Econ Quiz Unit 1

Why might some historians consider Adam Smith one of the most influential people in history?

• He taught that all people should be economic equals.

• He introduced a way of thinking about economic ideas.

• He argued for a larger role for the government in the economy.

• He wrote the economic argument for American independence.

Which of these statements is an example of normative economics?

• "Taxes ought to be lowered."

• "Inflation is higher this year."

• "The bond market is in decline."

• "Speculation caused a recession."

Which of these terms is most closely related to tradeoffs?

• incentives

• margin

• markets

• scarcity

Which statement is the best example of thinking at the margin?

• John has six shirts and is trying to decide whether to buy a seventh.

• Mary observes that the average cost of shoes is higher than last year.

• David decides to volunteer this summer instead of working for pay.

• Jane wants to buy a car but decides she cannot afford the insurance.

Which of the following is not a market?

• an online auction site

• a large appliance store

• a high school classroom

• a neighborhood garage sale

What is the law of unintended consequences?

• Attempts to intervene always backfire.

• Actions often have unforeseen effects.

• Markets are always influenced by emotional factors.

• Economic booms are always followed by downturns.

Which scenario best illustrates the law of diminishing marginal utility?

• A car breaks down more often as it gets older.

• A collector of china figurines is eager to get a new one.

• Someone who doesn't listen to music does not care about getting a new CD.

• A new toy is less exciting to a child with many toys than to a child with just a few.

Which of these economic goals is most important in a traditional economy?

• growth

• stability

• freedom

• efficiency

Why are economies most efficient when they have full employment?

• No one person has to work too hard.

• Wages are spent for consumer goods.

• Unemployment offices can be closed.

• No productive resources are left unused.

Which kind of economy is most common today?

• command

• market

• mixed

• traditional