ceiling on rents reduces the quantity and quality of housing ability.

C

One reason we need government, even in a market economy, is that a. there is insufficient market power in the absence of government b. property rights are too strong in the absence of government c. the invisible hand is not perfect d. both a. and b. are correct

C

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda a. can be thought of as the total benefit Bridget enjoys by drinking three sodas minus the total benefit she would have enjoyed by drinking just two sodas b. determines Bridget's willingness to pay for the third soda c. is likely different from the marginal benefit provided to Bridget by the second soda d. all of the above are correct

D

In communism, central planners decide which of the following? a. What goods and services will be produced b. How much will be produced c. Who will produce and consume the goods and services d. All of the above

D

People are likely to respond to a policy change a. only if the policy change changes the benefits of their behavior b. only if the policy change changes the costs of their behavior c. only if they think the policy is a good one d. if the policy changes either the costs or benefits of their behavior

D

Ramona decides to spend two hours taking a nap rather than attending her classes. Her opportunity cost of napping is a. the $24 she could have earned if she had worked at her job for those two hours b. nothing, since she valued sleep more than attendance at class c. the value of her nap minus the value of attending class d. the value of the knowledge she would have received had she attended class

D

The production possibilities frontier is used to illustrate some basic economic ideas, including a. scarcity b. opportunity cost c. economic growth d. all of the above

D

Yvette buys and sells real estate. Two weeks ago, she paid $300,000 for a house on Pine Street, intending to spend $50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Yvette purchased. As a result of the city's announced plan, Yvette is weighing two alternatives: She can go ahead with the $50,000 in repairs and then sell the house for $290,000, or she can forgo the repairs and then sell the house as it is for 250,000. She should

Forgo the repairs and sell the house as it is for $250,000.

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

Inflation

Which two groups of decision-makers are included in the simple circular-flow diagram?

households and firms

The slope of a steep upward-sloping line will be a

large positive number

In a market economy, economic activity is guided by

self-interest and prices

In the circular-flow diagram, in the markets for the factors of production, households are __________ and firms are __________.

sellers; buyers