Question 1

Externalities are created when parties not involved in an economic transaction are affected by it.

Accepted Answer

A) True 
 B)False

Question 2

The use of abstraction in economics is analogous to the use of a road map providing directions to a location.

Accepted Answer

A) True 
 B)False

Question 3

The dramatic increase in the standard of living since the Industrial Revolution

Accepted Answer

A)  means that societies and individuals face no constraints. 
B)  has not meant unlimited abundance for societies or persons. 
C)  means that "opportunity cost" is a meaningless concept. 
D)  has reduced the choices open to persons. 
E)  has made economics less useful to persons. 
A)  means that societies and individuals face no constraints. 
B)  has not meant unlimited abundance for societies or persons. 
C)  means that "opportunity cost" is a meaningless concept. 
D)  has reduced the choices open to persons. 
E)  has made economics less useful to persons.

Question 4

Because there is a trade-off between total output and equality of income distribution,

Accepted Answer

A)  greater equality of distribution will generally result in higher levels of output. 
B)  greater output is generally associated with more equal distribution. 
C)  policies designed to increase output will only succeed if distribution is more equal. 
D)  policies intended to expand output must necessarily fail. 
E)  policies designed to equalize distribution may adversely affect the size of output. 
A)  greater equality of distribution will generally result in higher levels of output. 
B)  greater output is generally associated with more equal distribution. 
C)  policies designed to increase output will only succeed if distribution is more equal. 
D)  policies intended to expand output must necessarily fail. 
E)  policies designed to equalize distribution may adversely affect the size of output.

Question 5

Is it possible to express an economic model in words without diagrams?

Accepted Answer

A)  No,models can only be stated in diagrams. 
B)  No,the very definition of model requires mathematical form. 
C)  Yes,some of the simplest models are verbal statements. 
D)  Yes,although the best models always use diagrams. 
E)  Uncertain,economic theory has not answered this question yet. 
A)  No,models can only be stated in diagrams. 
B)  No,the very definition of model requires mathematical form. 
C)  Yes,some of the simplest models are verbal statements. 
D)  Yes,although the best models always use diagrams. 
E)  Uncertain,economic theory has not answered this question yet.

Question 6

Standby passengers on airlines who pay low rates for seats benefit from the low price.How are the airlines affected?

Accepted Answer

A)  They lose,because the standby passengers do not cover the full cost of the seats. 
B)  They gain,because the additional revenue covers the "fixed costs" of the flight. 
C)  They lose,because the gain of the passengers must necessarily come at the expense of the airline. 
D)  They benefit as long as the additional revenue from the passengers exceeds the marginal cost. 
E)  Uncertain,because economic theory says nothing about this sort of situation. 
A)  They lose,because the standby passengers do not cover the full cost of the seats. 
B)  They gain,because the additional revenue covers the "fixed costs" of the flight. 
C)  They lose,because the gain of the passengers must necessarily come at the expense of the airline. 
D)  They benefit as long as the additional revenue from the passengers exceeds the marginal cost. 
E)  Uncertain,because economic theory says nothing about this sort of situation.

Question 7

When the economy experiences a bust,the government knows exactly which policies will spur an economic recovery.

Accepted Answer

A) True 
 B)False

Question 8

In scientific language,a theory is an untested assertion of alleged fact.

Accepted Answer

A) True 
 B)False

Question 9

Economic theory simplifies relationships to explain how the relationships interact.

Accepted Answer

A) True 
 B)False

Question 10

A vertical line always has a slope of one.

Accepted Answer

A) True 
 B)False

Question 11

Opportunity cost is the highest possible price you can receive when you sell an object.

Accepted Answer

A) True 
 B)False

Question 12

The beginning point of a graph (the 0,0 point)is known as

Accepted Answer

A)  ground zero. 
B)  mother lode. 
C)  the origin. 
D)  square one. 
E)  the beginning. 
A)  ground zero. 
B)  mother lode. 
C)  the origin. 
D)  square one. 
E)  the beginning.

Question 13

In her calculation of the cost of going to college,an economist would include the amount of forgone earnings over the years spent at college.

Accepted Answer

A) True 
 B)False

Question 14

Slope will vary along a curve (as opposed to a straight line).

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of a fiscal policy initiative?

Accepted Answer

A)  Lowering of interest rates. 
B)  Increase in reserve requirements. 
C)  Reduction in taxes. 
D)  Decrease in money supply. 
A)  Lowering of interest rates. 
B)  Increase in reserve requirements. 
C)  Reduction in taxes. 
D)  Decrease in money supply.

Question 16

A graph's origin is the point of intersection of all lines or curves in the graph.

Accepted Answer

A) True 
 B)False

Question 17

Figure 1-2  
-A line that rises at a 45 degree angle has a slope of

Accepted Answer

A)  0.45. 
B)  1. 
C)  45. 
D)  1/45. 
A)  0.45. 
B)  1. 
C)  45. 
D)  1/45.

Question 18

A horizontal line has a slope of

Accepted Answer

A)  one. 
B)  zero. 
C)  infinity. 
D)  undefined. 
A)  one. 
B)  zero. 
C)  infinity. 
D)  undefined.

Question 19

A useful economic model

Accepted Answer

A)  deals only with possibilities that actually occurred. 
B)  makes only realistic assumptions. 
C)  may make some unrealistic assumptions in order to simplify a complex reality. 
D)  should avoid drawing conclusions that have public policy implications,since economics is not equipped to make value judgments. 
A)  deals only with possibilities that actually occurred. 
B)  makes only realistic assumptions. 
C)  may make some unrealistic assumptions in order to simplify a complex reality. 
D)  should avoid drawing conclusions that have public policy implications,since economics is not equipped to make value judgments.

Question 20

Economists are often required to make unrealistic assumptions concerning the problems they are investigating.

Accepted Answer

A) True 
 B)False

Externalities are created when parties not involved in an economic transaction are affected by it.

The use of abstraction in economics is analogous to the use of a road map providing directions to a location.

The dramatic increase in the standard of living since the Industrial Revolution

Because there is a trade-off between total output and equality of income distribution,

Is it possible to express an economic model in words without diagrams?

Standby passengers on airlines who pay low rates for seats benefit from the low price.How are the airlines affected?

When the economy experiences a bust,the government knows exactly which policies will spur an economic recovery.

In scientific language,a theory is an untested assertion of alleged fact.

Economic theory simplifies relationships to explain how the relationships interact.

A vertical line always has a slope of one.

Opportunity cost is the highest possible price you can receive when you sell an object.

The beginning point of a graph (the 0,0 point)is known as

In her calculation of the cost of going to college,an economist would include the amount of forgone earnings over the years spent at college.

Slope will vary along a curve (as opposed to a straight line).

Which of the following is an example of a fiscal policy initiative?

A graph's origin is the point of intersection of all lines or curves in the graph.

Figure 1-2 -A line that rises at a 45 degree angle has a slope of

A horizontal line has a slope of

A useful economic model

Economists are often required to make unrealistic assumptions concerning the problems they are investigating.

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

Externalities are created when parties not involved in an economic transaction are affected by it.

The use of abstraction in economics is analogous to the use of a road map providing directions to a location.

The dramatic increase in the standard of living since the Industrial Revolution

Because there is a trade-off between total output and equality of income distribution,

Is it possible to express an economic model in words without diagrams?

Standby passengers on airlines who pay low rates for seats benefit from the low price.How are the airlines affected?

When the economy experiences a bust,the government knows exactly which policies will spur an economic recovery.

In scientific language,a theory is an untested assertion of alleged fact.

Economic theory simplifies relationships to explain how the relationships interact.

A vertical line always has a slope of one.

Opportunity cost is the highest possible price you can receive when you sell an object.

The beginning point of a graph (the 0,0 point)is known as

In her calculation of the cost of going to college,an economist would include the amount of forgone earnings over the years spent at college.

Slope will vary along a curve (as opposed to a straight line).

Which of the following is an example of a fiscal policy initiative?

A graph's origin is the point of intersection of all lines or curves in the graph.

Figure 1-2 -A line that rises at a 45 degree angle has a slope of

A horizontal line has a slope of

A useful economic model

Economists are often required to make unrealistic assumptions concerning the problems they are investigating.

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