Essentials of Economics (Practice Quiz Ch. 1)

Which term means "other things being equal"? A) Ceteris paribus. B) Laissez faire. C) Caveat emptor. D) None of the above.

A) Ceteris paribus.

The economics of the health care debate boil down to: A) Expanding health care versus paying for the costs of health care. B) Choosing the group that will experience the greatest reduction in health care. C) Deciding how to spend the extra savings from lower health care costs. D) Spurring technological growth in the health care sector.

A) Expanding health care versus paying for the costs of health care.

You can visit the exhibits at the Smithsonian Institution for no charge. Which of the following statements is true? A) There is still an opportunity cost because scarce time could have been used differently. B) There is no opportunity cost because the goods are free. C) Those who visit the exhibits have no opportunity cost since it is an extremely rewarding experience. D) The Smithsonian Institution is not a for-profit organization; as a result, economic theory is totally irrelevant to this question.

A) There is still an opportunity cost because scarce time could have been used differently.

When was the share of total output devoted to national defense the highest in U.S. history? A) World War II. B) Korean War. C) Vietnam War. D) Reagan buildup.

A) World War II.

If a nation were to save more, consume less, and produce more capital goods, then: A) Current consumption would rise, but future production would fall. B) Current consumption would fall, but future production would rise. C) There would be no change in either current consumption or future production. D) Both current consumption and future production would fall.

B) Current consumption would fall, but future production would rise.

What is economics? A) The study of money. B) The study of how to allocate scarce resources among alternative uses. C) The study of stocks and bonds. D) None of the above properly defines economics.

B) The study of how to allocate scarce resources among alternative uses.

Which of the following statements regarding scarcity is true? A) Scarcity occurs because our available resources are incapable of producing enough goods and services to satisfy everyone's wants. B) Even if our average per-capita income were to increase to $1,000,000 per year, scarcity still would not be eliminated. C) Both A and B. D) None of the above.

C) Both A and B.

Which of the three basic economic questions deals with how the national "pie" will be distributed? A) What to produce. B) How to produce. C) For whom to produce. D) None of the above is true.

C) For whom to produce.

By the end of 2009, what share of Americans expected their income to increase in the next year? A) More than 75%. B) More than 50%, but less than 75%. C) More than 25%, but less than 50%. D) Less than 25%.

C) More than 25%, but less than 50%.

The value of the best alternative you've given up in order to do something else is called: A) scarcity. B) production possibilities. C) opportunity cost. D) None of the above is true.

C) opportunity cost.

Which of the following is a basic economic question? A) What to produce. B) How to produce. C) For whom to produce. D) All of the above are basic economic questions.

D) All of the above are basic economic questions.

The production possibilities curve: A) shows the combinations of goods that could be produced with available resources and technology. B) illustrates economic trade-offs. C) deals with scarcity and the need to make choices. D) All of the above are true about the production possibilities curve.

D) All of the above are true about the production possibilities curve.

Government failure may have occurred when: A) government intervention doesn't improve economic outcomes. B) the economy moves away from the optimal mix of output. C) policy shifts the economy to the left of (inside) the production-possibilities curve. D) All of the above are true.

D) All of the above are true.

What is an example of a market failure? A) Too much pollution created by private firms. B) A higher level of poverty than is desired by society. C) Disincentives to work created by government transfers. D) Both A and B are correct.

D) Both A and B are correct.

Which of the following would not be studied in macroeconomics? A) National unemployment rate. B) Inflation. C) Economic growth. D) Market for new cars.

D) Market for new cars.