ECON 104 EXAM 1
Ready-to-Use Exam Paper
1. How is microeconomics different from macroeconomics? - 1. Micro→ the study of how
households and firms interact in markets and make decisions, and how the government
attempts to influence their choices
2. Macro→ the study of the economy as a whole, including topics such as inflation,
unemployment, and economic growth
2. What is economics? - 1. Economics→ the study of choices people make to attain their goals,
given their scarce resources
3. What are the 3 key economic ideas about how people interact and make choices in the
marketplace? - 1. People are rational
2. People act in response to economic incentives
3. Optimal decisions are made at the margin
4. What is the economic problem facing every society? - 1. A limited amount of economic
resources and unlimited wants
2. Trade-offs are produced
5. Standard of Living refers to ________________________. - 1. Unlimited wants
2. The amount of goods and services we can buy
3. To produce more goods and services, society needs resources which are scarce
6. The factors of production are land, labor, capital and ___________________. - 1.
Entrepreneurship
2. Land→ including water, oil, i.e. natural resources
3. Capital →
, 1. Physical - machines, factories, computers, software
2. Human - accumulated training and skills workers possess
4. Entrepreneur→ organizes and operates a business; takes on great risk
7. In economics, "capital", "capital goods", "human capital" or the "capital stock" refers to
______________. - 1. Capital-machinery, factory, resources
2. Capital Goods- durable used to produce goods and services
3. Human Capital-knowledge it takes to start a business
4. Capital Stock - how many machines, how many factory buildings (a value of all machines,
factories, etc)
1. All factors of production and investment
2. Change in capital is referred to as→ investment
1. Buying more machines, more inputs, bettering a factory etc
8. How is a centrally planned economy different from a market economy? What is a mixed
economy? True or False: The U.S. economy is a Market economy. According to the Index of
Economic Freedom (http://www.heritage.org/index/ranking), which country has the greatest
amount of economic freedom? Which country has the least? - 1. Centrally planned economy→
an economy in which the government decides how economic resources will be allocated
2. Market Economy→ an economy in which the decisions of households and firms interacting in
markets allocate economic resources
3. The us is a market economy (mostly free)
4. Hong Kong is the most free
5. North korea is repressed
9. Countries with the most (least) economic freedom have the highest (lowest)
____________________________ and/or quality of life. - 1. Have the highest GDP/capita
Ready-to-Use Exam Paper
1. How is microeconomics different from macroeconomics? - 1. Micro→ the study of how
households and firms interact in markets and make decisions, and how the government
attempts to influence their choices
2. Macro→ the study of the economy as a whole, including topics such as inflation,
unemployment, and economic growth
2. What is economics? - 1. Economics→ the study of choices people make to attain their goals,
given their scarce resources
3. What are the 3 key economic ideas about how people interact and make choices in the
marketplace? - 1. People are rational
2. People act in response to economic incentives
3. Optimal decisions are made at the margin
4. What is the economic problem facing every society? - 1. A limited amount of economic
resources and unlimited wants
2. Trade-offs are produced
5. Standard of Living refers to ________________________. - 1. Unlimited wants
2. The amount of goods and services we can buy
3. To produce more goods and services, society needs resources which are scarce
6. The factors of production are land, labor, capital and ___________________. - 1.
Entrepreneurship
2. Land→ including water, oil, i.e. natural resources
3. Capital →
, 1. Physical - machines, factories, computers, software
2. Human - accumulated training and skills workers possess
4. Entrepreneur→ organizes and operates a business; takes on great risk
7. In economics, "capital", "capital goods", "human capital" or the "capital stock" refers to
______________. - 1. Capital-machinery, factory, resources
2. Capital Goods- durable used to produce goods and services
3. Human Capital-knowledge it takes to start a business
4. Capital Stock - how many machines, how many factory buildings (a value of all machines,
factories, etc)
1. All factors of production and investment
2. Change in capital is referred to as→ investment
1. Buying more machines, more inputs, bettering a factory etc
8. How is a centrally planned economy different from a market economy? What is a mixed
economy? True or False: The U.S. economy is a Market economy. According to the Index of
Economic Freedom (http://www.heritage.org/index/ranking), which country has the greatest
amount of economic freedom? Which country has the least? - 1. Centrally planned economy→
an economy in which the government decides how economic resources will be allocated
2. Market Economy→ an economy in which the decisions of households and firms interacting in
markets allocate economic resources
3. The us is a market economy (mostly free)
4. Hong Kong is the most free
5. North korea is repressed
9. Countries with the most (least) economic freedom have the highest (lowest)
____________________________ and/or quality of life. - 1. Have the highest GDP/capita
