ECO 251 CH 1 QUIZ
Which of the following rates of growth in the money supply is likely to lead to the lowest level of inflation in the economy?
1% per year
Approximately what percentage of the world's economies experience scarcity?
100%
The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the
1980s
Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
Households and firms interacting in markets are guided by an "invisible hand" that leads them to desirable market outcomes.
When the government attempts to improve equality in an economy the result is often
a reduction in efficiency
A society allocates its scarce resources to various uses. These scarce resources include a. land. b. people. c. machines. d. All of the above are correct
all of the above
Which of the following is a subject that economists study? the growth in average income b. the fraction of the population that cannot find work c. the rate at which prices are rising d. All of the above are correct
all of the above
Which of the following products would be considered scarce? bread b. baseballs autographed by Babe Ruth c. motorcycles d. All of the above are correct
all of the above
trade
allows specialization, which reduces costs
When the "invisible hand" guides economic activity, prices of products reflect
both the values that society places on those products and the costs to society of producing those products
Rational people make decisions at the margin by
comparing marginal costs and marginal benefits
In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker
increased by 6.25 percent between 1998 and 2008
According to Adam Smith, the success of decentralized market economies is primarily due to
individuals' pursuit of self-interest
The business cycle is the
irregular fluctuations in economic activity
Which of the following is not subject to scarcity? . water b. steel c. diamonds d. none of the above
none of the above
The adage, "There is no such thing as a free lunch," is used to illustrate the principle that
people face tradeoffs
President Gerald Ford referred to inflation as
public enemy number one
In a particular country in 1999, the average worker had to work 20 hours to produce 55 units of output. In that same country in 2009, the average worker needed to work 28 hours to produce 77 units of output. In that country, the productivity of the average worker
remained unchanged between 1999 and 2009
Hamid spends an hour studying instead of watching TV with his friends. The opportunity cost to him of studying is
the enjoyment he would have received if he had watched TV with his friends
A rational decision maker takes an action if and only if
the marginal benefit of the action exceeds the marginal cost
