Question : 1.2 The Economic Problem That Every Society Must Solve 1) The : 1387260

1.2 The Economic Problem That Every Society Must Solve

1) The three fundamental questions that any economy must address are:

A) What will be the prices of goods and services; how will these goods and services be produced; and who will receive them?

B) What goods and services to produce; how will these goods and services be produced; and who receives them?

C) Who gets jobs; what wages do workers earn; and who owns what property?

D) How much will be saved; what will be produced; and how can these goods and services be fairly distributed?

2) The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

A) optimization.

B) efficiency.

C) trade-off.

D) equity.

3) Society faces a trade-off in all of the following situations except

A) when deciding who will receive the goods and services produced.

B) when deciding what goods and services will be produced.

C) when deciding how goods and services will be produced.

D) when some previously unemployed workers find jobs.

4) Which of the following statements is true?

A) Anytime you have to decide which action to take you are experiencing economic equity.

B) Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as a stock clearance sale.

C) Every individual, no matter how rich or poor, is faced with making trade-offs.

D) Economics is a social science that studies the trade-offs we are forced to make because resources are unlimited.

5) Which of the following is not an example of an economic trade-off that a firm has to make?

A) whether it is cheaper to produce with more machines or with more workers

B) whether it is to outsource the production of a good or service

C) whether or not consumers will buy its products

D) whether it should produce more of its product

6) The highest valued alternative that must be given up to engage in an activity is the definition of

A) economic equity.

B) marginal benefit.

C) opportunity cost.

D) marginal cost.

7) The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?

A) 2 1/2 Russian tea cakes

B) 2/5 of a Russian tea cake

C) $2.50

D) $1.00

8) The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a Russian tea cake?

A) 2 1/2 cappuccinos

B) 2/5 of a cappuccino

C) $2.50

D) $1.00

9) Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision?

A) zero, since she will no longer be earning a salary

B) It depends on the “going rate” for home-care providers.

C) at least $125,000

D) the value she attributes to the satisfaction she receives from taking care of her parents

10) The distribution of income primarily determines which of the fundamental economic questions?

A) What goods and services are to be produced?

B) How are the goods and services to be produced?

C) Who will receive the goods and services produced?

D) How should the economy be planned?

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July 1, 2023

121.In the context of the 1997 Asian crisis, how did the International Monetary Fund's “one-size-fits-all” approach to macroeconomic policy affect South Korea?

A. It led to a decrease in the interest rates of short-term loans.

B. It made it difficult for companies to service their excessive short-term debt obligations.

C. It decreased the probability of widespread corporate defaults.

D. South Korea failed to recover from its financial crises.

E. South Korea was forced to increase restrictions on foreign direct investment.

122._____ arises when people behave recklessly because they know they will be saved if things go wrong.

A. Systemic risk

B. Moral hazard

C. Ethical dilemma

D. Tragedy of the commons

E. Risk compensation

123.Jade, a working professional, began driving rashly ever since she got her car insured against damage. She believed that the insurance claim would cover her in case of any accidents. Jade’s behavior is due to a situation known as _____.

A. cognitive dissonance

B. conflict of interest

C. systemic risk

D. moral hazard

E. tragedy of the commons

124.The International Monetary Fund been criticized for:

A. its lack of “one-size-fits-all” approach to macroeconomic policy.

B. encouraging moral hazard among banks.

C. its lack of power and authority.

D. using external experts to gain knowledge about a country.

E. keeping its operations open to outside scrutiny.

125.According to the critics of the International Monetary Fund (IMF), how should the problem of moral hazard exhibited by banks be resolved?

A. The IMF should use a “one-size-fits-all” approach to macroeconomic policy.

B. The IMF should establish a mechanism for accountability.

C. The IMF should free all banks from the obligation of financial reporting.

D. The banks should be forced to pay the price for their rash lending policies.

E. The IMF should bail out the banks whose loans gave rise to financial crises.

126.According to the noted economist Jeffrey Sachs, the International Monetary Fund should:

A. not be accountable to anyone as it is a powerful institution.

B. bail out the banks that have rash lending policies.

C. have a “one-size-fits-all” approach to macroeconomic policy.

D. keep its operations open to greater outside scrutiny.

E. lend only to countries with safe credit ratings.

127.The International Monetary Fund programs have been counterproductive, or only had limited success in _____.

A. Turkey

B. Iceland

C. Greece

D. Ireland

E. Latvia

128.In response to the global financial crisis of 2008–2009, the International Monetary Fund began to:

A. exercise tight controls on fiscal policy of the borrowing countries.

B. encourage activities that resulted in high inflation rates.

C. display inflexibility in policy responses.

D. urge countries to adopt policies that included fiscal stimulus and monetary easing.

E. adopt a “one-size-fits-all” approach to macroeconomic policy.

129.Which of the following observations about the International Monetary Fund (IMF) is true?

A. The IMF can force countries to adopt the policies required to correct economic mismanagement.

B. Internal political problems can affect a government's commitment to taking corrective action in return for an IMF loan.

C. In recent years, the IMF has begun to make its policies more tight and inflexible.

D. In response to the global financial crisis of 2008–2009, the IMF began to adopt a “one-size-fits-all” approach to macroeconomic policy.

E. In recent years, the IMF has begun to urge countries to oppose fiscal stimulus and monetary easing.

130.Which of the following poses a problem for international businesses in the long run?

A. Using exchange rate instruments like the forward market and swaps

B. Volatility of global exchange rate regime

C. Anti-inflationary monetary policies

D. Maintaining strategic flexibility by dispersing production to different locations

E. A policy of reduction in government spending