Test questions Ch 1-3

If you choose between two summer jobs, the one you do not choose is the ______ of your decision a. trade-off b. opportunity cost c. decision at the margin d. opportunity at the margin

b

Policymakers pursue all of the following goals to stabilize the economy except a. high unemployment b. stable productivity c. stable prices d. steady growth

a

The physical capital used by a woodworker to make furniture would include a. saws and drills b. trees and oil c. hard work and time d. a workshop and money

a

What is the difference between a shortage and scarcity? a. scarcity always exists b. scarcity results from falling prices c. scarcity concerns a single item d. there is no real difference

a

What is the government's role in controlling externalities in the American economy? a. government tries to encourage positive and limit negative externalities b. government tries to limit all externalities to stop market failures c. government tries to limit positive and encourage negative externalities d. government tries to encourage all externalities to increase competition

a

Which are the government's three goals for promoting economic strength? a. high employment, steady growth, and stability b. high employment, increase spending, and low taxes c. low unemployment, low prices, and low taxes d. steady growth, high prices, and innovation

a

A decision is made at the margin when each alternative considers a. a different trade-off than the others b. where the most costly alternative will be c. what the "all or nothing" alternative will be d. cost and benefit ranked in progressive units

d

A town wants to repair a school in one of its poorest neighborhoods. To pay for it, citizens vote to raise taxes on households and businesses. What social goal best explains this economic decision? a. freedom b. security c. growth d. equity

d

Business cycles occur in free enterprise systems because a. government policy creates cycles b. the efficiency of workers is not the same from season to season, but fluctuates on a regular basis annually c. the standard of living is very high d. economic decisions about factors such as prices, production, and consumption are determined by the market

d

A person who believes that wealth should be evenly distributed throughout society is a. a socialist b. a communist c. a capitalist d. an entrepreneur

a

An economy that is producing the maximum amount of goods and services is considered a. efficient b. underutilized c. growing d. trading off

a

Each society answers the three basic economic questions based on a. its unique combination of values and goals b. the number of factor payments c. its degree of economic growth d. the desire to achieve economic freedom

a

Education programs make the economy more productive by a. adding to human capital and labor productivity b. providing more jobs to educators c. reducing payments to unemployed people d. reducing injuries on the job

a

How does a society determine who will get what is produced? a. by its distribution of income b. by factor payment amounts c. by its needs and wants d. by economic equity

a

How will consumers react to the incentive of a higher price on a good or service? a. the negative incentive will cause consumers to purchase less of the good or service b. the positive incentive will cause consumers to purchase less of the good or service c. the negative incentive will cause consumers to purchase more of the good or service d. the positive incentive will cause consumers to purchase more of the good or service

a

In what way does the Bill of Rights protect individuals' freedom to engage in business activities? a. it recognizes property rights b. it denies the government the ability to regulate commerce c. it provides free contracts d. it provides each industry with a competitive edge

a

Which is an example of thinking at the margin? a. figuring out what you will give up and what you will gain by hiring a new worker b. thinking about whether or not to go on a vacation to a warm beach c. drawing plans to build an extra room on an old home d. deciding whether to have a dog or a cat as a pet

a

Which of the following are factors of production? a. capital and land b. scarcity and shortages c. technology and productivity d. economics and business decisions

a

Which of the following is the best example of a public good? a. highway system b. shopping mall c. country club d. movie theater

a

Which of the following is the kind of decision that can be made at the margin? a. whether or not to hire new workers b. whether or not to go on vacation c. whether or not to build an extra room on a home d. whether to have a dog or cat as a pet

a

Which of the following is the main incentive for a manufacturer to sell a product? a. making profits on sales b. putting others out of business c. pleasing the consumer d. helping the economy grow

a

Which of the following might be a positive aspect of centrally planned economies? a. low unemployment due to guaranteed jobs b. high levels of consumer satisfaction c. quick adjustment to changing conditions d. incentives for workers to be innovative

a

Which programs provide health insurance for the older people, poor people, and disabled people? a. Medicare and Medicaid b. welfare and SCHIP c. workers' compensation and unemployment insurance d. TANF and Social Security

a

Why does the government promote technological processes? a. to make the economy stronger and more efficient b. to reduce the economy's dependence on government c. to slow an economy down for a long period of time d. to increase unemployment by making workers unnecessary

a

Why has America been referred to as the "land of opportunity"? a. it provides anyone the possibility of success through hard work b. it provides jobs for all citizens c. it provides farmers farmland without levying taxes on the land d. it provides money for all citizens

a

Why has the federal government passed laws requiring businesses to disclose product information to the public? a. to make buyers more knowledgeable and safer b. to make it hard for businesses to make an excess profit c. to make it easier for consumers to own property d. to make it easy for businesses to have good information

a

An economist who focuses on microeconomics might study which of the following? a. inflation b. household credit card debt c. income d. unemployment

b

Human capital includes a. the salary paid to an accountant b. the knowledge a taxi driver has of the city streets c. the machinery run by a seamstress to weave cloth d. the equipment used by a doctor to cure a patient

b

A factory building is an example of which factor of production? a. human capital b. physical capital c. land d. labor

b

All goods and services are scarce because a. some goods cost more than others b. resources are limited c. things are either needs or wants d. greedy people want too many goods

b

Making a decision at the margin is possible only in situations where a. the available opportunity costs are unclear or complicated b. the available alternatives can be divided into increments c. there are more than three different types of alternatives to consider d. there are differences in the amount of time each alternative will consume

b

Scarcity requires people to make choices. Why? a. People have more wants than needs b. There are not enough resources to make everything we want c. Services are easier to get than goods d. Producers rarely make enough of a good

b

Scarcity requires that people make trade-offs because a. people have more wants than needs b. there is a limited supply of resources c. services are more available than goods d. producers rarely make enough of a good

b

The ways in which factors of production are combined determines the answer to which economic question? a. What will be produced? b. How will goods be produced? c. Who will consume goods? d. How can we provide a safety net?

b

What are the government's three goals as it tries to promote economic strength? a. technological advancement, competition, and productivity b. high employment, growth, and stability c. public disclosure, regulation, and the public interest d. legal equality, patriotism, and profits

b

What does the expression "the customer is king" mean in a free market economy? a. in a service economy, the customer is always right b. customers have the power to decide what gets produced c. people with the most money are treated like royalty d. producers of goods are also customers

b

What information is needed to make a decision at the margin? a. opportunity costs b. cost to produce each unit c. more than three alternatives d. factors of production

b

What is one key feature of public goods? a. the more people use them, the more money they cost to provide b. it would be difficult to make consumers pay individually to use them c. every consumer must be willing to pay to pay for them d. people who do not pay for them do not get to use them

b

What must a nation's economy do in order to improve the standard of living? a. remain stable b. grow c. reach economic equity d. allow central planning

b

Which group lists the key principles of the free enterprise system? a. profit motive, legal equality, consumer protection, public interest b. profit motive, legal equality, private property, voluntary exchange c. private property, taxation, public interest., patriotism d. profit motive, private property, eminent domain, voluntary exchange

b

Which of the following is an example of changing physical capital? a. hiring more workers to do a job b. building extra space in a factory c. switching to cheaper fuel d. lowering workers' wages

b

Which of the following is physical capital? a. a college degree b. a factory building c. learning to sew d. playing the violin

b

Which of the following might a government provide as part of a safety net for the people? a. general elections every four years b. unemployment compensation c. a strong military defense d. regulation of commerce

b

Which of the following philosophers argued that a free market would regulate itself with little government involvement? a. Karl Marx b. Adam Smith c. Vladimir Lenin d. Friedrich Engels

b

Who owns the factors of production? a. individuals b. households c. firms d. the market

b

Why are free market economies able to attain economic growth? a. consumers can purchase all the goods they need, which causes firms to produce more b. competition encourages innovation, which causes growth c. everyone is acting in their own self-interest, which motivates market growth d. firms keep producing incentives to encourage households to purchase more goods

b

Why are goods and services scarce? a. some goods cost more than others b. resources used to produce them are limited c. people want more than they can have d. greedy people want too many goods

b

Why does the government protect inventors and authors by offering them patents and copyrights? a. to encourage free trade b. to promote innovation c. to regulate the business cycle d. to strengthen American culture

b

A factory bottles apple juice and cranberry juice. If it wants to bottle more apple juice, what is the trade-off? a. It must bottle the same amount of cranberry juice b. It must build a bigger factory c. It must bottle less cranberry juice d. It must bottle more cranberry juice

c

A farm grows corn and alfalfa. What would happen if the farm owner could not get enough workers to plant all the fields? a. Taxes will go up b. The farm will be most efficient c. Less corn and alfalfa can be grown d. The demand for corn will grow

c

A nation's automakers install new robotic machinery to build cars. As a result, cars take only a day to make, and the factories can produce many more cars than before. This is an example of growth caused by a. natural resources b. labor c. technology d. production possibility curves

c

A new runway has opened up at the airport, and citizens complain to local officials that the noise of the airplanes is disturbing their neighborhood. The noise is an example of a a. positive externality b. free-rider problem c. negative externality d. market failure

c

An economy in which all the boys become farmers when they are adults, just as their fathers and grandfathers did, would be an example of a a. free market economy b. command economy c. traditional economy d. centrally planned economy

c

Government intervention in a modern economy is useful because a. the needs and wants of a modern society are always met by the marketplace b. the marketplace has many incentives to create public works such as parks c. governments are more able to meet some needs and wants of a modern society d. free market principles do not encourage growth

c

If a student volunteers at a nursing home after school, which of the following might be a negative externality? a. a student might volunteer to spend more time with the residents b. a student might learn a new skill c. a student might be unable to work at her part-time job on that afternoon d. a student would feel good about herself

c

In a free enterprise system, how do consumers most often express their desires to businesses? a. e-mailing or texting the companies b. protesting and boycotting products c. buying or not buying products d. hiring lobbyists to speak for them

c

In what kind of an economy does the government make all the decisions? a. mixed b. laissez-faire c. centrally planned d. free enterprise

c

Something is generally considered to be a public good if a. the private sector could provide the service more efficiently b. the benefits of the good are greater for the government than for society c. the total benefits to society are greater than the total financial costs d. taxpayers demand that the government provide the service

c

The US government intervenes in the economy in order to a. provide competition for private firms b. impose barriers on foreign trade c. promote the general welfare d. protect laissez-faire

c

Various federal, state, and local government programs help to raise people's standard of living because a. people living in areas of poverty cannot afford to pay their taxes b. people want the government to intervene in the market c. certain groups of people have fewer opportunities to be productive d. people expect to maintain a high standard of living

c

What did communist revolutions lead to in the Soviet Union and in China? a. capitalism b. socialism c. central planning d. traditionalism

c

Which economy is efficient? a. one that makes fewer goods because workers are laid off b. one that uses fewer resources than are available c. one that makes the most goods and services possible d. one that wastes fuel when making goods

c

Which is an example of an economic shortage? a. a farmer without enough water for crops b. too many jobs available c. a toy store without dolls d. too much bread on the store shelves

c

Which of the following is an example of a firm trying to increase its human capital? a. building a company cafeteria b. hiring more part-time workers c. paying for employees' education d. leasing cars for employees

c

Which of the following is handled by individuals instead of government in a free market economy? a. national defense b. public education c. investment options d. mass transit

c

Which of the following is part of communism but not socialism? a. central planning b. government controlled services c. authoritarian government d. government controlled resources

c

Which would a company do to increase its human capital? a. build a company cafeteria b. hire more part-time workers c. pay for employees' education d. lease cars for employees

c

Why do people need to buy and sell products or services? a. People need to buy and sell products to make a profit b. We need to maintain a competitive society c. No one is self-sufficient d. People need to provide the market with goods and services

c

Why does every decision involve trade-offs? a. everyone has to make decisions b. incomes are not equal c. resources are limited d. decisions are all different

c

You bought two new CDs with the last $30 in your checking account, and your next payday is on Monday. What is the opportunity cost of these CDs? a. the difference between the cost to produce the CDs and the price you paid for them b. the $30 check that you wrote for the CDs c. the night out with your friends that you miss because you can't afford it now d. the satisfaction of knowing you are the first of your friends to have these CDs

c

You read an article in a news magazine that explains how the economy expanded for several years, and then went into a period of contraction. What is the main subject of this article? a. poverty b. microeconomics c. the business cycle d. voluntary exchange

c

Each payday, some of your pay is withheld as payroll deductions for Social Security. What happens to the money that is withheld? a. it is redistributed as cash transfers to workers who are injured on the job b. it is put into an account under your name to earn interest until you retire c. it is used to provide medical benefits to Americans over 65 d. it is redistributed as cash transfers to retired and disabled people

d

The US economy is a mixed economy a. based on a traditional economy, but allowing some government intervention b. based on a centrally planned economy, but limiting government intervention c. based on a free market, allowing no government intervention d. based on a free market, but allowing some government intervention

d

What "invisible hand" regulates the free market economy? a. incentive and efficiency b. specialization c. competition between firms d. competition and self-interest

d

What is considered a negative effect of government regulations? a. they cut into company profits b. they stifle competition c. they cause higher prices for consumers d. all of the above

d

What is one of the most important advantages of a free market? a. it distributes goods equally b. it protects the less fortunate c. it is easy to regulate d. it encourages growth

d

What is one way new technology helps the US improve its standard of living? a. prevents sudden price changes b. reduces unemployment c. increases economic stability d. increases productivity

d

What is the profit motive? a. exchange of goods b. money that a business makes c. opportunity for success d. incentive to make money

d

What was the trade-off of the Soviet Union's focus on heavy industry? a. everyone became poor b. it was a better investment c. it created fewer jobs d. fewer consumer goods were produced

d

When a theater owner considers whether to install another row of seating, she is a. underutilizing her resources b. experiencing a shortage c. using human capital d. thinking at the margin

d

Where are traditional economies usually found? a. in small communities that welcome change b. in large communities that welcome change c. in large communities that are able to deal with environmental disaster d. in small communities that avoid change

d

Which of the following best describes the economy of the US? a. free market b. centrally planned c. mixed, but more centrally planned d. mixed, but more like a free market

d

Which of the following is a characteristic of a traditional economy? a. it encourages innovation and change b. it is usually based on light industrial production c. it has a high standard of living d. it revolves around the family unit

d

Which of the following is a summary of the three key economic questions? a. Who will buy which goods and services, and how much will they pay? b. How, when, and from whom should consumers get what they want? c. When, where, and by whom should goods and services be produced? d. What goods and services should be produced, how, and for whom?

d

Which of the following lists of factors of production would an economist categorize as land? a. factories, office buildings, assembly lines, workers b. farm fields, tractors, pesticides, fertilizers c. dams, bridges, rock quarries, oil wells d. iron ore, natural gas, fertile soil, water

d

Which of the following people is an entrepreneur? a. a highly-paid singer b. a person who teaches courses at a college c. a highly-paid computer programmer d. a person who starts a cleaning supplies business

d

Why are public goods examples of market failure? a. they show that the free enterprise system does not work b. they show that competition in the free market is dangerous c. they show that the private sector is more efficient than the public sector d. they show that the free market cannot distribute certain resources efficiently

d

Why is legal equality important to the free enterprise system? a. protecting lawyers will ensure good legal representation for businesses b. guaranteeing that all businesses have the same legal rights creates competition in the marketplace c. protecting equality ensures that businesses ignore the profit motive d. guaranteeing all people the same legal rights allows everyone to compete in the marketplace

d

You will still be able to get a public broadcasting channel even though you did not contribute to its fundraising campaign. This is an example of a. an in-kind benefit b. a market failure c. a negative externality d. a free-rider problem

d

Your public radio station has a campaign to raise funding for the year. You do not contribute, but you still listen to the channel. What is this situation called? a. in-kind benefit b. market failure c. negative externality d. free rider problem

d