Sample Exam 1

Sample Exam 1 - Sample Exam 1-Note this is a lot longer...

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Sample Exam 1—Note this is a lot longer than your actual exam will be. Also it covers slightly different material than we did this semester—you won’t see any questions on Ch. 23. Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The overriding reason as to why households and societies face many decisions is that a. resources are scarce. b. goods and services are not scarce. c. incomes fluctuate with business cycles. d. people, by nature, tend to disagree. ____ 2. For most students, the largest single cost of a college education is a. the wages given up to attend school. b. tuition, fees, and books. c. room and board. d. transportation, parking, and entertainment. ____ 3. Government policies can change the costs and benefits that people face. Those policies have the potential to a. alter people’s behavior. b. alter people’s decisions at the margin. c. produce results that policymakers did not intend. d. All of the above are correct. ____ 4. Which of the following statements exemplifies a principle of individual decisionmaking? a. Trade can make everyone better off. b. Governments can sometimes improve market outcomes. c. The cost of something is what you give up to get it. d. All of the above are correct. ____ 5. Senator Smart, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Smart should argue that trade can be beneficial a. only if it allows us to obtain things that we couldn't make for ourselves. b. because it allows specialization, which increases total output. c. to us if we can gain and the others involved in the trade lose. d. in only a limited number of circumstances because others are typically self-interested. ____ 6. The term "invisible hand" was coined by a. Adam Smith. b. David Ricardo. c. Karl Marx. d. Benjamin Franklin. ____ 7. The basic principles of economics suggest that a. markets are seldom, if ever, a good way to organize economic activity. b. government should become involved in markets when trade between countries is involved. c. government should become involved in markets when those markets fail to produce efficient or equitable outcomes. d. All of the above are correct. ____ 8. Which of the following is not generally regarded as a legitimate reason for the government to intervene in a market? a. to promote efficiency b. to promote equity
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c. to enforce property rights d. to protect an industry from foreign competition ____ 9. The relatively low inflation experienced in the United States in the 1990s is attributable to a. slow growth of U.S. productivity during the 1990s. b.
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Sample Exam 1 - Sample Exam 1-Note this is a lot longer...

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