Principles of Economics Chapter 15
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Questions and Answers

What is the fundamental principle underlying people's decision-making according to Principle 3?

  • The cost of something is what you give up to get it
  • Rational people think at the margin (correct)
  • Trade can make everyone better off
  • People respond to incentives

    • What determines a country's standard of living according to Principle 8?

  • The level of unemployment
  • The amount of money in circulation
  • A country's ability to produce goods and services (correct)
  • The level of inflation

    • According to Principle 2, what is the cost of something?

  • The time it takes to produce the good or service
  • The monetary value of the good or service
  • The opportunity cost of the good or service (correct)
  • The level of satisfaction derived from the good or service

    • What is a key benefit of trade according to Principle 5?

    <p>Trade can make everyone better off</p> Signup and view all the answers

    What is the relationship between inflation and unemployment according to Principle 10?

    <p>Inflation and unemployment are inversely related</p> Signup and view all the answers

    What is the primary role of markets according to Principle 6?

    <p>To organize economic activity</p> Signup and view all the answers

    What is the primary goal of governments according to Principle 7?

    <p>To improve market outcomes</p> Signup and view all the answers

    What is the primary principle underlying people's decision-making according to Principle 1?

    <p>People face trade-offs</p> Signup and view all the answers

    What is the primary consequence of printing too much money according to Principle 9?

    <p>Prices rise</p> Signup and view all the answers

    What is the primary principle underlying economic decision-making according to Principle 4?

    <p>People respond to incentives</p> Signup and view all the answers

    What is the primary limitation of resources in economics?

    <p>Scarcity is the fundamental economic problem</p> Signup and view all the answers

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