Question 1

Microeconomics and macroeconomics are:

Accepted Answer

A) not related because they are taught as separate courses. 
B) virtually identical, though one is much more difficult than the other. 
C) interrelated because what happens in the economy as a whole is based on individual decisions. 
D) interrelated because both are taught by the same teacher. 
A) not related because they are taught as separate courses. 
B) virtually identical, though one is much more difficult than the other. 
C) interrelated because what happens in the economy as a whole is based on individual decisions. 
D) interrelated because both are taught by the same teacher.

Question 2

"The distribution of income should be left to the market" is an example of:

Accepted Answer

A) positive economics. 
B) normative economics. 
C) the art of economics. 
D) negative economics. 
A) positive economics. 
B) normative economics. 
C) the art of economics. 
D) negative economics.

Question 3

You bought one share of McDonald's stock for $10, one share of Coca-Cola for $15, and one share of Pepto-Bismol for $20. Currently, each stock is priced at $15. Assuming that there are no tax issues and that you cannot predict the future price of any of the stocks, if you needed $15, which stock would you sell?

Accepted Answer

A) McDonald's 
B) Coca-Cola 
C) Pepto-Bismol 
D) Any one of them 
A) McDonald's 
B) Coca-Cola 
C) Pepto-Bismol 
D) Any one of them

Question 4

An economic force given relatively free rein by society to work through the market is a:

Accepted Answer

A) market force. 
B) social force. 
C) price mechanism. 
D) political force. 
A) market force. 
B) social force. 
C) price mechanism. 
D) political force.

Question 5

Someone using the reasoning process consistent with the impartial spectator tool would argue that the minimum wage is a:

Accepted Answer

A) bad policy since, based on one's reasoned judgment, it will cause unemployment. 
B) good policy since based on one's reasoned judgment, it will raise one's wage. 
C) bad policy because, based on one's reasoned judgment, it interferes with the market. 
D) good policy because, based on one's reasoned judgment, it would lead to the greatest good for the greatest number. 
A) bad policy since, based on one's reasoned judgment, it will cause unemployment. 
B) good policy since based on one's reasoned judgment, it will raise one's wage. 
C) bad policy because, based on one's reasoned judgment, it interferes with the market. 
D) good policy because, based on one's reasoned judgment, it would lead to the greatest good for the greatest number.

Question 6

State the economic decision rule and apply it to the following situations:
(a)A personal computer costs about 2 cent per hour to operate.Every time it is turned on and off,there is a .00005 probability that the computer will fail,costing $700 to repair.Is it worthwhile to turn off your computer?
(b)Should you try out for the soccer or the baseball team?
(c)The date to withdraw from a course and get the $300 refund has passed.With 30 more classes left in the semester,should you drop the course?
(d)Your employer has offered you a 20% raise.Do you work more hours?

Accepted Answer

The economic decision rule is: If the ma

Question 7

What is economics,and what are the three coordination problems an economy must solve?

Accepted Answer

Economics is the study of how human bein

Question 8

What is the "invisible hand",and how does it work as a market force?

Accepted Answer

The invisible hand is a phrase that refe

Question 9

Microsoft has just taken some senators out to dinner in Paris in a private jet. This is probably an example of an attempt to influence:

Accepted Answer

A) economic forces. 
B) political forces. 
C) social forces. 
D) the price mechanism. 
A) economic forces. 
B) political forces. 
C) social forces. 
D) the price mechanism.

Question 10

What is the economic decision rule?

Accepted Answer

The economic decision rule is an applica

Question 11

Who probably would argue that you need to study the trees before you can understand the forest?

Accepted Answer

A) A microeconomist 
B) A macroeconomist 
C) A positive economist 
D) A Keynesian economist 
A) A microeconomist 
B) A macroeconomist 
C) A positive economist 
D) A Keynesian economist

Question 12

Explain how the government might apply economic reasoning in deciding on which of many techniques it should employ to reduce or eliminate terrorist attacks on airlines.What problems can arise when using such an approach?

Accepted Answer

If the government believes that the marg

Question 13

Economic forces:

Accepted Answer

A) are more powerful than social and political forces. 
B) are more powerful than social forces but less powerful than political forces. 
C) are less powerful than social and political forces. 
D) can be more or less powerful than political and social forces depending on the circumstances. 
A) are more powerful than social and political forces. 
B) are more powerful than social forces but less powerful than political forces. 
C) are less powerful than social and political forces. 
D) can be more or less powerful than political and social forces depending on the circumstances.

Question 14

The statement, "because the invisible hand allocates resources efficiently, economies ought to minimize government interference" is an example of:

Accepted Answer

A) an economic theorem. 
B) an economic precept. 
C) a natural experiment. 
D) efficiency. 
A) an economic theorem. 
B) an economic precept. 
C) a natural experiment. 
D) efficiency.

Question 15

How did Adam Smith deal with the problem of moving from theorems in positive economics to policy precepts in the art of economics?

Accepted Answer

He used the impartial spectator tool to

Question 16

Explain how microeconomics differs from macroeconomics and then categorize the following questions as either microeconomic or macroeconomic questions:
(a)How will interest rates change when the Federal Reserve Bank increases money supply?
(b)How will Nike's market share change when Reebok increases their marketing expenditures?
(c)How does a tariff on imported steel affect the U.S.steel industry?
(d)Should Wal-Mart renovate its stores nationwide?
(e)Should the government lower income taxes to stimulate consumption?

Accepted Answer

Microeconomics is the study of individua

Question 17

Economic reasoning would argue that there is an opportunity cost to:

Accepted Answer

A) all choices. 
B) more choices. 
C) only choices that involve money. 
D) only choices that do not involve money. 
A) all choices. 
B) more choices. 
C) only choices that involve money. 
D) only choices that do not involve money.

Question 18

Which of the following topics is most appropriately studied in a microeconomics course?

Accepted Answer

A) The decision by a nurse to change professions 
B) When the next recession will arrive 
C) Why unemployment is so low and inflation has not accelerated 
D) How the presidential candidates' tax plans might affect economic growth 
A) The decision by a nurse to change professions 
B) When the next recession will arrive 
C) Why unemployment is so low and inflation has not accelerated 
D) How the presidential candidates' tax plans might affect economic growth

Question 19

The price of computers has fallen each year for the last 30 years. This is probably an example of the working of:

Accepted Answer

A) economic forces. 
B) political forces. 
C) social forces. 
D) nonmarket forces. 
A) economic forces. 
B) political forces. 
C) social forces. 
D) nonmarket forces.

Question 20

Alexandra has determined that studying an hour for her economics quiz will improve her grade on the quiz from a 75 to a 100. She also determines that this improvement is worth $20. To study for an hour for her economics quiz, however, she will have to work one fewer hour at her part-time job. Alexandra should:

Accepted Answer

A) study for the quiz as long as her hourly wage rate is less than $20. 
B) study for the quiz as long as her hourly wage rate is more than $20. 
C) study for the quiz only if her hourly wage rate is exactly $20. 
D) not study for the quiz because earning a higher grade cannot have a dollar value. 
A) study for the quiz as long as her hourly wage rate is less than $20. 
B) study for the quiz as long as her hourly wage rate is more than $20. 
C) study for the quiz only if her hourly wage rate is exactly $20. 
D) not study for the quiz because earning a higher grade cannot have a dollar value.

Exam 1: Economics and Economic Reasoning

Microeconomics and macroeconomics are:

"The distribution of income should be left to the market" is an example of:

An economic force given relatively free rein by society to work through the market is a:

Someone using the reasoning process consistent with the impartial spectator tool would argue that the minimum wage is a:

What is economics,and what are the three coordination problems an economy must solve?

What is the "invisible hand",and how does it work as a market force?

Microsoft has just taken some senators out to dinner in Paris in a private jet. This is probably an example of an attempt to influence:

What is the economic decision rule?

Who probably would argue that you need to study the trees before you can understand the forest?

Explain how the government might apply economic reasoning in deciding on which of many techniques it should employ to reduce or eliminate terrorist attacks on airlines.What problems can arise when using such an approach?

Economic forces:

The statement, "because the invisible hand allocates resources efficiently, economies ought to minimize government interference" is an example of:

How did Adam Smith deal with the problem of moving from theorems in positive economics to policy precepts in the art of economics?

Economic reasoning would argue that there is an opportunity cost to:

Which of the following topics is most appropriately studied in a microeconomics course?

The price of computers has fallen each year for the last 30 years. This is probably an example of the working of:

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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