ECON 110 ACTUAL FINALS ANSWERS AND
QUESTIONS SET A+
✔✔market economies - ✔✔they had central planning before, and what did they develop
next
✔✔An Inquiry into the Nature and Causes of the Wealth of Nations (1776) - ✔✔what
book of Adam Smith made the most famous observation
✔✔household and firms interacting in markets act as if they are guided by an "invisible
hand" that leads them to desirable market outcomes - ✔✔most famous observation in
all of ecnomics
✔✔understand how this invisible hand works - ✔✔one of the goals in Economics
✔✔prices are the instrument - ✔✔what will you learn in which the invisible hand directs
economic activity
✔✔maximize the well-being of society as a whole - ✔✔these individuals buyers and
sellers reaches outcomes that
✔✔distort prices and the decisions of household and firms - ✔✔effects of taxes to the
allocation of resources
✔✔governments can sometimes improve market outcomes - ✔✔principle 7
✔✔refine your view about the proper role and scope of government policy - ✔✔one
purpose of studying economics
✔✔if the government enforces the rules and maintains the institutions - ✔✔why do we
need the government for the invisible hand to do its magic
, ✔✔invisible hand - ✔✔describes how people acting in their own self-interest, including
trying to make a profit or finding the best deal and accidentally benefit society as a
whole, without anyone actually planning it
✔✔1. to promote efficiency
2. to promote equality - ✔✔two broad rationales for a government to intervene in the
economy
✔✔market failure - ✔✔the market on its own fails to produce an efficient allocation of
resources
✔✔externality - ✔✔one possible cause of market failure that is the impact of one
person's actions on the well-being of a bystander
✔✔market power - ✔✔one possible cause of market failure is market power that refers
to the ability of a single person or firm to unduly influence market prices
✔✔a country's standard of living depends on its ability to produce goods and services -
✔✔principle 8
✔✔1. well education
2. have the tools they need to produce goods and services
3. have access to the best available technology - ✔✔policymakers need to raise
productivity by ensuring that workers are:
✔✔prices rise when the government prints too much money - ✔✔principle 9
✔✔growth in the quality of money - ✔✔what causes inflation
✔✔keeping inflation at a low level - ✔✔goal of economic policymakers around the world
✔✔society faces a short-run trade-off between inflation and unemployment -
✔✔principle 10
✔✔the overall level of spending - ✔✔increasing the amount of money in the economy
stimulates what
✔✔more complex and controversial - ✔✔the long-run story is the primary effect of
increasing the quantity of money but the short-run story is
✔✔encourages them to hire more workers and produce more - ✔✔what do higher
demand makes firms to do aside from raising their prices
QUESTIONS SET A+
✔✔market economies - ✔✔they had central planning before, and what did they develop
next
✔✔An Inquiry into the Nature and Causes of the Wealth of Nations (1776) - ✔✔what
book of Adam Smith made the most famous observation
✔✔household and firms interacting in markets act as if they are guided by an "invisible
hand" that leads them to desirable market outcomes - ✔✔most famous observation in
all of ecnomics
✔✔understand how this invisible hand works - ✔✔one of the goals in Economics
✔✔prices are the instrument - ✔✔what will you learn in which the invisible hand directs
economic activity
✔✔maximize the well-being of society as a whole - ✔✔these individuals buyers and
sellers reaches outcomes that
✔✔distort prices and the decisions of household and firms - ✔✔effects of taxes to the
allocation of resources
✔✔governments can sometimes improve market outcomes - ✔✔principle 7
✔✔refine your view about the proper role and scope of government policy - ✔✔one
purpose of studying economics
✔✔if the government enforces the rules and maintains the institutions - ✔✔why do we
need the government for the invisible hand to do its magic
, ✔✔invisible hand - ✔✔describes how people acting in their own self-interest, including
trying to make a profit or finding the best deal and accidentally benefit society as a
whole, without anyone actually planning it
✔✔1. to promote efficiency
2. to promote equality - ✔✔two broad rationales for a government to intervene in the
economy
✔✔market failure - ✔✔the market on its own fails to produce an efficient allocation of
resources
✔✔externality - ✔✔one possible cause of market failure that is the impact of one
person's actions on the well-being of a bystander
✔✔market power - ✔✔one possible cause of market failure is market power that refers
to the ability of a single person or firm to unduly influence market prices
✔✔a country's standard of living depends on its ability to produce goods and services -
✔✔principle 8
✔✔1. well education
2. have the tools they need to produce goods and services
3. have access to the best available technology - ✔✔policymakers need to raise
productivity by ensuring that workers are:
✔✔prices rise when the government prints too much money - ✔✔principle 9
✔✔growth in the quality of money - ✔✔what causes inflation
✔✔keeping inflation at a low level - ✔✔goal of economic policymakers around the world
✔✔society faces a short-run trade-off between inflation and unemployment -
✔✔principle 10
✔✔the overall level of spending - ✔✔increasing the amount of money in the economy
stimulates what
✔✔more complex and controversial - ✔✔the long-run story is the primary effect of
increasing the quantity of money but the short-run story is
✔✔encourages them to hire more workers and produce more - ✔✔what do higher
demand makes firms to do aside from raising their prices
