Global Economics Final NAF
Certification Test Exam
Incentives matter - correct answer-to all human beings regardless of environment.
Which of the following is often referred to as the basic postulate of economics? - correct
answer-Incentives matter-individuals respond in predictable ways to changes in
personal costs and benefits
The expression, "There's no such thing as a free lunch," implies that - correct answer-
opportunity costs are incurred when resources are used to produce goods and services.
Maria wishes to buy gasoline and have her car washed. She finds that if she buys 9
gallons of gasoline at $2.50 per gallon, the car wash costs $2, but if she buys 10 gallons
of gasoline, the car wash is free. For Maria, the marginal cost of the tenth gallon of
gasoline is - correct answer-50 cents
If the market price of a good is more than the opportunity cost of producing it, - correct
answer-producers will increase supply in the long run.
Who gains in a voluntary trade? - correct answer-both the buyer and the seller
Economic progress - correct answer-reflects that people are achieving higher income
levels and living standards.
Voluntary trade promotes economic progress because it - correct answer-makes larger
outputs possible as a result of specialization.
High transaction costs will tend to - correct answer-reduce the number of mutually
beneficial exchanges.
Middlemen - correct answer-reduce transactions costs.
If the Internet helps buyers learn about the availability of products and find potential
sellers more quickly, - correct answer-the gains from trade will increase.
The curve that shows the relationship between the price of a good and the quantity that
consumers are willing to purchase at each price is the - correct answer-demand curve
If equilibrium is present in a market, - correct answer-quantity demanded equals
quantity supplied.
,When individuals increase their personal wealth through production and exchange, they
- correct answer-increase the wealth of others.
The pursuit of profit will - correct answer-encourage firms to produce efficiently and
keep their costs low.
encourage firms to produce goods and services that consumers value highly relative to
costs.
discover and develop better products and lower-cost production methods.
All of the above are correct.
Economic progress comes primarily through - correct answer-entrepreneurial action
directed by competitive markets
If you want to earn a high income you should figure out what others value because -
correct answer-others will be willing to pay you for what they value.
Losses and business failures - correct answer-will help redirect resources away from
unproductive projects.
Specialization in goods and services one can produce at a low cost makes it possible
for trading partners to produce a larger joint output. This is called - correct answer-the
law of comparative advantage
The income and living standards of a nation will increase when - correct answer-the
availability of goods and services that people value increases.
When the government funds a project that will create jobs, the funds for the project -
correct answer-will have to be either taxed or borrowed from the private sector.
Adam Smith's invisible hand principle stresses the tendency of - correct answer-the
competitive market process to direct self-interested individuals into activities that
enhance the economic welfare of society.
Which of the following is a predictable, secondary effect of a sharp increase in gasoline
prices? - correct answer-Producers will increase the production of fuel-efficient cars.
In a free market economy, consumption and investment decisions - correct answer-
shape the future course of the national economy.
Why is private ownership an important source of economic prosperity? - correct answer-
It provides owners with a strong incentive to develop and use assets in ways that others
value highly.
Under a system of private property, could a 60-year-old owner of a tree farm benefit by
planting and caring for a crop of Douglas firs, most of which will not be ready to harvest
, for 50 years? - correct answer-Yes, the farmer will benefit from increased valuation of
the land as the trees grow and the harvest moves closer.
Which of the following is most important if a country is going to achieve and sustain
rapid economic growth? - correct answer-an open and competitive capital market
Even-handed enforcement of contracts fuels economic prosperity because it - correct
answer-promotes gains from trade by minimizing the costs of entry and enforcement of
contracts.
Competition is present when - correct answer-freedom of entry and rival firms are
present in a market.
What role do losses play in a competitive market? - correct answer-They send a
message that more value would be created if the resources were used to produce other
goods.
Which of the following best summarizes the importance of business failure and the
central idea of "creative destruction in a market economy"? - correct answer-Business
failure allows the assets and resources from that business to move into other areas
where they will be more productive.
If a nation is going to achieve and sustain a high rate of economic growth, it must -
correct answer-have a mechanism capable of attracting savings and channeling them
into wealth-creating projects.
"Wal-Mart is a low-wage firm and this indicates that it exploits its workers." Which of the
following should cause one to question the validity of this statement? - correct answer-
No one is required to work for Wal-Mart and, therefore, it must attract workers by paying
them more attractive wages than they could earn elsewhere.
In recent decades labor markets in European countries like Italy and Spain have been -
correct answer-more highly regulated and the unemployment rates of the European
countries have been higher than the United States.
If the government levies $20 billion in taxes to finance additional spending on military
weapons, the net impact on total employment will be - correct answer-small because
the higher taxes will reduce spending in the private sector, which will tend to offset any
jobs created by the government spending.
Private entrepreneurs are likely to make better investment decisions than central
planners because - correct answer-investors who make mistakes must bear the costs of
these mistakes personally.
Certification Test Exam
Incentives matter - correct answer-to all human beings regardless of environment.
Which of the following is often referred to as the basic postulate of economics? - correct
answer-Incentives matter-individuals respond in predictable ways to changes in
personal costs and benefits
The expression, "There's no such thing as a free lunch," implies that - correct answer-
opportunity costs are incurred when resources are used to produce goods and services.
Maria wishes to buy gasoline and have her car washed. She finds that if she buys 9
gallons of gasoline at $2.50 per gallon, the car wash costs $2, but if she buys 10 gallons
of gasoline, the car wash is free. For Maria, the marginal cost of the tenth gallon of
gasoline is - correct answer-50 cents
If the market price of a good is more than the opportunity cost of producing it, - correct
answer-producers will increase supply in the long run.
Who gains in a voluntary trade? - correct answer-both the buyer and the seller
Economic progress - correct answer-reflects that people are achieving higher income
levels and living standards.
Voluntary trade promotes economic progress because it - correct answer-makes larger
outputs possible as a result of specialization.
High transaction costs will tend to - correct answer-reduce the number of mutually
beneficial exchanges.
Middlemen - correct answer-reduce transactions costs.
If the Internet helps buyers learn about the availability of products and find potential
sellers more quickly, - correct answer-the gains from trade will increase.
The curve that shows the relationship between the price of a good and the quantity that
consumers are willing to purchase at each price is the - correct answer-demand curve
If equilibrium is present in a market, - correct answer-quantity demanded equals
quantity supplied.
,When individuals increase their personal wealth through production and exchange, they
- correct answer-increase the wealth of others.
The pursuit of profit will - correct answer-encourage firms to produce efficiently and
keep their costs low.
encourage firms to produce goods and services that consumers value highly relative to
costs.
discover and develop better products and lower-cost production methods.
All of the above are correct.
Economic progress comes primarily through - correct answer-entrepreneurial action
directed by competitive markets
If you want to earn a high income you should figure out what others value because -
correct answer-others will be willing to pay you for what they value.
Losses and business failures - correct answer-will help redirect resources away from
unproductive projects.
Specialization in goods and services one can produce at a low cost makes it possible
for trading partners to produce a larger joint output. This is called - correct answer-the
law of comparative advantage
The income and living standards of a nation will increase when - correct answer-the
availability of goods and services that people value increases.
When the government funds a project that will create jobs, the funds for the project -
correct answer-will have to be either taxed or borrowed from the private sector.
Adam Smith's invisible hand principle stresses the tendency of - correct answer-the
competitive market process to direct self-interested individuals into activities that
enhance the economic welfare of society.
Which of the following is a predictable, secondary effect of a sharp increase in gasoline
prices? - correct answer-Producers will increase the production of fuel-efficient cars.
In a free market economy, consumption and investment decisions - correct answer-
shape the future course of the national economy.
Why is private ownership an important source of economic prosperity? - correct answer-
It provides owners with a strong incentive to develop and use assets in ways that others
value highly.
Under a system of private property, could a 60-year-old owner of a tree farm benefit by
planting and caring for a crop of Douglas firs, most of which will not be ready to harvest
, for 50 years? - correct answer-Yes, the farmer will benefit from increased valuation of
the land as the trees grow and the harvest moves closer.
Which of the following is most important if a country is going to achieve and sustain
rapid economic growth? - correct answer-an open and competitive capital market
Even-handed enforcement of contracts fuels economic prosperity because it - correct
answer-promotes gains from trade by minimizing the costs of entry and enforcement of
contracts.
Competition is present when - correct answer-freedom of entry and rival firms are
present in a market.
What role do losses play in a competitive market? - correct answer-They send a
message that more value would be created if the resources were used to produce other
goods.
Which of the following best summarizes the importance of business failure and the
central idea of "creative destruction in a market economy"? - correct answer-Business
failure allows the assets and resources from that business to move into other areas
where they will be more productive.
If a nation is going to achieve and sustain a high rate of economic growth, it must -
correct answer-have a mechanism capable of attracting savings and channeling them
into wealth-creating projects.
"Wal-Mart is a low-wage firm and this indicates that it exploits its workers." Which of the
following should cause one to question the validity of this statement? - correct answer-
No one is required to work for Wal-Mart and, therefore, it must attract workers by paying
them more attractive wages than they could earn elsewhere.
In recent decades labor markets in European countries like Italy and Spain have been -
correct answer-more highly regulated and the unemployment rates of the European
countries have been higher than the United States.
If the government levies $20 billion in taxes to finance additional spending on military
weapons, the net impact on total employment will be - correct answer-small because
the higher taxes will reduce spending in the private sector, which will tend to offset any
jobs created by the government spending.
Private entrepreneurs are likely to make better investment decisions than central
planners because - correct answer-investors who make mistakes must bear the costs of
these mistakes personally.
