Mankiw's 10 Principles

Question 1

2nd principle

Answer 1

The cost of something is what you give up to get it

Question 2

3rd principle

Answer 2

Rational people think at the margin. People make decisions after comparing the benefits and deficits at the margin. “What’s in it for me?” Marginal benefits must exceed marginal cost

Question 3

4th principle

Answer 3

People respond to incentives.

Question 4

1st principle

Answer 4

People face trade offs. In order to get something you’ll probably have to give up something else

Question 5

5th principle

Answer 5

Trade can make everyone better off

Question 6

6th principle

Answer 6

Markets are usually a good way to organize economic activity

Question 7

7th principle

Answer 7

Governments can sometimes improve market outcomes. Can be seen through property rights and such

Question 8

8th principle

Answer 8

A country’s standard of living depends on its ability to produce goods and services

Question 9

9th principle

Answer 9

Prices rise when the government prints too much money

Question 10

10th principle

Answer 10

Society faces a short run trade off between inflation and unemployment