QUESTION 23

Higher expected incomes and greater wealth are associated with self-employment primarily because

a. persons who are self-employed can pay themselves higher salaries.

b. self-employment involves greater risk and therefore the market rewards are higher.

c. employers generally do not pay their employees enough for their services.

d. there are fewer risks associated with self-employment.

QUESTION 25

Which of the following is true?

a. Like nations, individuals will be able to achieve higher income levels when they concentrate their productive efforts on those activities that they do best.

b. People who are quite good at a wide range of activities should spend some of their work time on each of the activities.

c. Specialization and trade in accordance with the law of comparative advantage may help nations achieve a higher level of income, but this will not be true for individuals.

d. Your comparative advantage is determined by your absolute ability in an area rather than your relative ability in an area

QUESTION 26

Which one of the following statements most clearly reflects the economic way of thinking about life?

a.You can have it all.

b.There is more to a good life than making money.

c.If you want to be rich, think of yourself first.

d.Spend now and pay later.

QUESTION 31

Which of the following is most likely to lead to financial trouble for a young couple?

a. taking out a 30-year fixed rate mortgage in order to purchase a house

b. paying off the outstanding balance on their credit card debt every month

c. buying a new car on credit every two years

d. purchasing used furniture, children's clothing, and toys

QUESTION 41

Which of the following is true?

a. Investment in the stock market is a relatively foolproof method for an investor to earn a high rate of return during the next five years.

b. Current stock prices already reflect information that is known with a high degree of certainty.

c. Experts are able to predict changes in the direction of the broad stock market indexes with a high degree of accuracy.

d. While changes in the prices of specific stocks are difficult to predict, it is relatively easy to predict the future direction of the broad stock market

QUESTION 45

If you have an automobile insurance policy with a deductible of $1000 and coverage of $100,000,

a. you must pay $1,000 out of pocket before the insurance company begins to pay, and they will pay up to $100,000 in the event of a loss.

b. you must pay $1,000 per year to be insured, and the insurance company will charge an additional $100,000 per year if you do not pay on time.

c. you must pay $100,000 out of pocket before the insurance company begins to pay, and they will pay up to $1,000 in the event of a loss.

d. you must pay $1,000 per year to be insured, and the insurance company will pay up to $100,000 per year in the event of a loss.

QUESTION 46

Insurance reduces risk by

a.spreading the risk of a particular person's loss over everyone who pays premiums to a particular insurance company.

b. lobbying for regulations that restrict people from engaging in risky behavior.

c.making helpful suggestions for how people who are insured can behave more safely.

d.carefully monitoring the behavior of people who are insured.