经济学原理对应练习 111页

.-1.ThewordthatcomesfromtheGreekwordfor"onewhomanagesahousehold"isa.market.b.consumer.c.producer.d.economy.2.Theword“economy〞comesfromtheGreekwordoikonomos,whichmeansa.“environment.〞b.“production.〞c.“onewhomanagesahousehold.〞d.“onewhomakesdecisions.〞3.Resourcesarea.scarceforhouseholdsbutplentifulforeconomies.b.plentifulforhouseholdsbutscarceforeconomies.c.scarceforhouseholdsandscarceforeconomies.d.plentifulforhouseholdsandplentifulforeconomies.4.Economicsdealsprimarilywiththeconceptofa.scarcity.b.poverty.c.change.d.power.-.word.zl\n.-5.Whichofthefollowingquestionsisnotansweredbythedecisionsthateverysocietymustmake?a.Whatdeterminesconsumerpreferences?b.Whatgoodswillbeproduced?c.Whowillproducethegoods?d.Whowillconsumethegoods?6.Theoverridingreasonastowhyhouseholdsandsocietiesfacemanydecisionsisthata.resourcesarescarce.b.goodsandservicesarenotscarce.c.incomesfluctuatewithbusinesscycles.d.people,bynature,tendtodisagree.7.Thephenomenonofscarcitystemsfromthefactthata.mosteconomies’productionmethodsarenotverygood.b.inmosteconomies,wealthypeopleconsumedisproportionatequantitiesofgoodsandservices.c.governmentsrestrictsproductionoftoomanygoodsandservices.d.resourcesarelimited.8.Approximatelywhatpercentageoftheworld'seconomiesexperiencescarcity?a.25%b.50%-.word.zl\n.-c.75%d.100%9.Whenasocietycannotproduceallthegoodsandservicespeoplewishtohave,itissaidthattheeconomyisexperiencinga.scarcity.b.shortages.c.inefficiencies.d.inequities.10.Forsociety,agoodisnotscarceifa.atleastoneindividualinsocietycanobtainallheorshewantsofthegood.b.firmsareproducingthegoodatfullcapacity.c.allmembersofsocietycanhavealltheywantofthegood.d.thosewhohaveenoughincomecanbuyalltheywantofthegood.11.Whichofthefollowingproductswouldbeconsideredscarce?a.golfclubsb.Picassopaintingsc.applesd.Alloftheabovearecorrect.12.Economicsisthestudyof-.word.zl\n.-a.productionmethods.b.howsocietymanagesitsscarceresources.c.howhouseholdsdecidewhoperformswhichtasks.d.theinteractionofbusinessandgovernment.14.Inmostsocieties,resourcesareallocatedbya.asinglecentralplanner.b.asmallnumberofcentralplanners.c.thosefirmsthatuseresourcestoprovidegoodsandservices.d.thecombinedactionsofmillionsofhouseholdsandfirms.15.Theadage,"Thereisnosuchthingasafreelunch,"isusedtoillustratetheprinciplethata.goodsarescarce.b.peoplefacetradeoffs.(togetsomethingwelike,weusuallyhavetogiveupanotherthingwelike)c.incomemustbeearned.d.householdsfacemanydecisions.18.Whichofthefollowingstatementsbestrepresentstheprinciplerepresentedbytheadage,"Thereisnosuchthingasafreelunch"?a.Melissacanattendtheconcertonlyifshetakeshersisterwithher.b.Gregishungryandhomeless.-.word.zl\n.-c.Brianmustrepairthetireonhisbikebeforehecanrideittoclass.d.KendramustdecidebetweengoingtoColoradoorCancunforspringbreak.19.Theprinciplethat"peoplefacetradeoffs"appliestoa.individuals.b.families.c.societies.d.Alloftheabovearecorrect.20.Atypicalsocietystrivestogetthemostitcanfromitsscarceresources.Atthesametime,thesocietyattemptstodistributethebenefitsofthoseresourcestothemembersofthesocietyinafairmanner.Inotherwords,thesocietyfacesatradeoffbetweena.gunsandbutter.b.efficiencyandequity.c.inflationandunemployment.d.workandleisure.21.Gunsandbutterareusedtorepresenttheclassicsocietaltradeoffbetweenspendingona.durableandnondurablegoods.b.importsandexports.c.nationaldefenseandconsumergoods.-.word.zl\n.-d.lawenforcementandagriculture.22.Whensocietyrequiresthatfirmsreducepollution,thereisa.atradeoffbecauseofreducedincomestothefirms'ownersandworkers.b.atradeoffonlyifsomefirmsareforcedtoclose.c.notradeoff,sincethecostofreducingpollutionfallsonlyonthefirmsaffectedbytherequirements.d.notradeoff,sinceeveryonebenefitsfromreducedpollution.23.Atradeoffexistsbetweenacleanenvironmentandahigherlevelofincomeinthata.studiesshowthatindividualswithhigherlevelsofincomeactuallypollutelessthanlow-incomeindividuals.b.effortstoreducepollutiontypicallyarenotcompletelysuccessful.c.lawsthatreducepollutionraisecostsofproductionandreduceincomes.d.byemployingindividualstocleanuppollution,employmentandincomebothrise.24.Whichofthefollowingphrasesbestcapturesthenotionofefficiency?a.absolutefairnessb.equaldistribution-.word.zl\n.-c.minimumwasted.equitableoutcome25.Whichofthefollowingistrue?a.Efficiencyreferstothesizeoftheeconomicpie;equityreferstohowthepieisdivided.b.Governmentpoliciesusuallyimproveuponbothequityandefficiency.c.Aslongastheeconomicpiecontinuallygetslarger,noonewillhavetogohungry.d.Efficiencyandequitycanbothbeachievediftheeconomicpieiscutintoequalpieces.26.Efficiencymeansthata.societyisconservingresourcesinordertosavethemforthefuture.b.society'sgoodsandservicesaredistributedequallyamongsociety'smembers.c.society'sgoodsandservicesaredistributedfairly,thoughnotnecessarilyequally,amongsociety'smembers.d.societyisgettingthemaximumbenefitsfromitsscarceresources.27.Economistsusethewordequitytodescribeasituationinwhicha.eachmemberofsocietyhasthesameincome.-.word.zl\n.-b.eachmemberofsocietyhasaccesstoabundantquantitiesofgoodsandservices,regardlessofhisorherincome.c.societyisgettingthemaximumbenefitsfromitsscarceresources.d.thebenefitsofsociety'sresourcesaredistributedfairlyamongsociety'smembers.28.SenatorSmithwantstoincreasetaxesonpeoplewithhighincomesandusethemoneytohelpthepoor.SenatorJonesarguesthatsuchataxwilldiscouragesuccessfulpeoplefromworkingandwillthereforemakesocietyworseoff.Aneconomistwouldsaythata.weshouldagreewithSenatorSmith.b.weshouldagreewithSenatorJones.c.agooddecisionrequiresthatwerecognizebothviewpoints.d.therearenotradeoffsbetweenequityandefficiency.29.Whichofthefollowingwordsandphrasesbestcapturesthenotionofequity?a.minimumwasteb.maximumbenefitc.samenessd.fairnessANS:DDIF:1REF:1-1-.word.zl\n.-TOP:EquityMSC:Definitional30.Whengovernmentpoliciesareenacted,a.equitycanusuallybeenhancedwithoutanefficiencyloss,butefficiencycanneverbeenhancedwithoutanequityloss.b.efficiencycanusuallybeenhancedwithoutanequityloss,butequitycanneverbeenhancedwithoutanefficiencyloss.c.itisalwaysthecasethateitherefficiencyandfairnessarebothenhanced,orefficiencyandequityarebothdiminished.d.Noneoftheabovearecorrect.ANS:DDIF:2REF:1-1TOP:Government,Efficiency,EquityMSC:Applicative31.Alikelyeffectofgovernmentpoliciesthatredistributeincomeandwealthfromthewealthytothepooristhatthosepoliciesa.enhanceequity.b.reduceefficiency.c.reducetherewardforworkinghard.d.Alloftheabovearecorrect.ANS:DDIF:2REF:1-1TOP:Government,Efficiency,EquityMSC:Interpretive-.word.zl\n.-32.Whenthegovernmentimplementsprogramssuchasprogressiveincometaxrates,whichofthefollowingislikelytooccur?a.Equityisincreasedandefficiencyisincreased.b.Equityisincreasedandefficiencyisdecreased.c.Equityisdecreasedandefficiencyisincreased.d.Equityisdecreasedandefficiencyisdecreased.ANS:BDIF:2REF:1-1TOP:Government,Efficiency,EquityMSC:Interpretive33.Asaresultofasuccessfulattemptbygovernmenttocuttheeconomicpieintomoreequalslices,a.itiseasiertocutthepie,andthereforetheeconomycanproducealargerpie.b.thegovernmentcanmoreeasilyallocatethepietothosemostinneed.c.thepiegetssmaller,andtherewillbelesspieoverall.d.governmentwillspendtoomuchtimecuttinganditcausestheeconomytolosetheabilitytoproduceenoughpieforeveryone.ANS:CDIF:3REF:1-1TOP:Government,Efficiency,EquityMSC:Analytical-.word.zl\n.-34.Whenthegovernmentattemptstoimproveequityinaneconomytheresultisoftena.anincreaseinoveralloutputintheeconomy.b.additionalgovernmentrevenuesinceoverallincomewillincrease.c.areductioninequity.d.areductioninefficiency.ANS:DDIF:2REF:1-1TOP:Government,Efficiency,EquityMSC:Interpretive35.Whenthegovernmentredistributesincomefromthewealthytothepoor,a.efficiencyisimproved,butequityisnot.b.bothwealthypeopleandpoorpeoplebenefitdirectly.c.peopleworklessandproducefewergoodsandservices.d.wealthypeopleconsumefewergoods,butpoorpeopleconsumemoregoods,resultinginnorealchange.ANS:CDIF:2REF:1-1TOP:Government,Efficiency,EquityMSC:Interpretive-.word.zl\n.-36.Ineconomics,thecostofsomethingisa.thedollaramountofobtainingit.b.alwaysmeasuredinunitsoftimegivenuptogetit.c.whatyougiveuptogetit.d.oftenimpossibletoquantify,eveninprinciple.ANS:CDIF:1REF:1-1TOP:OpportunitycostMSC:Definitional37.Whatyougiveuptoobtainanitemiscalledyoura.opportunitycost.b.explicitcost.c.truecost.d.directcost.ANS:ADIF:1REF:1-1TOP:OpportunitycostMSC:Definitional-.word.zl\n.-38.Theopportunitycostofgoingtocollegeisa.thetotalspentonfood,clothing,books,transportation,tuition,lodging,andotherexpenses.b.thevalueofthebestopportunityastudentgivesuptoattendcollege.c.zeroforstudentswhoarefortunateenoughtohavealloftheircollegeexpensespaidbysomeoneelse.d.zero,sinceacollegeeducationwillallowastudenttoearnalargerincomeaftergraduation.ANS:BDIF:2REF:1-1TOP:OpportunitycostMSC:Interpretive39.Mauricereceives$100asabirthdaygift.Indecidinghowtospendthemoney,henarrowshisoptionsdowntofourchoices:OptionA,OptionB,OptionC,andOptionD.Eachoptioncosts$100.FinallyhedecidesonOptionB.Theopportunitycostofthisdecisionisa.thevaluetoMauriceoftheoptionhewouldhavechosenhadOptionBnotbeenavailable.b.thevaluetoMauriceofOptionsA,CandDcombined.c.$100.d.$300.ANS:ADIF:2REF:1-1TOP:OpportunitycostMSC:Applicative-.word.zl\n.-40.Afurnituremakercurrentlyproduces100tablesperweekandsellsthemforaprofit.Sheisconsideringexpandingheroperationinordertomakemoretables.Shouldsheexpand?a.Yes,becausemakingtablesisprofitable.b.No,becauseshemaynotbeabletoselltheadditionaltables.c.Itdependsonthemarginalcostofproducingmoretablesandthemarginalrevenueshewillearnfromsellingmoretables.d.Itdependsontheaveragecostofproducingmoretablesandtheaveragerevenueshewillearnfromsellingmoretables.ANS:CDIF:2REF:1-1TOP:MarginalchangesMSC:Applicative41.Formoststudents,thelargestsinglecostofacollegeeducationisa.thewagesgivenuptoattendschool.b.tuition,fees,andbooks.c.roomandboard.d.transportation,parking,andentertainment.ANS:ADIF:2REF:1-1TOP:OpportunitycostMSC:Interpretive-.word.zl\n.-42.Foracollegestudentwhowishestocalculatethetruecostsofgoingtocollege,thecostsofroomandboarda.shouldbecountedinfull,regardlessofthecostsofeatingandsleepingelsewhere.b.shouldbecountedonlytotheextentthattheyaremoreexpensiveatcollegethanelsewhere.c.usuallyexceedtheopportunitycostofgoingtocollege.d.plusthecostoftuition,equalstheopportunitycostofgoingtocollege.ANS:BDIF:2REF:1-1TOP:OpportunitycostMSC:Applicative43.Forwhichofthefollowingindividualswouldtheopportunitycostofgoingtocollegebehighest?a.apromisingyoungmathematicianwhowillcommandahighsalaryoncesheearnshercollegedegreeb.astudentwithaveragegradeswhohasneverheldajobc.afamous,highly-paidactorwhowantstotaketimeawayfromshowbusinesstofinishcollegeandearnadegreed.astudentwhoisthebestplayeronhiscollegebasketballteam,butwholackstheskillsnecessarytoplayprofessionalbasketballANS:CDIF:2REF:1-1TOP:OpportunitycostMSC:Applicative-.word.zl\n.-44.Whenyoucalculateyourtruecostsofgoingtocollege,whatportionofyourroom-and-boardexpensesshouldbeincluded?a.Yourfullroom-and-boardexpensesshouldalwaysbeincluded.b.Noneofyourroom-and-boardexpensesshouldeverbeincluded.c.Youshouldincludeonlytheamountbywhichyourroom-and-boardexpensesexceedtheincomeyouearnwhileattendingcollege.d.Youshouldincludeonlytheamountbywhichyourroom-and-boardexpensesexceedtheexpensesforrentandfoodifyouwerenotincollege.ANS:DDIF:2REF:1-1TOP:OpportunitycostMSC:Applicative45.Theopportunitycostofanitemisa.thenumberofhoursneededtoearnmoneytobuytheitem.b.whatyougiveuptogetthatitem.c.usuallylessthanthedollarvalueoftheitem.d.thedollarvalueoftheitem.ANS:BDIF:1REF:1-1TOP:OpportunitycostMSC:Definitional-.word.zl\n.-46.Mallorydecidestospendthreehoursworkingovertimeratherthanwatchingavideowithherfriends.Sheearns$8anhour.Heropportunitycostofworkingisa.the$24sheearnsworking.b.the$24minustheenjoymentshewouldhavereceivedfromwatchingthevideo.c.theenjoymentshewouldhavereceivedhadshewatchedthevideo.d.nothing,sinceshewouldhavereceivedlessthan$24ofenjoymentfromthevideo.ANS:CDIF:3REF:1-1TOP:OpportunitycostMSC:Applicative47.Russellspendsanhourstudyinginsteadofplayingtennis.Theopportunitycosttohimofstudyingisa.theimprovementinhisgradesfromstudyingforthehour.b.theimprovementinhisgradesfromstudyingminustheenjoymentofplayingtennis.c.theenjoymentandexercisehewouldhavereceivedhadheplayedtennis.d.zero.SinceRussellchosetostudyratherthantoplaytennis,thevalueofstudyingmusthavebeengreaterthanthevalueofplayingtennis.ANS:CDIF:3REF:1-1TOP:OpportunitycostMSC:Applicative-.word.zl\n.-48.College-ageathleteswhodropoutofcollegetoplayprofessionalsportsa.arenotrationaldecisionmakers.b.arewellawarethattheiropportunitycostofattendingcollegeisveryhigh.c.areconcernedmoreaboutpresentcircumstancesthantheirfuture.d.underestimatethevalueofacollegeeducation.ANS:BDIF:2REF:1-1TOP:OpportunitycostMSC:Interpretive49.Arationaldecisionmakera.ignoresmarginalchangesandfocusesinsteadon“thebigpicture.〞b.ignoresthelikelyeffectsofgovernmentpolicieswhenheorshemakeschoices.c.takesanactiononlyifthemarginalbenefitofthatactionexceedsthemarginalcostofthataction.d.takesanactiononlyifthecombinedbenefitsofthatactionandpreviousactionsexceedthecombinedcostsofthatactionandpreviousactions.ANS:CDIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive-.word.zl\n.-50.Rationalpeoplemakedecisionsatthemarginbya.followingmarginaltraditions.b.behavinginarandomfashion.c.thinkinginblack-and-whiteterms.d.comparingmarginalcostsandmarginalbenefits.ANS:DDIF:1REF:1-1TOP:MarginalchangesMSC:Interpretive51.Theword"margin"meansa.edge.b.distance.c.space.d.measure.ANS:ADIF:1REF:1-1TOP:MarginalchangesMSC:Definitional-.word.zl\n.-52.Makingrationaldecisions"atthemargin"meansthatpeoplea.makethosedecisionsthatdonotimposeamarginalcost.b.evaluatehoweasilyadecisioncanbereversedifproblemsarise.c.comparethemarginalcostsandmarginalbenefitsofeachdecision.d.alwayscalculatethemarginaldollarcostsforeachdecision.ANS:CDIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive53.Aperson’swillingnesstopayforagoodisbasedona.theavailabilityofthegood.b.themarginalbenefitthatanextraunitofthegoodwouldprovideforthatperson.c.themarginalcostofproducinganextraunitofthegood.d.esotericfactors,thestudyofwhichliesbeyondtheboundariesofeconomics.ANS:BDIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive-.word.zl\n.-54.Tosaythat"peoplerespondtoincentives"istosaythata.changesincosts(butnotchangesinbenefits)influencepeople'sdecisionsandtheirbehavior.b.changesinbenefits(butnotchangesincosts)influencepeople'sdecisionsandtheirbehavior.c.changesinbenefitsorchangesincostsinfluencepeople'sdecisionsandtheirbehavior.d.tradeoffscanbeeliminatedbyrationalpeoplewhothinkatthemargin.ANS:CDIF:1REF:1-1TOP:IncentivesMSC:Definitional55.Amarginalchangeisaa.changethatinvolveslittle,ifanything,thatisimportant.b.large,significantadjustment.c.changefortheworse,andsoitisusuallyashort-termchange.d.small,incrementaladjustment.ANS:DDIF:1REF:1-1TOP:MarginalchangesMSC:Definitional-.word.zl\n.-56.Whichofthefollowingisthebestexampleofamarginalchange?a.Aftergraduatingcollege,Audrey'sincomeincreasesfrom$500permonthto$3,000permonth.b.Morgangetsaraiseatherpart-timejobandisnowpaid$7.25perhourinsteadof$7.00.c.Housingpricesinanareaincreaseby40percentwhenanewinterstateisbuiltthatpassesnearby.d.AhardfreezewipesouthalfoftheorangecropinFloridaandthepriceoforangejuicedoubles.ANS:BDIF:2REF:1-1TOP:MarginalchangesMSC:Applicative57.Whichofthefollowingisthebestexampleofamarginalchange?a.ThepriceofhousinginDenverincreasedby6percentlastyear.b.Kimgetsabigpromotionatwork.Shealsogetsaraisefrom$35,000peryearto$55,000peryear.c.Markgraduatesfromcollegeandtakesajob.Hisincomeincreasesfrom$10,000peryearto$35,000peryear.d.AdroughthitstheupperMidwestandthepriceofwheatincreasesfrom$4.00perbushelto$6.50perbushel.ANS:ADIF:2REF:1-1TOP:MarginalchangesMSC:Applicative-.word.zl\n.-58.Amarginalchangeisbestillustratedbywhichofthefollowing?a.Nancyretiresandtakesapart-timejob.Shewasworking40hoursperweekandnowworks15hoursperweek.b.Alarge,state-supporteduniversityhasannouncedthatduetostatebudgetdeficits,tuitionmustriseby20percentnextyear.c.Ryanmovedtoanewapartmentandnowpays40percentmorerentthanbefore.d.Arizona,whichusuallyreceives10inchesofrainperyear,received11incheslastyear.ANS:DDIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive-.word.zl\n.-59.Teresaeatsthreeorangesduringaparticularday.Themarginalbenefitsheenjoysfromeatingthethirdorangea.canbethoughtofasthetotalbenefitTeresaenjoysbyeatingthreeorangesminusthetotalbenefitshewouldhaveenjoyedbyeatingjustthefirsttwooranges.b.determinesTeresa’swillingnesstopayforthefirst,second,andthirdoranges.c.doesnotdependonhowmanyorangesTeresahasalreadyeaten.d.Alloftheabovearecorrect.ANS:ADIF:3REF:1-1TOP:MarginalchangesMSC:Applicative60.Arationaldecisionmakertakesanactionifandonlyifa.themarginalbenefitoftheactionexceedsthemarginalcostoftheaction.b.themarginalcostoftheactionexceedsthemarginalbenefitoftheaction.c.themarginalcostoftheactioniszero.d.theopportunitycostoftheactioniszero.ANS:ADIF:1REF:1-1TOP:MarginalchangesMSC:Interpretive-.word.zl\n.-61.Aftermuchconsideration,youhavechosenCancunoverFt.LauderdaleasyourSpringBreakdestinationthisyear.However,SpringBreakisstillmonthsaway,andyoumayreversethisdecision.Whichofthefollowingeventswouldpromptyoutoreversethisdecision?a.ThemarginalbenefitofgoingtoCancunincreases.b.ThemarginalcostofgoingtoCancundecreases.c.ThemarginalbenefitofgoingtoFt.Lauderdaledecreases.d.ThemarginalcostofgoingtoFt.Lauderdaledecreases.ANS:DDIF:3REF:1-1TOP:MarginalchangesMSC:Applicative62.Theaveragecostperseatonthe50-passengerFloating-On-AirBuscompany'stripfromKansasCitytoSt.Louis,onwhichnorefreshmentsareserved,is$45.Inadvanceofaparticulartrip,threeseatsremainunsold.Thebuscompanycouldincreaseitsprofitonlyifita.chargedanyticketpriceabove$0forthethreeremainingseats.b.chargedatleast$15foreachofthethreeremainingseats.c.chargedatleast$45foreachofthethreeremainingseats.d.paidthreepeopletooccupythethreeremainingseats.ANS:ADIF:2REF:1-1TOP:MarginalcostMSC:Applicative-.word.zl\n.-63.Warrendrinksfourcupsofcoffeeduringaparticularday.Themarginalbenefitheenjoysfromdrinkingthefourthcupa.canbethoughtofasthetotalbenefitWarrenenjoysbydrinkingfourcupsminusthetotalbenefithewouldhaveenjoyedbydrinkingjustthreecups.b.determinesWarren’swillingnesstopayforthefourthcup.c.islikelydifferentfromthemarginalbenefitprovidedtoWarrenbythethirdcup.d.Alloftheabovearecorrect.ANS:DDIF:3REF:1-1TOP:MarginalchangesMSC:Applicative64.Arationaldecisionmakertakesanactiononlyifthea.marginalbenefitislessthanthemarginalcost.b.marginalbenefitisgreaterthanthemarginalcost.c.averagebenefitisgreaterthantheaveragecost.d.marginalbenefitisgreaterthanboththeaveragecostandthemarginalcost.ANS:BDIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive-.word.zl\n.-65.Aconstructioncompanyhasbuilt50housessofarthisyearatatotalcosttothecompanyof$8million.Ifthecompanybuildsa51sthouse,itstotalcostwillincreaseto$8.18million.Whichofthefollowingstatementsiscorrect?a.Forthefirst50houses,theaveragecostperhousewas$160,000.b.Themarginalcostofthe51sthouse,ifitisbuilt,willbe$180,000.c.Ifthecompanycanexperienceamarginalbenefitof$190,000bybuildingthe51sthouse,thenthecompanyshouldbuildit.d.Alloftheabovearecorrect.ANS:DDIF:3REF:1-1TOP:Marginalcost,MarginalbenefitMSC:Applicative-.word.zl\n.-66.Mikehasspent$500purchasingandrepairinganoldfishingboat,whichheexpectstosellfor$800oncetherepairsarecomplete.Mikediscoversthat,inadditiontothe$500hehasalreadyspent,heneedstomakeanadditionalrepair,whichwillcostanother$400,inordertomaketheboatworth$800topotentialbuyers.Hecanselltheboatasitisnowfor$300.Whatshouldhedo?a.Heshouldselltheboatasitisnowfor$300.b.Heshouldkeeptheboatsinceitwouldnotberationaltospend$900onrepairsandthenselltheboatfor$800.c.Heshouldcompletetherepairsandselltheboatfor$800.d.Itdoesnotmatterwhichactionhetakes;theoutcomeisthesameeitherway.ANS:CDIF:3REF:1-1TOP:MarginalcostMSC:Analytical-.word.zl\n.-67.Adonutshopsellsfreshbakeddonutsfrom5a.m.until3p.m.everyday.Theshopdoesnotsellday-olddonuts,soallunsolddonutsarethrownawayat3p.m.eachday.Thecostofmakingandsellingadozendonutsis$1.50;therearenocostsassociatedwiththrowingdonutsaway.Ifthemanagerhas10dozendonutsleftat2:30p.m.onaparticularday,whichofthefollowingalternativesismostattractive?a.Lowerthepriceoftheremainingdonuts,evenifthepricefallsbelow$1.50perdozen.b.Lowerthepriceoftheremainingdonuts,butundernocircumstancesshouldthepricefallbelow$1.50perdozen.c.Throwthedonutsawayandproduce10fewerdozendonutstomorrow.d.Startingtomorrow,lowerthepriceonalldonutssotheywillallbesoldearlierintheday.ANS:ADIF:3REF:1-1TOP:MarginalchangesMSC:Analytical-.word.zl\n.-68.Stanbuysa1966Mustangfor$2,000,planningtorestoreandsellthecar.Hegoesontospend$8,000restoringthecar.Atthispointhecansellthecarfor$9,000.Asanalternative,hecanspendanadditional$3,000replacingtheengine.Withanewenginethecarwouldsellfor$12,000.Stanshoulda.completetherepairsandsellthecarfor$12,000.b.sellthecarnowfor$9,000.c.nevertrysuchanexpensiveprojectagain.d.beindifferentbetween(i)sellingthecarnowand(ii)replacingtheengineandthensellingit.ANS:DDIF:3REF:1-1TOP:MarginalcostMSC:Analytical-.word.zl\n.-69.Sarahbuysandsellsrealestate.Twoweeksago,shepaid$140,000forahouseonOakStreet,intendingtospend$20,000onrepairssellthehousefor$175,000.Lastweek,thecitygovernmentannouncedaplantobuilda“halfwayhouse〞forconvictedcriminalsonOakStreet.Asaresultofthecity’sannouncedplan,Sarahisweighingtwoalternatives:Shecangoaheadwiththe$20,000inrepairsandthensellthehousefor$135,000,orshecanforgotherepairsandsellthehouseasitisfor$120,000.Sarahshoulda.keepthehouseandliveinit.b.goaheadwiththe$20,000inrepairsandsellthehousefor$135,000.c.forgotherepairsandsellthehouseasitisfor$120,000.d.movethehousefromOakStreettoamoredesirablelocation,irrespectiveofthecostofdoingso.ANS:CDIF:3REF:1-1TOP:MarginalcostMSC:Analytical-.word.zl\n.-70.Peoplearewillingtopaymoreforadiamondthanforabottleofwaterbecausea.themarginalcostofproducinganextradiamondfarexceedsthemarginalcostofproducinganextrabottleofwater.b.themarginalbenefitofanextradiamondfarexceedsthemarginalbenefitofanextrabottleofwater.c.producersofdiamondshaveamuchgreaterabilitytomanipulatediamondpricesthanproducersofwaterhavetomanipulatewaterprices.d.waterpricesareheldartificiallylowbygovernments,sincewaterisnecessaryforlife.ANS:BDIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive71.Economistsareparticularlyadeptatunderstandingthatpeoplerespondtoa.laws.b.incentives.c.punishmentsmorethanrewards.d.rewardsmorethanpunishments.ANS:BDIF:1REF:1-1TOP:IncentivesMSC:Interpretive-.word.zl\n.-72.Governmentpoliciescanchangethecostsandbenefitsthatpeopleface.Thosepolicieshavethepotentialtoa.alterpeople’sbehavior.b.alterpeople’sdecisionsatthemargin.c.produceresultsthatpolicymakersdidnotintend.d.Alloftheabovearecorrect.ANS:DDIF:2REF:1-1TOP:IncentivesMSC:Interpretive73.RalphNader'sbookUnsafeatAnySpeedcausedCongresstorequirea.safetyglassinallnewcars.b.seatbeltsinallnewcars.c.airbagsinallnewcars.d.stricterdrunkdrivinglawsinallstates.ANS:BDIF:1REF:1-1TOP:IncentivesMSC:Interpretive-.word.zl\n.-74.U.S.lawsrequiringthatdriverswearseatbeltshaveresultedina.areductioninbothdriverdeathsandpedestriandeaths.b.feweraccidentsandfewerdeathsperaccident.c.fewerdriverdeaths,feweraccidentsandfewerpedestriandeaths.d.littlechangeinthenumberofdriverdeaths,butmoreaccidentsandmorepedestriandeaths.ANS:DDIF:2REF:1-1TOP:IncentivesMSC:Interpretive75.Evidenceindicatesthatseatbeltlawshaveledtoa.fewerpedestriandeaths.b.fewerautomobileaccidents.c.fewerdeathsperautomobileaccident.d.Alloftheabovearecorrect.ANS:CDIF:1REF:1-1TOP:SeatbeltlawsMSC:Definitional-.word.zl\n.-76.Oneeffectofthegovernment-imposedseatbeltlawintheU.S.hasbeena.adramaticdecreaseinthenumberofpedestriandeaths.b.saferdriving.c.anincreaseinthenumberofaccidents.d.adramaticdecreaseinthenumberofdriverdeaths.ANS:CDIF:2REF:1-1TOP:IncentivesMSC:Interpretive77.Basedonwhatweknowabouttheeffectsofmandatoryseatbeltlaws,whichofthefollowinggroupswouldbemostlikelytomountacampaigntorepealthoselaws?a.Ownersofcollision-repairshops.b.Peoplewhowalkratherthandrive.c.Policemenwhohavebetterthingstodothaninvestigatecollisions.d.Alloftheabovearecorrect.ANS:BDIF:3REF:1-1TOP:IncentivesMSC:Analytical-.word.zl\n.-78.Basedontheavailableevidence,whichofthefollowinggroupsbenefitsmostfrommandatoryseatbeltlaws?a.automakersb.pedestriansc.driversd.ownersofcollision-repairshopsANS:DDIF:3REF:1-1TOP:IncentivesMSC:Analytical79.IntheformerSovietUnion,producerswerepaidformeetingoutputtargets,notforsellingproducts.Underthosecircumstances,whatweretheeconomicincentivesforproducers?a.toproducegoodqualityproductssothatsocietywouldbenefitfromtheresourcesusedb.toconserveoncosts,soastomaintainefficiencyintheeconomyc.toproduceenoughtomeettheoutputtarget,withoutregardforqualityorcostd.toproducethoseproductsthatsocietydesiresmostANS:CDIF:2REF:1-1TOP:IncentivesMSC:Interpretive-.word.zl\n.-80.Yourprofessorlovesherwork,teachingeconomics.Shehasbeenofferedotherpositionsinthecorporateworldthatwouldincreaseherincomeby25percent,butshehasdecidedtocontinueworkingasaprofessor.Herdecisionwouldnotchangeunlessthemarginala.costofteachingincreased.b.benefitofteachingincreased.c.costofteachingdecreased.d.costofacorporatejobincreased.ANS:ADIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive81.Supposeyourmanagementprofessorhasbeenofferedacorporatejobwitha30percentpayincrease.Hehasdecidedtotakethejob.Forhim,themarginala.costofleavingwasgreaterthanthemarginalbenefit.b.benefitofleavingwasgreaterthanthemarginalcost.c.benefitofteachingwasgreaterthanthemarginalcost.d.Alloftheabovearecorrect.ANS:BDIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive-.word.zl\n.-82.Whenpolicymakersimplementpoliciesthatalterincentives,theyusuallya.havecarefullyweighedthedirectandindirecteffectsofthepolicy.b.donotobservetheintendedresultofthepolicies.c.haveconsideredallpossibleeffectsoftheincentivechangeswhentheydevelopedthepolicy,whichwillmakethepolicyeffective.d.correctlyanticipatetheindirecteffects,butoftenmissthedirecteffects.ANS:BDIF:2REF:1-1TOP:IncentivesMSC:Interpretive83.Whichofthefollowingprinciplesisnotoneofthefourprinciplesofindividualdecisionmaking?a.Peoplefacetradeoffs.b.Tradecanmakeeveryonebetteroff.c.Peoplerespondtoincentives.d.Rationalpeoplethinkatthemargin.ANS:BDIF:1REF:1-1,1-2TOP:Tradeoffs,Trade,MarginalchangesMSC:Definitional-.word.zl\n.-84.Whichofthefollowingisaprincipleconcerninghowpeopleinteract?a.Marketsareusuallyagoodwaytoorganizeeconomicactivity.b.Rationalpeoplethinkatthemargin.c.Peoplerespondtoincentives.d.Alloftheabovearecorrect.ANS:ADIF:2REF:1-1,1-2TOP:MarketsMSC:Interpretive85.Whichofthefollowingstatementsexemplifiesaprincipleofindividualdecisionmaking?a.Tradecanmakeeveryonebetteroff.b.Governmentscansometimesimprovemarketoutcomes.c.Thecostofsomethingiswhatyougiveuptogetit.d.Alloftheabovearecorrect.ANS:CDIF:2REF:1-1,1-2TOP:OpportunitycostMSC:Interpretive-.word.zl\n.-86.Whichisthemostaccuratestatementabouttrade?a.Tradecanmakeeverynationbetteroff.b.Trademakessomenationsbetteroffandothersworseoff.c.Tradingforagoodcanmakeanationbetteroffonlyifthenationcannotproducethatgooditself.d.Tradehelpsrichnationsandhurtspoornations.ANS:ADIF:2REF:1-2TOP:TradeMSC:Interpretive87.Theprinciplethat"tradecanmakeeveryonebetteroff"appliestointeractionsandtradebetweena.families.b.stateswithintheUnitedStates.c.nations.d.Alloftheabovearecorrect.ANS:DDIF:1REF:1-2TOP:TradeMSC:Applicative-.word.zl\n.-88.Whichofthefollowingstatementsabouttradeisfalse?a.Tradeincreasescompetition.b.Withtrade,onecountrywinsandonecountryloses.c.Bulgariacanbenefit,potentially,fromtradewithanyothercountry.d.Tradeallowspeopletobuyagreatervarietyofgoodsandservicesatlowercost.ANS:BDIF:2REF:1-2TOP:TradeMSC:Interpretive89.SenatorSmart,whounderstandseconomicprinciples,istryingtoconvinceworkersinherdistrictthattradewithothercountriesisbeneficial.SenatorSmartshouldarguethattradecanbebeneficiala.onlyifitallowsustoobtainthingsthatwecouldn'tmakeforourselves.b.becauseitallowsspecialization,whichincreasestotaloutput.c.tousifwecangainandtheothersinvolvedinthetradelose.d.inonlyalimitednumberofcircumstancesbecauseothersaretypicallyself-interested.ANS:BDIF:2REF:1-2TOP:TradeMSC:Interpretive-.word.zl\n.-90.Benefitsfromtradewouldnotincludea.theabilityofpeopleandnationstospecialize.b.agreatervarietyofgoodsandservicesbecomingavailable.c.lesscompetition.d.lowerprices.ANS:CDIF:2REF:1-2TOP:TradeMSC:Interpretive91.TradebetweentheUnitedStatesandIndiaa.benefitsboththeUnitedStatesandIndia.b.isalosingpropositionfortheUnitedStatesbecauseIndiahascheaperlabor.c.isalosingpropositionforIndiabecausecapitalismuchmoreabundantintheU.S.thaninIndia.d.isalosingpropositionforIndiabecauseU.S.workersaremoreproductive.ANS:ADIF:2REF:1-2TOP:TradeMSC:Interpretive-.word.zl\n.-92.Canadacanbenefitfromtradea.onlywithnationsthatcanproducegoodsCanadacannotproduce.b.onlywithlessdevelopednations.c.onlywithnationsoutsideofNorthAmerica.d.withanynation.ANS:DDIF:2REF:1-2TOP:TradeMSC:Interpretive93.IfJapanchoosestoengageintrade,ita.willonlybenefitifittradeswithcountriesthatproducegoodsJapancannotproduce.b.cannotbenefitifittradeswithlessdevelopedcountries.c.shouldfirstattempttoproducethegooditself.d.canbenefitbytradingwithanyothercountry.ANS:DDIF:2REF:1-2TOP:TradeMSC:Interpretive-.word.zl\n.-94.IftheUnitedStatesdecidestotradewithMexico,weknowthata.Mexicowillbenefit,buttradewithalessdevelopedcountrycouldnotbenefittheUnitedStates.b.itwillnotbenefitMexicobecauseworkersintheUnitedStatesaremoreproductive.c.MexicoandtheUnitedStatescanbothbenefit.d.itwillnotbenefiteithercountrybecausetheirculturaldifferencesaretoovast.ANS:CDIF:2REF:1-2TOP:TradeMSC:Interpretive95.Whichofthefollowingstatementsaboutmarketsismostaccurate?a.Marketsareusuallyagoodwaytoorganizeeconomicactivity.b.Marketsareusuallyinferiortocentralplanningasawaytoorganizeeconomicactivity.c.Marketsfailandarethereforenotanacceptablewaytoorganizeeconomicactivity.d.Marketsareagoodwaytoorganizeeconomicactivityindevelopednations,butnotinlessdevelopednations.ANS:ADIF:1REF:1-2TOP:MarketsMSC:Interpretive-.word.zl\n.-96.Whichofthefollowingstatementsdoesnotapplytoamarketeconomy?a.Firmsdecidewhomtohireandwhattoproduce.b.Nooneislookingoutfortheeconomicwell-beingofsocietyasawhole.c.Householdsdecidewhichfirmstoworkforandwhattobuywiththeirincomes.d.Governmentpoliciesaretheprimaryforcesthatguidethedecisionsoffirmsandhouseholds.ANS:DDIF:2REF:1-2TOP:MarketeconomyMSC:Interpretive97.Inamarketeconomy,whomakesthedecisionsthatguidemosteconomicactivity?a.firmsonlyb.householdsonlyc.firmsandhouseholdsd.governmentANS:CDIF:1REF:1-2TOP:MarketsMSC:Definitional-.word.zl\n.-98.Thedecisionsoffirmsandhouseholdsareguidedbypricesandself-interestinaa.commandeconomy.b.centrally-plannedeconomy.c.marketeconomy.d.Alloftheabovearecorrect.ANS:CDIF:1REF:1-2TOP:MarketeconomyMSC:Definitional99.Inamarketeconomy,economicactivityisguidedbya.thegovernment.b.corporations.c.centralplanners.d.self-interestandprices.ANS:DDIF:1REF:1-2TOP:MarketeconomyMSC:Definitional100.Thetermusedtodescribeasituationinwhichmarketsfailtoallocateresourcesefficientlyiscalleda.economicmeltdown.b.marketfailure.c.disequilibrium.d.theeffectoftheinvisiblehand.ANS:BDIF:1REF:1-2TOP:MarketfailureMSC:Definitional-.word.zl\n.-101.Inaneconomyinwhichdecisionsareguidedbypricesandindividualself-interest,thereisa.thepotentialtoachieveefficiencyinproduction.b.astrongneedforgovernmentinterventioninthemarket.c.lessefficiencythanwouldbeobservedinacentrally-plannedeconomy.d.moreneedforastronglegalsystemtocontrolindividualgreedthanwouldbeneededinacentrally-plannedeconomy.ANS:ADIF:2REF:1-2TOP:MarketeconomyMSC:Interpretive102.Pricesdirecteconomicactivityinamarketeconomybya.influencingtheactionsofbuyersandsellers.b.reducingscarcityofthegoodsandservicesproduced.c.eliminatingtheneedforgovernmentintervention.d.allocatinggoodsandservicesinthemostequitableway.ANS:ADIF:2REF:1-2TOP:MarketeconomyMSC:Interpretive-.word.zl\n.-103.Afriendofyoursasksyouwhymarketpricesarebetterthangovernment-determinedprices.Becauseyouunderstandeconomicprinciples,yousaythatmarket-determinedpricesarebetterbecausetheygenerallyreflecta.thevalueofagoodtosociety,butnotthecostofmakingit.b.thecostofmakingagoodtosociety,butnotitsvalue.c.boththevalueofagoodtosocietyandthecostofmakingit.d.neitherthevalueofagoodtosocietynorthecostofmakingit.ANS:CDIF:2REF:1-2TOP:Markets,PricesMSC:Interpretive104.Whichofthefollowingfirmsismostlikelytohavemarketpower?a.afastfoodrestaurantinacollegetownb.awheatfarminKansasc.thelastgasstationinNewMexicofor100milesd.ashoestoreinKentuckyANS:CDIF:2REF:1-2TOP:MarketpowerMSC:Interpretive-.word.zl\n.-105.Anexampleofafirmwithmarketpowerisaa.delicatesseninNewYork.b.cableTVproviderinSt.Louis.c.clothingstoreinLosAngeles.d.familyfarminIllinois.ANS:BDIF:2REF:1-2TOP:MarketpowerMSC:Interpretive106.Oneadvantagemarketeconomieshaveovercentrally-plannedeconomiesisthatmarketeconomiesa.provideanequaldistributionofgoodsandservicestohouseholds.b.establishasignificantroleforgovernmentintheallocationofresources.c.solvetheproblemofscarcity.d.aremoreefficient.ANS:DDIF:2REF:1-2TOP:MarketeconomyMSC:Interpretive-.word.zl\n.-107.Whichofthefollowingstatementsbestcharacterizesabasicdifferencebetweenmarketeconomiesandcentrally-plannedeconomies?a.Societyreliesmoreuponpricestoallocateresourceswhentheeconomyiscentrally-plannedthanwhenitismarket-based.b.Theself-interestofhouseholdsisreflectedmorefullyintheoutcomeofacentrally-plannedeconomythanintheoutcomeofamarketeconomy.c.Governmentplaysalargerroleintheeconomicaffairsofamarketeconomythanintheeconomicaffairsofacentrally-plannedeconomy.d.Noneoftheabovearecorrect.ANS:DDIF:2REF:1-2TOP:MarketeconomyMSC:Interpretive108.ThecollapseofcommunismintheSovietUnionandEasternEuropetookplacemainlyinthea.1960s.b.1970s.c.1980s.d.1990s.ANS:CDIF:1REF:1-2TOP:CommunismMSC:Definitional-.word.zl\n.-109.TheeconomyoftheformerSovietUnionisbestdescribedasaa.primitiveeconomy.b.marketeconomy.c.hybrideconomy.d.centrally-plannedeconomy.ANS:DDIF:1REF:1-2TOP:MarketeconomyMSC:Definitional110.Priortothecollapseofcommunism,communistcountriesworkedonthepremisethateconomicwell-beingcouldbebestattainedbya.amarketeconomy.b.astrongrelianceonpricesandindividuals’self-interests.c.asystemoflarge,government-operated,privately-ownedfirms.d.theactionsofgovernmentcentralplanners.ANS:DDIF:2REF:1-2TOP:CommunismMSC:Interpretive-.word.zl\n.-111.WhichofthefollowingobservationswasmadefamousbyAdamSmithinhisbookTheWealthofNations?a.Thereisnosuchthingasafreelunch.b.Peoplebuymorewhenpricesarelowthanwhenpricesarehigh.c.Nomatterhowmuchpeopleearn,theytendtospendmorethantheyearn.d.Householdsandfirmsinteractinginmarketsareguidedbyan"invisiblehand"thatleadsthemtodesirablemarketoutcomes.ANS:DDIF:1REF:1-2TOP:InvisiblehandMSC:Definitional112.Theterm"invisiblehand"wascoinedbya.AdamSmith.b.DavidRicardo.c.KarlMarx.d.BenjaminFranklin.ANS:ADIF:1REF:1-2TOP:InvisiblehandMSC:Definitional-.word.zl\n.-113.The"invisiblehand"directseconomicactivitythrougha.advertising.b.prices.c.centralplanning.d.governmentregulations.ANS:BDIF:2REF:1-2TOP:InvisiblehandMSC:Interpretive114.Theideathatonlythegovernmentcanorganizeeconomicactivityinawaythatpromoteseconomicwell-beingforacountryasawholea.isabasicprincipleregardingindividualdecisionmaking.b.amountstoadenialofoneofthebasicprinciplesregardinginteractionsamongpeople.c.supportstheideathatthe"invisiblehand"shouldguideeconomicactivity.d.waspromotedbytheeconomistAdamSmithinawell-known1776book.ANS:BDIF:2REF:1-2TOP:MarketsMSC:Interpretive-.word.zl\n.-115.AdamSmitharguedthatinamarketsystem,whenpeopleactintheirownself-interest,theytypicallya.helponlythemselves.b.harmothers.c.helpothers,butnotasmuchastheywouldhaveiftheywerenotself-interested.d.helpothersevenmorethanwhentheydeliberatelytrytohelpothers.ANS:DDIF:2REF:1-2TOP:InvisiblehandMSC:Interpretive116.Theinvisiblehand'sabilitytocoordinatethedecisionsofthefirmsandhouseholdsintheeconomycanbehinderedbya.governmentactionsthatdistortprices.b.increasedcompetitioninmarkets.c.enforcementofpropertyrights.d.toomuchattentionpaidtoefficiency.ANS:ADIF:2REF:1-2TOP:InvisiblehandMSC:Interpretive-.word.zl\n.-117.Whenthe"invisiblehand"guideseconomicactivity,pricesofproductsreflecta.onlythevaluesthatsocietyplacesonthoseproducts.b.onlythecoststosocietyofproducingthoseproducts.c.boththevaluesthatsocietyplacesonthoseproductsandthecoststosocietyofproducingthoseproducts.d.noneoftheabove;whenthe"invisiblehand"guideseconomicactivity,pricesofproductsaresetbythegovernmentinamannerthatisthoughttobe"fair."ANS:CDIF:2REF:1-2TOP:Invisiblehand,MarketsMSC:Interpretive118.AdamSmith'sbookTheWealthofNationswaspublishedina.1692.b.1776.c.1816.d.1936.ANS:BDIF:1REF:1-2TOP:InvisiblehandMSC:Definitional-.word.zl\n.-119.BothTheWealthofNationsandtheDeclarationofIndependencesharethepointofviewthata.everypersonisentitledtolife,liberty,andthepursuitofhappiness.b.individualsarebestlefttotheirowndeviceswithoutthegovernmentguidingtheiractions.c.thegovernmentplaysacentralroleinorganizingamarketeconomy.d.becauseofhumannatureastronglegalsystemisnecessaryforamarketsystemtosurvive.ANS:BDIF:2REF:1-2TOP:InvisiblehandMSC:Interpretive120.Theinvisiblehandworkstopromotegeneralwell-beingintheeconomyprimarilythrougha.governmentintervention.b.thepoliticalprocess.c.people’spursuitofself-interest.d.altruism.ANS:CDIF:1REF:1-2TOP:InvisiblehandMSC:Interpretive-.word.zl\n.-121.Taxesadverselyaffecttheallocationofresourcesinsocietybecausea.theydonotalwaysfallmoreheavilyontherichthanonthepoor.b.thetaxescollectedarenotenoughtofinancegovernmentspending.c.noteveryonepaystaxes.d.theydistortpricesandthusdistortthedecisionsofhouseholdsandfirms.ANS:DDIF:2REF:1-2TOP:TaxesMSC:Interpretive122.Aprimaryfunctionofpricesinamarketeconomyistoprovideparticipantswitha.relevanteconomicinformation.b.relevantspendinglimits.c.anequitabledistributionofgoodsandservices.d.Alloftheabovearecorrect.ANS:ADIF:2REF:1-2TOP:Marketeconomy,PricesMSC:Interpretive-.word.zl\n.-123.Whenthegovernmentpreventspricesfromadjustingnaturallytosupplyanddemand,a.itstabilizestheeconomybyreducingmarketuncertainties.b.itadverselyaffectstheallocationofresources.c.theimprovementinequityjustifiesthereductioninefficiency.d.theimprovementinefficiencyjustifiesthereductioninequity.ANS:BDIF:2REF:1-2TOP:Prices,GovernmentMSC:Applicative124.Withrespecttotheattainmentofanefficientallocationofresources,whichofthefollowingstatementsiscorrect?a.Marketsarealwaysagoodwaytoorganizeeconomicactivity.b.Marketsareoftenagoodwaytoorganizeeconomicactivity.c.Marketsareseldomagoodwaytoorganizeeconomicactivity.d.Marketsareneveragoodwaytoorganizeeconomicactivity.ANS:BDIF:1REF:1-2TOP:MarketsMSC:Interpretive-.word.zl\n.-125.Formarketstoworkwell,theremustbea.marketpower.b.acentralplanner.c.propertyrights.d.abundant,notscarce,resources.ANS:CDIF:2REF:1-2TOP:Markets,PropertyrightsMSC:Interpretive126.Onereasonweneedgovernment,eveninamarketeconomy,isthata.thereareinsufficientquantitiesofexternalitiesintheabsenceofgovernment.b.propertyrightsbecometooentrenchedintheabsenceofgovernment.c.theinvisiblehandseldomleadstoanefficientallocationofresourcesinanymarket.d.theinvisiblehand,whilepowerful,isnotperfect.ANS:DDIF:2REF:1-2TOP:Marketeconomy,GovernmentMSC:Interpretive-.word.zl\n.-127.Thebasicprinciplesofeconomicssuggestthata.marketsareseldom,ifever,agoodwaytoorganizeeconomicactivity.b.governmentshouldbecomeinvolvedinmarketswhentradebetweencountriesisinvolved.c.governmentshouldbecomeinvolvedinmarketswhenthosemarketsfailtoproduceefficientorequitableoutcomes.d.Alloftheabovearecorrect.ANS:CDIF:1REF:1-2TOP:Markets,Government,TradeMSC:Interpretive128.Onenecessaryroleofgovernmentinamarketeconomyistoa.imposetaxesonthosegoodsandservicesthataremostdesiredbyconsumers.b.maintainwelfareprogramsforthepoor.c.provideservicessuchasmaildeliveryandgarbagecollection.d.enforcepropertyrights.ANS:DDIF:2REF:1-2TOP:Government,PropertyrightsMSC:Interpretive-.word.zl\n.-129.Thegovernmentenforcespropertyrightsbya.requiringpropertyownerstopaypropertytaxes.b.providingpoliceandcourts.c.forcingpeopletoownproperty.d.providingpublicparksandrecreationfacilities.ANS:BDIF:2REF:1-2TOP:Government,PropertyrightsMSC:Interpretive130.Tosaythatgovernmentintervenesintheeconomytopromoteefficiencyistosaythatgovernmentisattemptingtoa.createamorefairdistributionofincome.b.changethewayinwhichtheeconomicpieisdivided.c.enlargetheeconomicpie.d.Alloftheabovearecorrect.ANS:CDIF:2REF:1-2TOP:Efficiency,GovernmentMSC:Interpretive-.word.zl\n.-131.Acompanythatformerlyproducedsoftwarewentoutofbusinessbecausetoomanypotentialcustomersboughtillegally-producedcopiesofthesoftwareinsteadofbuyingtheproductdirectlyfromthecompany.Thisinstanceservesasanexampleofa.marketpower.b.marketfailure.c.inadequateenforcementofpropertyrights.d.theinvisiblehandatwork.ANS:CDIF:2REF:1-2TOP:PropertyrightsMSC:Interpretive132.Arationaleforgovernmentinvolvementinamarketeconomyisasfollows:a.Marketssometimesfailtoproduceafairdistributionofeconomicwell-being.b.Marketssometimesfailtoproduceanefficientallocationofresources.c.Propertyrightshavetobeenforced.d.Alloftheabovearecorrect.ANS:DDIF:1REF:1-2TOP:Government,MarketsMSC:Interpretive-.word.zl\n.-133.Thetermmarketfailurereferstoa.asituationinwhichthemarketonitsownfailstoallocateresourcesefficiently.b.anunsuccessfuladvertisingcampaignwhichreducesdemandforaproduct.c.asituationinwhichcompetitionamongfirmsbecomesruthless.d.afirmwhichisforcedoutofbusinessbecauseoflosses.ANS:ADIF:1REF:1-2TOP:MarketfailureMSC:Definitional134.Whichofthefollowingisnotgenerallyregardedasalegitimatereasonforthegovernmenttointerveneinamarket?a.topromoteefficiencyb.topromoteequityc.toenforcepropertyrightsd.toprotectanindustryfromforeigncompetitionANS:DDIF:2REF:1-2TOP:Government,MarketsMSC:Interpretive-.word.zl\n.-135.Causesofmarketfailureincludea.externalitiesandmarketpower.b.marketpowerandincorrectforecastsofconsumerdemand.c.externalitiesandforeigncompetition.d.incorrectforecastsofconsumerdemandandforeigncompetition.ANS:ADIF:2REF:1-2TOP:MarketfailureMSC:Interpretive136.Whichofthefollowingstatementsisnottrue?a.Inthepresenceofamarketfailure,governmentactionwillalwaysimproveonthemarketoutcome.b.Inthepresenceofamarketfailure,governmentactioncansometimesimproveonthemarketoutcome.c.Inthepresenceofamarketfailure,governmentactionmightnotimproveonthemarketoutcomebecausesomeleadersarenotfullyinformedabouttheeffectsoftheiractions.d.Inthepresenceofamarketfailure,governmentactionmightnotimproveonthemarketoutcomebecausesometimespublicpoliciessimplyrewardthepoliticallypowerful.ANS:ADIF:2REF:1-2TOP:Marketfailure,GovernmentMSC:Interpretive-.word.zl\n.-137.Marketfailurecanbecausedbya.lowconsumerdemand.b.governmentinterventionandpricecontrols.c.externalitiesandmarketpower.d.highpricesandforeigncompetition.ANS:CDIF:2REF:1-2TOP:MarketfailureMSC:Interpretive138.Theterm"marketfailure"a.meansthesamethingas"marketpower."b.referstothedissolutionofamarketwhenfirmsdecidetoquitproducingacertainproduct.c.referstothefailureofamarkettoproduceanefficientallocationofresources.d.referstogovernment'sfailuretoenforcethepropertyrightsofhouseholdsorfirmsthatparticipateinacertainmarket.ANS:CDIF:2REF:1-2TOP:MarketfailureMSC:Interpretive-.word.zl\n.-139.Anexampleofanexternalityistheimpactofa.John’sactionsonJane’swell-being.b.John’sactionsonJohn’sownwell-being.c.society'sdecisionsonsociety’swell-being.d.society'sdecisionsonJohn’swell-being.ANS:ADIF:1REF:1-2TOP:ExternalitiesMSC:Definitional140.Anexampleofanexternalityistheimpactofa.badweatherontheincomeoffarmers.b.thepersonalincometaxonaperson'sabilitytopurchasegoodsandservices.c.pollutionfromafactoryonthehealthofpeopleinthevicinityofthefactory.d.increasesinhealthcarecostsonthehealthofindividualsinsociety.ANS:CDIF:2REF:1-2TOP:ExternalitiesMSC:Interpretive-.word.zl\n.-141.Ifanexternalityispresentinamarket,economicefficiencymaybeenhancedbya.governmentintervention.b.increasedcompetition.c.betterinformedmarketparticipants.d.weakerpropertyrights.ANS:ADIF:2REF:1-2TOP:Externalities,EfficiencyMSC:Interpretive142.Whichofthesestatementsconcerningexternalitiesiscorrect?a.Therewouldbenojustificationforgovernmentinvolvementintheeconomyifitwerenotforexternalities.b.Anexternalitycanonlyarisewhenoneperson(orasmallgroupofpersons)hastheabilitytoundulyinfluencemarketprices.c.Anexternalitycanariseonlywhentwoormorecountriesareengagedintradewithoneanother.d.Anexternalityariseswhenoneperson'sactionshaveanimpactonthewell-beingofothers.ANS:DDIF:2REF:1-2TOP:Government,MarketsMSC:Interpretive-.word.zl\n.-143.Ifacopperrefinerydoesnotbeartheentirecostofthesmokeitemits,itwilla.notemitanysmokesoastoavoidtheentirecostofthesmoke.b.emitlowerlevelsofsmoke.c.emitanacceptablelevelofsmoke.d.emittoomuchsmoke.ANS:DDIF:2REF:1-2TOP:ExternalitiesMSC:Interpretive144.Lawsthatrestrictthesmokingofcigarettesinpublicplacesareexamplesofgovernmentinterventionthatisintendedtoreducea.theinfluenceoftheinvisiblehand.b.trade.c.externalities.d.marketpower.ANS:CDIF:2REF:1-2TOP:Externalities,GovernmentMSC:Applicative-.word.zl\n.-145.Amarketeconomyrewardspeopleaccordingtotheira.needforgoodsandservices.b.willingnesstowork.c.abilitytoproducethingsthatotherpeoplearewillingtopayfor.d.abilitytoproducethingsofculturalimportance.ANS:CDIF:2REF:1-2TOP:MarketeconomyMSC:Interpretive146.Marketeconomiesaredistinguishedfromothertypesofeconomieslargelyonthebasisofa.thepoliticalaffiliationsofgovernmentofficials.b.theprocessbywhichgovernmentofficialsareelectedorappointed.c.thewaysinwhichscarceresourcesareallocated.d.thenumberofretailoutletsavailabletoconsumers.ANS:CDIF:2REF:1-2TOP:MarketeconomyMSC:Interpretive-.word.zl\n.-147.Whichoftheseconsumptionactivitieswillmostlikelyimposeanexternalcost?a.Anexecutiveplaysavigorousgameofgolf.b.AstudentinadormplaysherCDsat120decibelslateatnight.c.Ayoungmotherexercisestoanaerobicsvideo.d.Aconstructionworkereatsasandwichduringhislunchbreak.ANS:BDIF:2REF:1-2TOP:ExternalitiesMSC:Interpretive148.Whichoftheseactivitieswillmostlikelyresultinanexternalbenefit?a.Acollegestudentbuysadeckofcardstoplaysolitaireinherdormroom.b.Anelderlywomanplantsaflowergardenonthevacantlotnexttoherhouse.c.Anexecutivepurchasesabooktoreadonabusinesstrip.d.Aten-year-olduseshisallowancetobuynewNikeshoes.ANS:BDIF:2REF:1-2TOP:ExternalitiesMSC:Interpretive-.word.zl\n.-149.Ifeducationproducesexternalbenefitsforsociety,whichofthefollowingmightNOTbeanappropriatepolicyforsocietytoadoptregardingeducation?a.taxincentivesforschoolingb.mandatoryminimumlevelsofeducationc.programswhichpromotethehiringofhighschooldropoutsd.publicsubsidiesofeducationANS:CDIF:2REF:1-2TOP:ExternalitiesMSC:Applicative150.Whenasingleperson(orsmallgroup)hastheabilitytoinfluencemarketprices,thereisa.competition.b.marketpower.c.anexternality.d.alackofpropertyrights.ANS:BDIF:1REF:1-2TOP:MarketpowerMSC:Definitional-.word.zl\n.-151.Marketpowerreferstothea.powerofasinglepersonorsmallgrouptoinfluencemarketprices.b.abilityofapersonorsmallgrouptosuccessfullymarketnewproducts.c.powerofthegovernmenttoregulateamarket.d.importanceofacertainmarketinrelationtotheoveralleconomy.ANS:ADIF:1REF:1-2TOP:MarketpowerMSC:Definitional152.Whichisthemostcorrectstatementabouttheinvisiblehand?a.Theinvisiblehandalwaysensuresbothequityandefficiency.b.Theinvisiblehandismoreeffectiveatensuringequitythanitisatensuringefficiency.c.Theinvisiblehandismoreeffectiveatensuringefficiencythanitisatensuringequity.d.Marketpoweristheinstrumentwithwhichtheinvisiblehanddirectseconomicactivity.ANS:CDIF:2REF:1-2TOP:InvisiblehandMSC:Interpretive-.word.zl\n.-153.AccordingtoAdamSmith,thesuccessofdecentralizedmarketeconomiesisprimarilyduetoa.thebasicbenevolenceofsociety.b.society'slegalsystem.c.individuals'pursuitofself-interest.d.partnershipsthatareforgedbetweenbusinessandgovernment.ANS:CDIF:2REF:1-2TOP:InvisiblehandMSC:Interpretive154.Theself-interestoftheparticipantsinaneconomyisguidedintopromotinggeneraleconomicself-interestbya.theinvisiblehand.b.marketpower.c.governmentintervention.d.oikonomos.ANS:ADIF:1REF:1-2TOP:InvisiblehandMSC:Interpretive-.word.zl\n.-155.IntheUnitedStates,higherincometaxratesonrichpeoplecouldbejustifiedonthebasisofa.superiordecision-makingbymarketparticipants.b.superiorresourceallocation.c.enhancedmarketefficiency.d.enhancedequityforsociety.ANS:DDIF:2REF:1-2TOP:TaxesMSC:Applicative156.Thebasicprinciplesofeconomicsimplythatpolicymakersshoulda.relyonmarketstoguideeconomicactivity,exceptwhenmarketsproduceinefficientorinequitableoutcomes.b.enactpoliciesthatdiscouragepeoplefromspecializinginparticulareconomicactivities.c.enactpoliciesthatleadtohighratesofgrowthofthequantityofmoney.d.Alloftheabovearecorrect.ANS:ADIF:2REF:1-2,1-3TOP:Efficiency,Specialization,InflationMSC:Analytical-.word.zl\n.-157.Theprimarydeterminantofacountry'sstandardoflivingisa.thecountry’sabilitytoprevailoverforeigncompetition.b.thecountry’sabilitytoproducegoodsandservices.c.thetotalsupplyofmoneyintheeconomy.d.theaverageageofthecountry'slaborforce.ANS:BDIF:2REF:1-3TOP:StandardoflivingMSC:Interpretive158.In2000theaverageAmericanhadanincomeofabouta.$28,400.b.$34,100.c.$39,800.d.$44,500.ANS:BDIF:1REF:1-3TOP:IncomeMSC:Definitional159.IntheUnitedStates,incomeshistoricallyhavegrownabout2percentperyear.Atthisrate,averageincomedoubleseverya.10years.b.25years.c.35years.d.50years.ANS:CDIF:2REF:1-3TOP:IncomeMSC:Interpretive-.word.zl\n.-160.Theincomeofatypicalworkerinacountryismostcloselylinkedtowhichofthefollowing?a.populationb.productivityc.marketpowerd.governmentpoliciesANS:BDIF:2REF:1-3TOP:Producitvity,IncomeMSC:Interpretive161.Theterm"productivity"a.meansthesamethingas"efficiency."b.isseldomusedbyeconomists,asitsmeaningisnotprecise.c.referstothequantityofgoodsandservicesproducedfromeachhourofaworker'stime.d.referstothevarietyofgoodsandservicesfromwhichhouseholdscanchoosewhentheyshop.ANS:CDIF:1REF:1-3TOP:ProductivityMSC:Definitional-.word.zl\n.-162.IftheaverageincomeofanAustralianishigherthantheaverageincomeofaRussian,itismostlikelybecausea.productivityishigherinAustraliathaninRussia.b.AustraliahasamoreindustrialeconomythanRussia.c.thereismorecompetitioninAustraliathaninRussia.d.laborunionsaremorepowerfulinAustraliathaninRussia.ANS:ADIF:2REF:1-3TOP:Productivity,IncomeMSC:Interpretive163.SupposethattheaverageincomeofaKenyanishigherthantheaverageincomeofaSouthAfrican.Youmightconcludethata.SouthAfricanfirmsarefacedwithstrictergovernmentregulationsthanKenyanfirms.b.totalincomeisdividedamongfewerworkersinKenyasinceithasasmallerlaborforcethanSouthAfrica.c.Kenya'sclimateallowsforlongergrowingseasonsandthereforeKenyacanproducelargequantitiesofgrainandothercrops.d.productivityinKenyaishigherthaninSouthAfrica.ANS:DDIF:2REF:1-3TOP:Productivity,IncomeMSC:Applicative-.word.zl\n.-164.AtypicalworkerinItalycanproduce24unitsofproductinaneight-hourday,whileatypicalworkerinPolandcanproduce25unitsofproductina10-hourday.Wecanconcludethata.workerproductivityinPolandishigherthaninItaly.b.thestandardoflivingwilllikelybehigherinItalythaninPoland.c.productivityis3unitsperhourforthePolishworkerand21/2unitsperhourfortheItalianworker.d.therewillbenodifferencebetweenthestandardoflivinginItalyandPoland.ANS:BDIF:3REF:1-3TOP:Productivity,StandardoflivingMSC:Applicative-.word.zl\n.-165.AworkerinBangladeshcanearn$1perdaymakingcottonclothonahandloom.AworkerintheUnitedStatescanearn$100perdaymakingcottonclothwithamechanicalloom.Whataccountsforthedifferenceinwages?a.U.S.textileworkersbelongtoaunion.b.ThereislittledemandforcottonclothinBangladeshandgreatdemandintheU.S.c.Laborismoreproductivemakingcottonclothwithamechanicalloomthanwithahandloom.d.Bangladeshhasalow-wagepolicytomakeitstextileindustrymorecompetitiveinworldmarkets.ANS:CDIF:3REF:1-3TOP:ProductivityMSC:Applicative166.Overthepastcentury,theaverageincomeintheUnitedStateshasrisenabouta.twofold.b.fivefold.c.eightfold.d.tenfold.ANS:CDIF:1REF:1-3TOP:IncomeMSC:Definitional-.word.zl\n.-167.IntheUnitedStates,incomeshavehistoricallygrowna.about10percentperyear.b.about5percentperyear.c.about2percentperyear.d.about0.5percentperyear.ANS:CDIF:1REF:1-3TOP:IncomeMSC:Definitional168.Almostallvariationinlivingstandardsisattributabletodifferencesincountries'a.populationgrowthrates.b.productivity.c.systemsofpubliceducation.d.taxes.ANS:BDIF:2REF:1-3TOP:StandardoflivingMSC:Interpretive-.word.zl\n.-169.Productivityisdefinedasthea.amountofgoodsandservicesproducedfromeachhourofaworker'stime.b.numberofworkersrequiredtoproduceagivenamountofgoodsandservices.c.amountoflaborwhichcanbesavedbyreplacingworkerswithmachines.d.actualamountofeffortworkersputintoanhourofworkingtime.ANS:ADIF:2REF:1-3TOP:ProductivityMSC:Definitional170.Theamountofgoodsandservicesproducedfromeachhourofaworker'stimeiscalleda.totaloutput.b.productivity.c.marginalproduct.d.efficiency.ANS:BDIF:1REF:1-3TOP:ProductivityMSC:Definitional-.word.zl\n.-171.Adirectorpositiverelationshipexistsbetweenacountry'sa.productivityanditsstandardofliving.b.amountofgovernmentspendinganditsproductivity.c.totalpopulationanditsaveragecitizen’sincome.d.rateofpopulationgrowthandtheextentofitstradewithothercountries.ANS:ADIF:2REF:1-3TOP:Productivity,StandardoflivingMSC:Interpretive172.ThehistoricalriseinlivingstandardsofAmericanworkersisprimarilyaresultofa.theinfluenceoflaborunionsinAmerica.b.tariffprotectionimposedbytheAmericangovernment.c.theenactmentofminimum-wagelawsinAmerica.d.theriseinAmericanproductivity.ANS:DDIF:2REF:1-3TOP:Productivity,StandardoflivingMSC:Interpretive-.word.zl\n.-173.Thefactthatdifferentcountriesexperiencedifferentstandardsoflivingislargelyexplainedbydifferencesinthosecountries'a.populations.b.productivitylevels.c.locations.d.noneoftheabove;economistsarepuzzledbydifferencesinstandardsoflivingaroundtheworld.ANS:BDIF:1REF:1-3TOP:Standardofliving,ProductivityMSC:Interpretive174.TheslowgrowthofU.S.incomesduringthe1970sand1980scanbestbeexplainedbya.unstableeconomicconditionsinEasternEurope.b.increasedcompetitionfromabroad.c.adeclineintherateofincreaseinU.S.productivity.d.astrongU.S.dollarabroad,hurtingU.S.exports.ANS:CDIF:3REF:1-3TOP:Productivity,IncomeMSC:Applicative-.word.zl\n.-175.IncomesofU.S.householdsinthe1970sand1980sa.grewrapidly,duetothewidespreadsuccessoflaborunionsinpushingupwagesduringthosedecades.b.grewrapidly,duetoseveralincreasesintheminimumwageduringthosedecades.c.grewrapidly,duetogovernmentpoliciesthatdiscouragedtheimportationofforeignproductsduringthosedecades.d.grewslowly,duetoslowgrowthoftheoutputofgoodsandservicesperhourofU.S.workers'timeduringthosedecades.ANS:DDIF:2REF:1-3TOP:Productivity,IncomeMSC:Applicative176.Toimprovelivingstandards,policymakersshoulda.imposerestrictiononforeigncompetition.b.formulatepoliciesdesignedtoincreaseproductivity.c.imposetougherimmigrationpolicies.d.providetaxbreaksforthemiddleclass.ANS:BDIF:2REF:1-3TOP:Productivity,StandardoflivingMSC:Applicative-.word.zl\n.-177.Policiestoenhancelivingstandardsshouldbedesignedtoensurethatworkersa.haveaccesstothebestavailablemethodsofproducinggoodsandservices.b.havetheappropriateequipmenttoproducegoodsandservices.c.receivegoodeducations.d.Alloftheabovearecorrect.ANS:DDIF:2REF:1-3TOP:ProductivityMSC:Interpretive178.Toincreaselivingstandards,publicpolicyshoulda.ensurethatworkersarewelleducatedandhavethenecessarytoolsandtechnology.b.makeunemploymentbenefitsmoregenerous.c.moveworkersintojobsdirectlyfromhighschool.d.ensureagreaterdegreeofequity,takingallincome-earnersintoaccount.ANS:ADIF:2REF:1-3TOP:Productivity,StandardoflivingMSC:Applicative-.word.zl\n.-179.Toraiseproductivity,policymakerscoulda.increasespendingoneducation.b.providetaxcreditstofirmsforcapitalimprovements.c.fundresearchanddevelopment.d.Alloftheabovearecorrect.ANS:DDIF:3REF:1-3TOP:Productivity,GovernmentMSC:Applicative180.Anincreaseintheoveralllevelofpricesinaneconomyisreferredtoasa.economicgrowth.b.inflation.c.thepriceeffect.d.thedemandeffect.ANS:BDIF:1REF:1-3TOP:InflationMSC:Definitional181.Inflationisdefinedasa.aperiodofrisingproductivityintheeconomy.b.aperiodofrisingincomeintheeconomy.c.anincreaseintheoveralllevelofoutputintheeconomy.d.anincreaseintheoveralllevelofpricesintheeconomy.ANS:DDIF:1REF:1-3TOP:InflationMSC:Definitional-.word.zl\n.-182.Intheearly1920s,a.Germanyexperiencedaveryhighrateofinflation.b.thequantityofGermanmoneywasdecliningrapidly.c.thevalueofGermanmoneyremainedalmostconstant.d.Alloftheabovearecorrect.ANS:ADIF:2REF:1-3TOP:Inflation,MoneyMSC:Interpretive183.InGermanyintheearly1920s,onaverage,a.priceswererising50percenteverymonth,whilethequantityofmoneywasrising20percenteverymonth.b.pricesweredoublingeverymonth,whilethequantityofmoneyfell10percenteverymonth.c.pricesweretriplingeverymonth,whilethequantityofmoneyremainedalmostconstanteverymonth.d.pricesandthequantityofmoneybothtripledeverymonth.ANS:DDIF:2REF:1-3TOP:Inflation,MoneyMSC:Interpretive-.word.zl\n.-184.Duringtheearly1920sinGermany,pricesa.doubledannually.b.doubledmonthly.c.tripledmonthly.d.tripledannually.ANS:CDIF:2REF:1-3TOP:InflationMSC:Definitional185.Oneofthe20thcentury’sworstepisodesofinflationoccurredina.theUnitedStatesinthe1960s.b.Italyinthe1950s.c.Russiainthe1930s.d.Germanyinthe1920s.ANS:DDIF:1REF:1-3TOP:InflationMSC:Definitional186.IntheUnitedStates,theoveralllevelofpricesmorethandoubledduringthea.1950s.b.1960s.c.1970s.d.1980s.ANS:CDIF:1REF:1-3TOP:InflationMSC:Definitional-.word.zl\n.-187.Largeorpersistentinflationisalmostalwayscausedbya.excessivegovernmentspending.b.excessivegrowthinthequantityofmoney.c.foreigncompetition.d.higher-than-normallevelsofproductivity.ANS:BDIF:2REF:1-3TOP:InflationMSC:Interpretive188.PresidentGeraldFordreferredtoinflationasa.ablightonournation'seconomy.b.anecessaryeviltocombathighunemployment.c.publicenemynumberone.d.aflyintheointment.ANS:CDIF:2REF:1-3TOP:InflationMSC:Interpretive189.TheU.S.presidentwhoreferredtoinflationas“publicenemynumberone〞wasa.RichardNixon.b.GeraldFord.c.JimmyCarter.d.RonaldReagan.ANS:BDIF:1REF:1-3TOP:InflationMSC:Interpretive-.word.zl\n.-190.Inthe1990s,inflationintheUnitedStateswasa.veryclosetozero.b.about3percentperyear.c.about6percentperyear.d.commonlyreferredtoas“publicenemynumberone.〞ANS:BDIF:2REF:1-3TOP:InflationMSC:Interpretive191.Lowratesofinflationaregenerallyassociatedwitha.lowratesofgovernmentspending.b.smallornonexistentgovernmentbudgetdeficits.c.lowratesofproductivitygrowth.d.lowratesofgrowthofthequantityofmoney.ANS:DDIF:2REF:1-3TOP:InflationMSC:Interpretive-.word.zl\n.-192.Whichofthefollowingisthemostcorrectstatementabouttherelationshipbetweeninflationandunemployment?a.Intheshortrun,fallinginflationisassociatedwithfallingunemployment.b.Intheshortrun,fallinginflationisassociatedwithrisingunemployment.c.Inthelongrun,fallinginflationisassociatedwithfallingunemployment.d.Inthelongrun,fallinginflationisassociatedwithrisingunemployment.ANS:BDIF:2REF:1-3TOP:Inflation,Unemployment,TradeoffsMSC:Applicative-.word.zl\n.-193.Themainstreamviewamongeconomistsisthata.societyfacesatradeoffbetweenunemploymentandinflation,butonlyintheshortrun.b.societyfacesatradeoffbetweenunemploymentandinflation,butonlyinthelongrun.c.societyfacesatradeoffbetweenunemploymentandinflation,bothintheshortrunandinthelongrun.d.notradeoffexistsbetweenunemploymentandinflation,eitherintheshortrunorinthelongrun.ANS:ADIF:2REF:1-3TOP:Inflation,Unemployment,TradeoffsMSC:Applicative194.Intheearly1980s,U.S.economicpolicywasdirectedtowardreducinginflation.Whatwouldyouhaveexpectedtoobserveduringthisshortperiodoftime?a.Inflationfellandunemploymentfell.b.Inflationandunemploymentwerebothunaffected.c.Inflationfellandunemploymentincreased.d.Inflationfellandunemploymentwasunchanged.ANS:CDIF:2REF:1-3TOP:Inflation,Unemployment,TradeoffsMSC:Applicative-.word.zl\n.-195.Between1929and1933,theU.S.economywentfromasituationoffullemploymenttooneof25percentunemployment.Whichofthefollowingeventswouldyouhaveexpectedtoobserveoverthisrelativelyshortperiodoftime?a.Theoverallpricelevelremainedunchanged.b.Theoverallpriceleveldecreased.c.Theoverallpricelevelincreased.d.Itisimpossibletospeculateonwhathappenedtotheoveralllevelofpricesfromtheinformationgiven.ANS:BDIF:2REF:1-3TOP:Inflation,Unemployment,TradeoffsMSC:Applicative196.Thebusinesscycleisthea.relationshipbetweenunemploymentandinflation.b.irregularfluctuationsineconomicactivity.c.positiverelationshipbetweenthequantityofmoneyinaneconomyandinflation.d.predictablechangesineconomicactivityduetochangesingovernmentspendingandtaxes.ANS:BDIF:1REF:1-3TOP:BusinesscycleMSC:Definitional-.word.zl\n.-197.WhichofthefollowingismostlikelytoraisetheaveragematerialstandardoflivingintheUnitedStates?a.anincreaseininvestmentinnewcapitalb.acontinuationoftheeconomicproblemsexperiencedbyChina,withwhomtheUnitedStatescompetesinworldmarketsc.anincreaseintheminimumlegalwaged.ashorteningoftheaverageworkweekANS:ADIF:2REF:1-3TOP:StandardoflivingMSC:Applicative198.Duringthe1990s,theUnitedKingdomexperiencedlowlevelsofinflationwhileTurkeyexperiencedhighlevelsofinflation.Alikelyexplanationofthesefactsisthata.theUnitedKingdomismoreindustrializedthanTurkey.b.therateofgrowthofthequantityofmoneywasslowerintheUnitedKingdomthaninTurkey.c.workersintheUnitedKingdomarelessproductivethanworkersinTurkey.d.thereweremorecasesofmarketfailureinTurkeythanintheUnitedKingdom.ANS:BDIF:2REF:1-3TOP:Inflation,MoneyMSC:Interpretive-.word.zl\n.-199.Whichofthefollowingclaimsisconsistentwiththeviewsofmainstreameconomists?a.Ifweincreasetherateofinflationfrom3percentto6percent,thentherateofunemploymentwilltemporarilyfall.b.Ifweincreasetherateofinflationfrom3percentto6percent,thentherateofunemploymentwilltemporarilyrise.c.Ifweincreasetherateofinflationfrom3percentto6percent,thentherateofunemploymentwillpermanentlyfall.d.Ifweincreasetherateofinflationfrom3percentto6percent,thentherateofunemploymentwillpermanentlyrise.ANS:ADIF:2REF:1-3TOP:Inflation,Unemployment,TradeoffsMSC:Applicative-.word.zl\n.-200.Topromotegoodeconomicoutcomes,policymakersshouldstrivetoenactpoliciesthata.enhanceproductivity.b.enhanceindividuals'marketpower.c.resultinarapidly-growingquantityofmoney.d.Alloftheabovearecorrect.ANS:ADIF:2REF:1-2,1-3TOP:Productivity,Marketpower,InflationMSC:Applicative201.Thetradeoffbetweeninflationandunemploymenta.impliesthatpoliciesdesignedtoreduceunemploymentalsoreduceinflation.b.waseliminatedbyimprovedeconomicpoliciesinthe1900s.c.isalong-runtradeoff,persistingfordecades,accordingtomosteconomists.d.Noneoftheabovearecorrect.ANS:DDIF:2REF:1-3TOP:Inflation,Unemployment,TradeoffsMSC:Interpretive-.word.zl\n.-202.Oneofhistory'smostsevereepisodesofinflationoccurreda.intheU.S.inthe1920s.b.inGermanyinthe1920s.c.intheU.S.inthe1970s.d.inGermanyinthe1970s.ANS:BDIF:1REF:1-3TOP:InflationMSC:Definitional203.DuringwhichdecadedidtheUnitedStatesexperienceaninflationaryepisodesimilartothatexperiencedbyGermanyduringthe1920s?a.the1880sb.the1930sc.the1970sd.Noneoftheabovearecorrect.ANS:DDIF:2REF:1-3TOP:InflationMSC:Interpretive-.word.zl\n.-204.TherelativelylowinflationexperiencedintheUnitedStatesinthe1990sisattributabletoa.slowgrowthofU.S.productivityduringthe1990s.b.slowgrowthofthequantityofmoneyintheU.S.inthe1990s.c.lowlevelsofgovernmentspendingintheU.S.inthe1980sand1990s.d.theeight-yearpresidencyofWilliamJeffersonClintonduringthe1990s.ANS:BDIF:2REF:1-3TOP:Inflation,MoneyMSC:Interpretive205.Germanycouldhaveavoidedthehighinflationthatitexperiencedinthe1920sbya.notdirectingsomanyofitsresourcestowardpreparationforWorldWarII.b.notincreasingtaxessomuchontheGermanmiddleclass.c.notallowingthequantityofmoneytoincreasesorapidly.d.usinggovernmentpoliciestostimulatetheeconomymoresothanwhatwasdone.ANS:CDIF:2REF:1-3TOP:Inflation,MoneyMSC:Applicative-.word.zl\n.-206.Inaparticularcountryin1995,theaverageworkerneededtowork25hourstoproduce40unitsofoutput.Inthatsamecountryin2005,theaverageworkerneededtowork40hourstoproduce68unitsofoutput.Inthatcountry,theproductivityoftheaverageworkera.decreasedby1.7percentbetween1995and2005.b.remainedunchangedbetween1995and2005.c.increasedby4.75percentbetween1995and2005.d.increasedby6.25percentbetween1995and2005.ANS:DDIF:3REF:1-3TOP:ProductivityMSC:Analytical-.word.zl\n.-207.Inaparticularcountryin1995,theaverageworkerneededtowork30hourstoproduce40unitsofoutput.Inthatsamecountryin2005,theaverageworkerneededtowork20hourstoproduce29unitsofoutput.Inthatcountry,theproductivityoftheaverageworkera.decreasedbetween1995and2005,sowewouldexpectthestandardoflivingtohavedecreasedaccordingly.b.increasedbetween1995and2005,sowewouldexpectthestandardoflivingtohaveincreasedaccordingly.c.decreasedbetween1995and2005,sowewouldexpectinflationtohavedecreasedaccordingly.d.increasedbetween1995and2005,sowewouldexpectinflationtohaveincreasedaccordingly.ANS:BDIF:3REF:1-3TOP:Productivity,StandardoflivingMSC:Analytical-.word.zl\n.-208.IntheimaginarycountryofCountriana,in1996,theaverageworkerhadtowork10hourstoproduce20unitsofoutput.Inthatsamecountryin2006,theaverageworkerneededtowork18hourstoproduce36unitsofoutput.Inthatcountry,theproductivityoftheaverageworkera.increasedby2percentbetween1996and2006.b.increasedby5percentbetween1996and2006.c.remainedunchangedbetween1996and2006.d.decreasedby3percentbetween1996and2006.ANS:CDIF:3REF:1-3TOP:ProductivityMSC:Analytical-.word.zl\n.-209.Whichofthefollowingstatementsiscorrectabouthoweconomistsviewtheeffectsofincreasesinthequantityofmoney?a.Theshort-runeffectsarewellunderstood,butthelong-runeffectsarestillthesubjectofcontroversyamongeconomists.b.Thelong-runeffectsarewellunderstood,buttheshort-runeffectsarestillthesubjectofcontroversyamongeconomists.c.Boththeshort-runeffectsandthelong-runeffectsarewellunderstood.d.Neithertheshort-runeffectsnorthelong-runeffectsarewellunderstood.ANS:BDIF:2REF:1-3TOP:Money,Shortrun,LongrunMSC:Interpretive210.Mosteconomistsbelievethatanincreaseinthequantityofmoneyresultsina.anincreaseinthedemandforgoodsandservices.b.lowerunemploymentintheshortrun.c.higherinflationinthelongrun.d.Alloftheabovearecorrect.ANS:DDIF:3REF:1-3TOP:Money,Inflation,UnemploymentMSC:Applicative-.word.zl\n.-211.Theshort-runtradeoffbetweeninflationandunemploymentimpliesthat,intheshortrun,a.adecreaseinthegrowthrateofthequantityofmoneywillbeaccompaniedbyanincreaseintheunemploymentrate.b.anincreaseinthegrowthrateofthequantityofmoneywillbeaccompaniedbyanincreaseintheunemploymentrate.c.policymakersareabletoreducetheinflationrateand,atthesametime,reducetheunemploymentrate.d.policymakerscaninfluencetheinflationrate,butnottheunemploymentrate.ANS:ADIF:3REF:1-3TOP:Inflation,Unemployment,TradeoffsMSC:ApplicativeTrue/False1.Scarcitymeansthatthereislessofagoodorresourceavailablethanpeoplewishtohave.ANS:TPTS:1DIF:1REF:1-1TOP:ScarcityMSC:Definitional2.Economicsisthestudyofhowfairlygoodsandservicesaredistributedwithinsociety.ANS:FPTS:1DIF:1REF:1-1TOP:EconomicsMSC:Definitional-.word.zl\n.-3.Withcarefulplanning,wecanusuallygetsomethingthatwelikewithouthavingtogiveupsomethingelsethatwelike.ANS:FPTS:1DIF:2REF:1-1TOP:TradeoffsMSC:Interpretive4.Equitymeanseveryoneintheeconomyshouldreceiveanequalshareofthegoodsandservicesproduced.ANS:FPTS:1DIF:2REF:1-1TOP:EquityMSC:Definitional5.Equityreferstohowthepieisdivided,andefficiencyreferstothesizeoftheeconomicpie.ANS:TPTS:1DIF:2REF:1-1TOP:Equity|EfficiencyMSC:Definitional6.Tuitionisthesingle-largestcostofattendingcollegeformoststudents.ANS:FPTS:1DIF:1REF:1-1TOP:OpportunitycostMSC:Interpretive7.Thecostofanactionismeasuredintermsofforegoneopportunities.ANS:TPTS:1DIF:1REF:1-1TOP:OpportunitycostMSC:Interpretive-.word.zl\n.-8.Amarginalchangeisasmallincrementaladjustmenttoanexistingplanofaction.ANS:TPTS:1DIF:1REF:1-1TOP:MarginalchangesMSC:Definitional9.IftheaveragecostoftransportingapassengeronthetrainfromChicagotoSt.Louisis$75,itwouldbeirrationalfortherailroadtoallowanypassengertorideforlessthan$75.ANS:FPTS:1DIF:2REF:1-1TOP:MarginalchangesMSC:Applicative10.Arationaldecisionmakertakesanactionifandonlyifthemarginalcostexceedsthemarginalbenefit.ANS:FPTS:1DIF:2REF:1-1TOP:MarginalchangesMSC:Interpretive11.Tradeallowseachpersontospecializeintheactivitiesheorshedoesbest,thusincreasingeachindividual'sproductivity.ANS:TPTS:1DIF:2REF:1-2TOP:Trade|ProductivityMSC:Interpretive12.Tradewithanynationcanbemutuallybeneficial.ANS:TPTS:1DIF:2REF:1-2TOP:TradeMSC:Interpretive-.word.zl\n.-13.Amarketeconomycannotproduceasociallydesirableoutcomebecauseindividualsaremotivatedbytheirownselfishinterests.ANS:FPTS:1DIF:2REF:1-2TOP:MarketeconomyMSC:Interpretive14.Thegovernmentcanpotentiallyimprovemarketoutcomesifmarketinequalitiesormarketfailureexists.ANS:TPTS:1DIF:2REF:1-2TOP:Government|MarketeconomyMSC:Interpretive15.Marketfailurereferstoasituationinwhichthemarketdoesnotallocateresourcesefficiently.ANS:TPTS:1DIF:1REF:1-2TOP:MarketfailureMSC:Definitional16.Sincetaxesaffectonlythepricepaidbythebuyer,theycannothaveanadverseimpactontheallocationofsociety'sresources.ANS:FPTS:1DIF:2REF:1-2TOP:TaxesMSC:Interpretive17.Productivityisdefinedasthequantityofgoodsandservicesproducedfromeachhourofaworker'stime.ANS:TPTS:1DIF:1REF:1-3TOP:ProductivityMSC:Definitional-.word.zl\n.-18.Productivityistheprimarydeterminantofacountry'slivingstandards.ANS:TPTS:1DIF:2REF:1-3TOP:Productivity|StandardoflivingMSC:Interpretive19.Inflationincreasesthevalueofmoney.ANS:FPTS:1DIF:2REF:1-3TOP:InflationMSC:Interpretive20.Governmentspendingistheultimatesourceofinflation.ANS:FPTS:1DIF:2REF:1-3TOP:Inflation|GovernmentMSC:InterpretiveShortAnswer1.Howdoesthestudyofeconomicsdependuponthephenomenonofscarcity?ANS:Sinceeconomicsisthestudyofhowsocietyallocatesitsscarceresources,iftherewerenoscarcity,therewouldbenoneedforeconomics.Everyonecouldhaveallthegoodsandservicestheywanted.Noonewouldhavetomakedecisionsbasedontradeoffs,becausetherewouldbenoopportunitycostassociatedwiththedecision.(Itisdifficulttoconceiveofasituationwheretimeisnotscarce,however).PTS:1DIF:2REF:1-1TOP:Economics|ScarcityMSC:Applicative-.word.zl\n.-2.Onetradeoffsocietyfacesisbetweenefficiencyandequity.Defineeachterm.IftheU.S.governmentredistributesincomefromtherichtothepoor,explainhowthisactionaffectsequityaswellasefficiencyintheeconomy.ANS:Efficiencyisthepropertyofsocietygettingthemostitcanfromitsscarceresources.Equityisdefinedasthepropertyofdistributingeconomicprosperityfairlyamongthemembersofsociety.Often,thesetwogoalsconflict.Whenthegovernmentredistributesincomefromtherichtothepoor,itreducestherewardforworkinghard.Fewergoodsandservicesareproducedandtheeconomicpiegetssmaller.Whenthegovernmenttriestocuttheeconomicpieintomoreequalslices,thepiegetssmaller.Policiesaimedatachievingamoreequaldistributionofeconomicwell-being,suchasthewelfaresystem,trytohelpthosemembersofsocietywhoaremostinneed.Theindividualincometaxasksthefinanciallysuccessfultocontributemorethanotherstosupportthegovernment.PTS:1DIF:2REF:1-1TOP:Tradeoffs|Efficiency|EquityMSC:Interpretive-.word.zl\n.-3.Defineopportunitycost.Whatistheopportunitycosttoyouofattendingcollege?Whatwasyouropportunitycostofcomingtoclasstoday?ANS:Whatevermustbegivenuptoobtainsomeitemititsopportunitycost.Basically,thiswouldbeaperson'ssecondchoice.Theopportunitycostofapersonattendingcollegeisthevalueofthebestalternativeuseofthatperson'stime.Formoststudentsthiswouldbetheincomethestudentgivesupbynotworking.Astudent'sopportunitycostofcomingtoclasswasthevalueofthebestopportunitythestudentgaveup.(Formoststudents,thatseemstobesleep.)PTS:1DIF:2REF:1-1TOP:OpportunitycostMSC:Interpretive-.word.zl\n.-4.Withtheunderstandingthatpeoplerespondtoincentives,outlinethepossibleoutcomeforteachersiftheK-12schoolyearisextendedto11monthsperyearinsteadoftheexisting9monthsperyear.ANS:Theconceptofworkinglongerperyearwouldbeperceivedbymanyteachersasadefiniteincreaseinthecostofteaching.Evenwithadditionalcompensation,manyteacherslookatsummersoffasamajorbenefitoftheeducationprofession.Ifthisbenefitwereeliminatedordiminished,someteachersmayperceivethatthemarginalcostofteachingwouldnowbegreaterthanthemarginalbenefitandwouldchoosetoleaveteaching.PTS:1DIF:3REF:1-1TOP:IncentivesMSC:Analytical5.Underwhatconditionsmightgovernmentinterventioninamarketeconomyimprovetheeconomy’sperformance?ANS:Ifthereisamarketfailure,suchasanexternalityormonopoly,governmentregulationmightimprovethewell-beingofsocietybypromotingefficiency.Ifthedistributionofincomeorwealthisconsideredtobeunfairbysociety,governmentinterventionmightachieveamoreequitabledistributionofeconomicwell-being.-.word.zl\n.-PTS:1DIF:2REF:1-2TOP:Marketeconomy|GovernmentMSC:Applicative6.Explainhowanattemptbythegovernmenttolowerinflationcouldcauseunemploymenttoincreaseintheshort-run.ANS:Tolowerinflation,thegovernmentmaychoosetoreducethemoneysupplyintheeconomy.Whenthemoneysupplyisreduced,pricesdon'tadjustimmediately.Lowerspending,combinedwithpricesthataretoohigh,reducessalesandcausesworkerstobelaidoff.Hence,thelowerpricelevelisassociatedwithhigherunemployment.PTS:1DIF:2REF:1-3TOP:Inflation|Unemployment|TradeoffsMSC:Applicative教育之通病是教用脑的人不用手，不教用手的人用脑，所以一无所能。教育革命的对策是手脑联盟，结果是手与脑的力量都可以大到不可思议。-.word.zl