Economics 1 - Practice Quiz Chapters 1 & 2
Suppose you find $20. If you choose to use the $20 to go to the football game, your opportunity cost of going to the game is
$20 (because you could have used the $20 to buy other things) plus the value of your time spent at the game
In making which of the following statements is an economist acting more like a scientist?
A reduction in unemployment benefits will reduce the unemployment rate
Which of the following statements is true about a market economy?
Market participants act as if guided by an "invisible hand" to produce outcomes that promote general economic well-being
You have spent $1,000 building a hot-dog stand based on estimates of sales of $2,000. The hot-dog stand is nearly completed, but now you estimate total sales to be only $800. You can complete the hot-dog stand for another $300. Should you complete the hot-dog stand? (Assume that the hot dogs cost you nothing.)
Yes
Economic growth is depicted by
a shift in the production possibilities frontier outward
Raising taxes and increasing welfare payments
improves equality at the expense of efficiency
If a central bank uses the tools of monetary policy to reduce the demand for goods and services, the likely result is ________ inflation and ________ unemployment in the short run.
lower, higher
Which of the following is not a factor of production?
money
Because people respond to incentives,
policymakers can alter outcomes by changing punishments or rewards policies can have unintended consequences society faces a trade-off between efficiency and equality All of the above
Trade-offs are required because wants are unlimited and resources are
scarce
Economics is the study of how
society manages its scarce resources
The main reason that some nations have higher average living standards than others is that
some nations have higher levels of productivity
Positive statements are
statements of description that can be tested
Adam Smith's "invisible hand" refers to
the ability of free markets to reach desirable outcomes, despite the self-interest of market participants
A rational person does not act unless
the action produces marginal benefits that exceed marginal costs
If a nation has high and persistent inflation, the most likely explanation is
the central bank creating excessive amounts of money
All of the following topics fall within the study of microeconomics EXCEPT
the influence of the government budget deficit on economic growth
Which of the following is not part of the opportunity cost of going on vacation?
the money you spent on food
As we move from point A to point D,
the opportunity cost of eggs in terms of bacon rises
Workers in the United States enjoy a high standard of living because
workers in the United States are highly productive
