Chapter 1—Economics: The World Around You
MULTIPLE CHOICE
1. According to the text, over their lifetimes college-educated people earn
a. nearly twice as much as people without college degrees.
b. nearly 10 times as much as people without college degrees.
c. more than people with limited college but less than those with just a high school
degree.
d. more than people with a high school degree but no more than those with two years
of college.
e. more than those without a college degree for the first ten years of working, but after
that the two are nearly the same.
ANS: A PTS: 1 DIF: Easy REF: Ch 1, 1.a
OBJ: Ch 1, 1 TOP: College degree TYP: Factual
2. According to the text, the objective of economics is
a. to understand why the real world is what it is.
b. to understand money.
c. to understand the stock market.
d. to understand scarcity.
e. to understand greed.
ANS: A PTS: 1 DIF: Easy REF: Ch 1, 2.a
OBJ: Ch 1, 2 TOP: Objective of economics TYP: Factual
,3. According to the text, there are some fundamental regularities of human behavior. One such
regularity is
a. that people behave in ways that make themselves happier.
b. that people behave in ways that make those around them miserable.
c. that people care about others.
d. that people are fundamentally selfish.
e. that people are generous to a fault.
ANS: A PTS: 1 DIF: Easy REF: Ch 1, 2.c
OBJ: Ch 1, 2 TOP: Human behavior TYP: Factual
4. According to the text, the divorce rate of high school graduates is
a. the same as that of college students.
b. one third lower than that of college students.
c. twice as high as that of college students.
d. three times that of college students
e. half that of college students.
ANS: C PTS: 1 DIF: Easy REF: Ch 1, 1.a
OBJ: Ch 1, 1 TOP: College degree TYP: Factual
5. In the United States, before the 2006-2009 stock market collapse, the return on the money
spent to earn a bachelor's degree is
a. 3 percent.
b. 5 percent.
c. 7 percent.
d. 10 percent.
, e. 12 percent.
ANS: E PTS: 1 DIF: Easy REF: Ch 1, 1.a
OBJ: Ch 1, 1 TOP: College degree TYP: Factual
6. Earning a bachelor's degree in economics is good preparation for a career in
a. business.
b. banking.
c. education.
d. the non-profit sector.
e. all of these areas, and more.
ANS: E PTS: 1 DIF: Easy REF: Ch 1, 1.a
OBJ: Ch 1, 1 TOP: College degree TYP: Interpretive
7. Even though the public often hears of economists' disagreements, economists agree on a
wide variety of topics. Particularly, economists tend to agree on
a. the role of fiscal policy in the economy.
b. the role of monetary policy in the economy.
c. the best method of providing health care in the United States.
d. the logic of economics.
e. the latest verdict in the Microsoft anti-trust trial.
ANS: D PTS: 1 DIF: Medium REF: Ch 1, 1.b
OBJ: Ch 1, 1 TOP: Economics TYP: Interpretive
8. Which of the following statements is true?
, a. One definition of economics provided in the text is that economics is the study of
unintended consequences.
b. Although there is wide agreement concerning the logic of economics, economists
often disagree about the results of that logic.
c. In studying the world, economists recognize that every action has costs.
d. If the United States spends more on war, it must give up some domestic spending.
e. All of these choices.
ANS: E PTS: 1 DIF: Medium REF: Ch 1, 1.b
OBJ: Ch 1, 1 TOP: Economics TYP: Interpretive
9. Which of the following issues was of most concern in the 2008 campaign for the US
Presidency?
a. Health care.
b. National security.
c. Economics.
d. Foreign policy.
e. Religion.
ANS: C PTS: 1 DIF: Medium REF: Ch 1, 1.b
OBJ: Ch 1, 1 TOP: Economics TYP: Interpretive
10. By the statement "people have unlimited wants," the author of the text means
a. people always want more goods and services than they have or can purchase with
their incomes.
b. people always have a desire to have more money.
c. people always strive to be the best they can be.
d. people always give 110 percent.
MULTIPLE CHOICE
1. According to the text, over their lifetimes college-educated people earn
a. nearly twice as much as people without college degrees.
b. nearly 10 times as much as people without college degrees.
c. more than people with limited college but less than those with just a high school
degree.
d. more than people with a high school degree but no more than those with two years
of college.
e. more than those without a college degree for the first ten years of working, but after
that the two are nearly the same.
ANS: A PTS: 1 DIF: Easy REF: Ch 1, 1.a
OBJ: Ch 1, 1 TOP: College degree TYP: Factual
2. According to the text, the objective of economics is
a. to understand why the real world is what it is.
b. to understand money.
c. to understand the stock market.
d. to understand scarcity.
e. to understand greed.
ANS: A PTS: 1 DIF: Easy REF: Ch 1, 2.a
OBJ: Ch 1, 2 TOP: Objective of economics TYP: Factual
,3. According to the text, there are some fundamental regularities of human behavior. One such
regularity is
a. that people behave in ways that make themselves happier.
b. that people behave in ways that make those around them miserable.
c. that people care about others.
d. that people are fundamentally selfish.
e. that people are generous to a fault.
ANS: A PTS: 1 DIF: Easy REF: Ch 1, 2.c
OBJ: Ch 1, 2 TOP: Human behavior TYP: Factual
4. According to the text, the divorce rate of high school graduates is
a. the same as that of college students.
b. one third lower than that of college students.
c. twice as high as that of college students.
d. three times that of college students
e. half that of college students.
ANS: C PTS: 1 DIF: Easy REF: Ch 1, 1.a
OBJ: Ch 1, 1 TOP: College degree TYP: Factual
5. In the United States, before the 2006-2009 stock market collapse, the return on the money
spent to earn a bachelor's degree is
a. 3 percent.
b. 5 percent.
c. 7 percent.
d. 10 percent.
, e. 12 percent.
ANS: E PTS: 1 DIF: Easy REF: Ch 1, 1.a
OBJ: Ch 1, 1 TOP: College degree TYP: Factual
6. Earning a bachelor's degree in economics is good preparation for a career in
a. business.
b. banking.
c. education.
d. the non-profit sector.
e. all of these areas, and more.
ANS: E PTS: 1 DIF: Easy REF: Ch 1, 1.a
OBJ: Ch 1, 1 TOP: College degree TYP: Interpretive
7. Even though the public often hears of economists' disagreements, economists agree on a
wide variety of topics. Particularly, economists tend to agree on
a. the role of fiscal policy in the economy.
b. the role of monetary policy in the economy.
c. the best method of providing health care in the United States.
d. the logic of economics.
e. the latest verdict in the Microsoft anti-trust trial.
ANS: D PTS: 1 DIF: Medium REF: Ch 1, 1.b
OBJ: Ch 1, 1 TOP: Economics TYP: Interpretive
8. Which of the following statements is true?
, a. One definition of economics provided in the text is that economics is the study of
unintended consequences.
b. Although there is wide agreement concerning the logic of economics, economists
often disagree about the results of that logic.
c. In studying the world, economists recognize that every action has costs.
d. If the United States spends more on war, it must give up some domestic spending.
e. All of these choices.
ANS: E PTS: 1 DIF: Medium REF: Ch 1, 1.b
OBJ: Ch 1, 1 TOP: Economics TYP: Interpretive
9. Which of the following issues was of most concern in the 2008 campaign for the US
Presidency?
a. Health care.
b. National security.
c. Economics.
d. Foreign policy.
e. Religion.
ANS: C PTS: 1 DIF: Medium REF: Ch 1, 1.b
OBJ: Ch 1, 1 TOP: Economics TYP: Interpretive
10. By the statement "people have unlimited wants," the author of the text means
a. people always want more goods and services than they have or can purchase with
their incomes.
b. people always have a desire to have more money.
c. people always strive to be the best they can be.
d. people always give 110 percent.
