Question 1

Economic theory is necessary and extremely important because of its relationship to economic policy.

Accepted Answer

A) True 
 B)False

Question 2

For the typical student,taking an introductory course in economics should

Accepted Answer

A)  turn the student into an economist. 
B)  teach the student solutions to most social problems. 
C)  teach the student how to answer complex social questions. 
D)  help the student learn to make rational decisions. 
E)  All of the above are correct. 
A)  turn the student into an economist. 
B)  teach the student solutions to most social problems. 
C)  teach the student how to answer complex social questions. 
D)  help the student learn to make rational decisions. 
E)  All of the above are correct.

Question 3

Why might well-educated economists disagree on appropriate public policy in some situations?

Accepted Answer

Economists might disagree beca

Question 4

A large factory pours its toxic wastewater into a nearby river,and as a result,the residents of a downstream community experience high rates of illness and birth defects.The economic problem illustrated by this example is

Accepted Answer

A)  marginal thinking. 
B)  comparative advantage. 
C)  repealing the laws of supply and demand. 
D)  externalities. 
E)  productivity growth. 
A)  marginal thinking. 
B)  comparative advantage. 
C)  repealing the laws of supply and demand. 
D)  externalities. 
E)  productivity growth.

Question 5

How does correlation differ from causation? Give an example of each to illustrate your answer.

Accepted Answer

Correlation means that two (or more)vari

Question 6

If Taiwanese workers can produce all goods at lower wages than American workers,then

Accepted Answer

A)  Americans can still gain by trading with Taiwan. 
B)  Americans can only lose if they import from Taiwan. 
C)  Taiwan can only lose if it trades with America. 
D)  there are no gains from trade that are possible in this case. 
E)  Americans should be self-sufficient. 
A)  Americans can still gain by trading with Taiwan. 
B)  Americans can only lose if they import from Taiwan. 
C)  Taiwan can only lose if it trades with America. 
D)  there are no gains from trade that are possible in this case. 
E)  Americans should be self-sufficient.

Question 7

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

Accepted Answer

A) True 
 B)False

Question 8

There are never any adverse consequences of government attempts to modify the laws of supply and demand.

Accepted Answer

A) True 
 B)False

Question 9

Opportunity cost can best be defined as the

Accepted Answer

A)  value of what must be given up in order to acquire an item. 
B)  money cost to the buyer to acquire a good or service. 
C)  total value of all the other items that otherwise could be acquired. 
D)  cost to the seller to produce an item. 
E)  time cost to obtain the money to buy an item. 
A)  value of what must be given up in order to acquire an item. 
B)  money cost to the buyer to acquire a good or service. 
C)  total value of all the other items that otherwise could be acquired. 
D)  cost to the seller to produce an item. 
E)  time cost to obtain the money to buy an item.

Question 10

Government controls over market prices frequently "backfire."

Accepted Answer

A) True 
 B)False

Question 11

Economists make assumptions because

Accepted Answer

A)  they need to incorporate value judgments into their models. 
B)  analysis without assumptions would be impossibly complex. 
C)  they always have imperfect information about reality. 
D)  assumptions are the final product of careful economic analysis. 
E)  assumptions allow economists to ignore things that they cannot explain. 
A)  they need to incorporate value judgments into their models. 
B)  analysis without assumptions would be impossibly complex. 
C)  they always have imperfect information about reality. 
D)  assumptions are the final product of careful economic analysis. 
E)  assumptions allow economists to ignore things that they cannot explain.

Question 12

To an economist,theory can be thought of as

Accepted Answer

A)  abstraction for the sake of argument. 
B)  one person's opinion,which is just as good as another's. 
C)  another term for the description of a situation. 
D)  beliefs which cannot necessarily be verified. 
E)  explanation of mechanisms behind observed phenomena. 
A)  abstraction for the sake of argument. 
B)  one person's opinion,which is just as good as another's. 
C)  another term for the description of a situation. 
D)  beliefs which cannot necessarily be verified. 
E)  explanation of mechanisms behind observed phenomena.

Question 13

Greater economic efficiency often leads to greater economic inequality.

Accepted Answer

A) True 
 B)False

Question 14

A line that slopes downward from left to right has a positive slope.

Accepted Answer

A) True 
 B)False

Question 15

One of the consequences of allowing wages to fall in the United States has been growing wage inequality.

Accepted Answer

A) True 
 B)False

Question 16

A graph conveys information about a cause-and-effect relationship.

Accepted Answer

A) True 
 B)False

Question 17

In the 19th century,Russian peasants noticed that during cholera epidemics there were lots of doctors around; in an attempt to eliminate cholera,they killed all the doctors.This is an example of

Accepted Answer

A)  mistaking correlation with causation. 
B)  the fallacy of opportunism. 
C)  excessive abstraction. 
D)  rationality. 
E)  marginal analysis. 
A)  mistaking correlation with causation. 
B)  the fallacy of opportunism. 
C)  excessive abstraction. 
D)  rationality. 
E)  marginal analysis.

Question 18

The principle of comparative advantage explains how

Accepted Answer

A)  one nation can take advantage of another one through international trade. 
B)  two nations may engage in mutually beneficial trade,even though one of them is more productive than the other. 
C)  one individual can take advantage of another through international trade. 
D)  some people are good at producing everything,while others have no comparative advantages. 
E)  some nations end up with large trade surpluses. 
A)  one nation can take advantage of another one through international trade. 
B)  two nations may engage in mutually beneficial trade,even though one of them is more productive than the other. 
C)  one individual can take advantage of another through international trade. 
D)  some people are good at producing everything,while others have no comparative advantages. 
E)  some nations end up with large trade surpluses.

Question 19

An externality is defined as

Accepted Answer

A)  an opportunity cost that is not considered,which causes inefficiency. 
B)  a social cost that affects parties external to a transaction. 
C)  a transaction which imposes a loss on one of the parties involved. 
D)  a "cost of doing business" that cannot be allocated to any particular good. 
E)  the increase in cost associated with increased production. 
A)  an opportunity cost that is not considered,which causes inefficiency. 
B)  a social cost that affects parties external to a transaction. 
C)  a transaction which imposes a loss on one of the parties involved. 
D)  a "cost of doing business" that cannot be allocated to any particular good. 
E)  the increase in cost associated with increased production.

Question 20

Economic efficiency and income equality are often conflicting goals in an economy.

Accepted Answer

A) True 
 B)False

Economic theory is necessary and extremely important because of its relationship to economic policy.

For the typical student,taking an introductory course in economics should

Why might well-educated economists disagree on appropriate public policy in some situations?

A large factory pours its toxic wastewater into a nearby river,and as a result,the residents of a downstream community experience high rates of illness and birth defects.The economic problem illustrated by this example is

How does correlation differ from causation? Give an example of each to illustrate your answer.

If Taiwanese workers can produce all goods at lower wages than American workers,then

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

There are never any adverse consequences of government attempts to modify the laws of supply and demand.

Opportunity cost can best be defined as the

Government controls over market prices frequently "backfire."

Economists make assumptions because

To an economist,theory can be thought of as

Greater economic efficiency often leads to greater economic inequality.

A line that slopes downward from left to right has a positive slope.

One of the consequences of allowing wages to fall in the United States has been growing wage inequality.

A graph conveys information about a cause-and-effect relationship.

In the 19th century,Russian peasants noticed that during cholera epidemics there were lots of doctors around; in an attempt to eliminate cholera,they killed all the doctors.This is an example of

The principle of comparative advantage explains how

An externality is defined as

Economic efficiency and income equality are often conflicting goals in an economy.

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

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Exam 1: What Is Economics

Economic theory is necessary and extremely important because of its relationship to economic policy.

For the typical student,taking an introductory course in economics should

Why might well-educated economists disagree on appropriate public policy in some situations?

A large factory pours its toxic wastewater into a nearby river,and as a result,the residents of a downstream community experience high rates of illness and birth defects.The economic problem illustrated by this example is

How does correlation differ from causation? Give an example of each to illustrate your answer.

If Taiwanese workers can produce all goods at lower wages than American workers,then

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

There are never any adverse consequences of government attempts to modify the laws of supply and demand.

Opportunity cost can best be defined as the

Government controls over market prices frequently "backfire."

Economists make assumptions because

To an economist,theory can be thought of as

Greater economic efficiency often leads to greater economic inequality.

A line that slopes downward from left to right has a positive slope.

One of the consequences of allowing wages to fall in the United States has been growing wage inequality.

A graph conveys information about a cause-and-effect relationship.

In the 19th century,Russian peasants noticed that during cholera epidemics there were lots of doctors around; in an attempt to eliminate cholera,they killed all the doctors.This is an example of

The principle of comparative advantage explains how

An externality is defined as

Economic efficiency and income equality are often conflicting goals in an economy.

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

Exchange Rates and The Macroeconomy

Filters