Question 1

Why is a high quality education system important in raising living standards for future generations?

Accepted Answer

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Question 2

Policymakers can affect inflation and unemployment in the short term by
A)eliminating externalities.
B)giving the central bank independence.
C)changing the amount that the government spends.
D)encouraging firms to think at the margin.

Accepted Answer

Policymakers can affect inflation and unemployment in the short term by changing the amount that the government spends. By increasing government spending, aggregate demand increases, leading to an increase in employment and output in the short term. However, if the economy is already at full employment, this increased demand could lead to inflation.

Question 3

Explain why there is a short-run trade-off between inflation and unemployment.

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Question 4

Outline one example of the principle of 'thinking at the margin.'

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Question 5

Define opportunity cost.What is the opportunity cost to you of attending university? What was your opportunity cost of coming to class today?

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Question 6

Productivity can be increased by
A)improving the education of workers.
B)raising union wages.
C)raising minimum wages.
D)restricting trade with foreign countries.

Accepted Answer

Improving the education of workers can help increase their skills and knowledge, making them more productive in their jobs. This can lead to increased efficiency and output, ultimately increasing overall productivity in the economy. Raising union wages or minimum wages may lead to increased employee satisfaction and reduced turnover, but it does not necessarily directly impact productivity. Restricting trade with foreign countries may limit competition and protect domestic industries, but it can also lead to higher prices and reduced efficiency in the long run.

Question 7

When are markets not a good way to organise economic activity?

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Question 8

Which of the following is not part of the opportunity cost of going on holiday? The money you
A)spent on a theatre show.
B)could have made if you had stayed at home and worked.
C)spent on airline tickets.
D)spent on another opportunity.

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Question 9

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

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Question 10

Under what conditions might government intervention in a market economy improve the economy's performance?

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Question 11

The business cycle is the
A)relationship between unemployment and inflation.
B)irregular fluctuations in economic activity.
C)positive relationship between the quantity of money in an economy and inflation.
D)predictable changes in economic activity due to changes in government spending and taxes.

Accepted Answer

The business cycle refers to the irregular fluctuations in economic activity, including expansions (periods of economic growth and increasing employment), contractions (periods of economic decline and increasing unemployment), and the peaks and troughs that mark the beginning and end of each of these phases. It is not specifically related to any one economic factor, such as unemployment or government spending.

Question 12

Both the production of goods and services and the unemployment rate are used to measure
A)the business cycle.
B)productivity.
C)the interest rate.
D)inflation.

Accepted Answer

Both the production of goods and services and the unemployment rate are key indicators used to track the business cycle. The level of production can indicate whether the economy is expanding or contracting, while the unemployment rate can provide insight into the overall health of the labor market. Therefore, A is the best choice. B is incorrect because productivity is typically measured independently of these two factors. C is incorrect because while interest rates can be affected by changes in the business cycle, they are not measuring the cycle itself. D is incorrect because inflation is also not a direct measure of the business cycle, although it can be related to it.

Question 13

For which of the following individuals would the opportunity cost of going to university be highest?
A)A promising young mathematician who will command a high salary once she earns her university degree.
B)A student with average grades who has never held a job.
C)A famous, highly-paid actor who wants to take time away from show business to finish university and earn a degree.
D)A student who is the best player on his university rugby team, but who lacks the skills necessary to play professional rugby.

Accepted Answer

The opportunity cost is highest for the famous, highly-paid actor because they would be giving up a substantial income from their acting career to attend university.

Question 14

One trade-off society faces is between efficiency and equality.Define each term.If the South African government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

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Question 15

With the understanding that people respond to incentives, outline the possible outcome for teachers if school holidays are reduced.

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Question 16

An increase in the price of beef provides
A)no information because prices in a market system are managed by planning boards.
B)information which tells consumers to buy less pork.
C)information which tells producers to produce more beef.
D)information which tells consumers to buy more beef.

Accepted Answer

An increase in the price of beef indicates that the demand for beef is higher than the supply, and producers will respond by increasing production to reap higher profits. This is the market mechanism and not managed by planning boards. Therefore, the correct answer is C. Option A is incorrect because prices in a market system are not managed by planning boards. Option B is incorrect since an increase in beef prices does not indicate that consumers should buy less pork. Option D is incorrect because consumers may respond to the price increase by buying less beef, not more.

Question 17

How does the study of economics depend upon the phenomenon of scarcity?

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Quiz 1: What Is Economics

Why is a high quality education system important in raising living standards for future generations?

Policymakers can affect inflation and unemployment in the short term by

Explain why there is a short-run trade-off between inflation and unemployment.

Outline one example of the principle of 'thinking at the margin.'

Define opportunity cost.What is the opportunity cost to you of attending university? What was your opportunity cost of coming to class today?

Productivity can be increased by

When are markets not a good way to organise economic activity?

Which of the following is not part of the opportunity cost of going on holiday? The money you

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

Under what conditions might government intervention in a market economy improve the economy's performance?

The business cycle is the

Both the production of goods and services and the unemployment rate are used to measure

For which of the following individuals would the opportunity cost of going to university be highest?

One trade-off society faces is between efficiency and equality.Define each term.If the South African government redistributes income from the rich to the poor, explain how this action affects equality as well as efficiency in the economy.

With the understanding that people respond to incentives, outline the possible outcome for teachers if school holidays are reduced.

An increase in the price of beef provides

How does the study of economics depend upon the phenomenon of scarcity?