Question 1

To increase living standards,public policy should

Accepted Answer

Ensuring that workers are well-educated and have the necessary tools and technology would equip them with the skills and means to access higher-paying jobs and increase their earning potential. This in turn would raise living standards for workers and their families. Generous unemployment benefits may provide temporary relief but do not address the underlying issue of lack of well-paying job opportunities. Moving workers into jobs directly after high school may not be feasible for everyone, as some jobs require higher education and specialized training. Ensuring greater equality in income distribution may also be an important goal, but it does not directly address the issue of increasing living standards for all individuals.

Question 2

To raise productivity,policymakers could

Accepted Answer

All of the options listed have the potential to raise productivity. Increasing spending on education can lead to a more skilled and productive workforce. Providing tax credits to firms for capital improvements can incentivize businesses to invest in new technology and equipment that can increase their efficiency. Funding research and development can lead to new innovations and technologies that can improve productivity in various sectors. Therefore, all three options can be effective in raising productivity.

Question 3

A worker in Thailand can earn $2 per day making cotton cloth on a hand loom.A worker in the United States can earn $80 per day making cotton cloth with a mechanical loom.What accounts for the difference in wages?

Accepted Answer

The difference in wages is due to the productivity difference between using a hand loom and a mechanical loom. The worker using a mechanical loom in the US can produce cloth at a much faster rate than the worker using a hand loom in Thailand. This leads to a difference in wages as the worker using a mechanical loom is producing more cloth and is therefore more productive, making them more valuable to the textile industry.

Question 4

To improve living standards,policymakers should

Accepted Answer

Formulating policies designed to increase productivity is the best choice because it leads to long-term growth and improved living standards. Restricting foreign competition and imposing tougher immigration policies may provide short-term benefits but could harm the overall economy in the long run. Tax breaks for the middle class may provide some immediate relief, but may not necessarily lead to sustainable economic growth.

Question 5

The U.S.president who referred to inflation as "public enemy number one" was

Accepted Answer

The answer of The U.S.president who referred to inflation as...

Question 6

Incomes of U.S.households in the 1970s and 1980s

Accepted Answer

The correct choice is D. Incomes of U.S. households in the 1970s and 1980s grew slowly due to the slow growth of the output of goods and services per hour of U.S. workers' time during those decades. This period is known as the "stagflation" era, characterized by a combination of slow economic growth and high inflation, which made it difficult for workers to achieve significant wage gains.

Question 7

One of the 20th century's worst episodes of inflation occurred in

Accepted Answer

Germany experienced hyperinflation in the 1920s, where the value of the German mark plummeted, making it nearly worthless. Prices for goods and services rose rapidly, and people resorted to using alternative currencies, such as cigarettes or gold. The situation was exacerbated by Germany's war reparations following World War I, which put a strain on the country's economy.

Question 8

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

Accepted Answer

An increase in the growth rate of the money supply would lead to an increase in inflation in the long run. However, it would not necessarily change unemployment in the long run as that is determined by a variety of other factors such as technology, demographics, and government policies. Therefore, the correct answer is A, as an increase in the growth rate of the money supply would permanently change inflation but not unemployment.

Question 9

In which of the following decades was there both high inflation and rapid money supply growth in the US?

Accepted Answer

The 1970's had both high inflation and rapid money supply growth, whereas the 1990's had low inflation and moderate money supply growth.

Question 10

To promote good economic outcomes,policymakers should strive to enact policies that

Accepted Answer

Enhancing productivity leads to increases in output and efficiency, which can lead to higher economic growth and increased standards of living. Enhancing individuals' market power could lead to inefficiencies and potentially unfair market practices. Rapidly-growing quantities of money can lead to inflation and macroeconomic instability. Therefore, the most important policy for achieving good economic outcomes is enhancing productivity.

Question 11

Large or persistent inflation is almost always caused by

Accepted Answer

Large or persistent inflation is almost always caused by excessive growth in the quantity of money. When the money supply grows faster than the economy's productive capacity, it leads to too much money chasing too few goods, resulting in an increase in prices.

Question 12

In the United States,the overall level of prices more than doubled during the

Accepted Answer

The 1970s saw a significant increase in inflation due to a combination of factors such as the Vietnam War, oil price shocks, and expansionary monetary policy. This led to an overall increase in prices by more than double.

Question 13

In the early 1920s,

Accepted Answer

In the early 1920s, Germany experienced a very high rate of inflation, with prices skyrocketing and the value of the German mark rapidly depreciation.

Question 14

Most economists believe that an increase in the quantity of money results in

Accepted Answer

The answer of Most economists believe that an increase in...

Question 15

President Gerald Ford referred to inflation as

Accepted Answer

President Gerald Ford famously declared "Inflation is public enemy number one" in 1974, reflecting the severity of the inflation crisis at the time and the priority his administration placed on combating it.

Question 16

Inflation is defined as

Accepted Answer

Inflation refers to an increase in the overall level of prices in the economy. When there is too much money chasing too few goods, the prices of goods and services tend to rise, causing inflation. As a result, the purchasing power of money decreases, making goods and services more expensive. Inflation can lead to a decrease in consumer demand and a decrease in investment, both of which can negatively impact the economy.

Question 17

In the short run,which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?

Accepted Answer

The answer of In the short run,which of the following...

Question 18

During the early 1920s in Germany,prices

Accepted Answer

The answer of During the early 1920s in Germany,prices
...

Question 19

In the 1990s,inflation in the United States was

Accepted Answer

The answer of In the 1990s,inflation in the United States...

Question 20

An increase in the overall level of prices in an economy is referred to as

Accepted Answer

Inflation refers to an increase in the general price level of goods and services in an economy over a period of time. The opposite of inflation is deflation, which refers to a decrease in the general price level. The income effect and substitution effect are concepts in microeconomics that describe how changes in prices affect consumer behavior.

Quiz 1: Ten Principles of Economics