Question 1

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

Accepted Answer

A) Most people do not know the names of their legislators in the U.S.Congress, but those same individuals are likely to know the names of all the cast members on a popular TV show. 
B) In considering purchases, people are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a car, but are unlikely to purchase a consumer ratings magazine that reviews pens and pencils before buying a pen or pencil. 
C) When shopping for something like a new calculator, people will generally not spend the time to do price comparisons at all of the stores in town that sell calculators. 
D) All of the above are consistent with the economic way of thinking. 
A) Most people do not know the names of their legislators in the U.S.Congress, but those same individuals are likely to know the names of all the cast members on a popular TV show. 
B) In considering purchases, people are more likely to purchase a consumer ratings magazine that reviews new automobiles before buying a car, but are unlikely to purchase a consumer ratings magazine that reviews pens and pencils before buying a pen or pencil. 
C) When shopping for something like a new calculator, people will generally not spend the time to do price comparisons at all of the stores in town that sell calculators. 
D) All of the above are consistent with the economic way of thinking.

Question 2

Which of the following is a positive economic statement?

Accepted Answer

A) Too much government spending is the biggest problem facing the U.S.economy. 
B) Creating jobs is the most serious problem facing the U.S.economy. 
C) Raising taxes provides additional revenue that should be used to finance health care. 
D) If taxes are over 50 percent of national income, job creation falls. 
A) Too much government spending is the biggest problem facing the U.S.economy. 
B) Creating jobs is the most serious problem facing the U.S.economy. 
C) Raising taxes provides additional revenue that should be used to finance health care. 
D) If taxes are over 50 percent of national income, job creation falls.

Question 3

Economists make assumptions in order to

Accepted Answer

A) mimic the methodologies employed by other scientists. 
B) minimize the number of experiments that yield no useful data. 
C) minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D) focus their thinking on the essence of the problem at hand. 
A) mimic the methodologies employed by other scientists. 
B) minimize the number of experiments that yield no useful data. 
C) minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D) focus their thinking on the essence of the problem at hand.

Question 4

Which one of the following statements most accurately indicates the basic motivation for behavior?

Accepted Answer

A) Individuals are motivated primarily by selfish desires; thus, personal costs and benefits influence their actions. 
B) Individuals are motivated primarily by humanitarian concerns; therefore, personal costs and benefits exert little influence on most of their actions. 
C) Individuals are motivated by a variety of forces; however, changes in personal benefits and costs influence the choices of both selfish and humanitarian individuals. 
D) Individuals are motivated by a variety of forces; however, changes in personal benefits and costs affect behavior only when individuals are motivated by selfishness. 
A) Individuals are motivated primarily by selfish desires; thus, personal costs and benefits influence their actions. 
B) Individuals are motivated primarily by humanitarian concerns; therefore, personal costs and benefits exert little influence on most of their actions. 
C) Individuals are motivated by a variety of forces; however, changes in personal benefits and costs influence the choices of both selfish and humanitarian individuals. 
D) Individuals are motivated by a variety of forces; however, changes in personal benefits and costs affect behavior only when individuals are motivated by selfishness.

Question 5

Which of the following is a normative economic statement?

Accepted Answer

A) Congress should increase the legal minimum wage. 
B) An increase in the legal minimum wage would cause unemployment to increase. 
C) An increase in the legal minimum wage would cause unemployment to decrease. 
D) An increase in the legal minimum wage would lead to more equality in the distribution of income. 
A) Congress should increase the legal minimum wage. 
B) An increase in the legal minimum wage would cause unemployment to increase. 
C) An increase in the legal minimum wage would cause unemployment to decrease. 
D) An increase in the legal minimum wage would lead to more equality in the distribution of income.

Question 6

If people are self-interested, why does anyone give money to public radio?

Accepted Answer

Since people can listen to public radio

Question 7

The basic difference between macroeconomics and microeconomics is that

Accepted Answer

A) microeconomics is concerned with aggregate markets and the entire economy, while macroeconomics is concerned with specific individual markets. 
B) macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. 
C) microeconomics is concerned with individual markets and the behavior of people and firms, while macroeconomics is concerned with aggregate markets and the entire economy. 
D) macroeconomics is concerned with positive economics, while microeconomics is concerned with normative economics. 
A) microeconomics is concerned with aggregate markets and the entire economy, while macroeconomics is concerned with specific individual markets. 
B) macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. 
C) microeconomics is concerned with individual markets and the behavior of people and firms, while macroeconomics is concerned with aggregate markets and the entire economy. 
D) macroeconomics is concerned with positive economics, while microeconomics is concerned with normative economics.

Question 8

Economists are generally opposed to tariffs or other restrictions on imported goods because of the negative secondary effects they create that more than offset the benefits to employment in the domestic industry. Which of the following could be considered a secondary effect of these trade restrictions?

Accepted Answer

A) The price to consumers of the good in question will be higher as a result of the restriction, meaning consumers will be worse off. 
B) As consumers must spend more money to purchase the good, there will be employment losses in other domestic industries as consumers cut back on their spending on other things. 
C) Because there is a link between a country's imports and its exports, less imports from other countries will result in lower domestic employment in export industries. 
D) All of the above. 
A) The price to consumers of the good in question will be higher as a result of the restriction, meaning consumers will be worse off. 
B) As consumers must spend more money to purchase the good, there will be employment losses in other domestic industries as consumers cut back on their spending on other things. 
C) Because there is a link between a country's imports and its exports, less imports from other countries will result in lower domestic employment in export industries. 
D) All of the above.

Question 9

The economizing problem is essentially one of deciding how to make the best use of

Accepted Answer

A) limited resources to satisfy limited wants. 
B) unlimited resources to satisfy limited wants. 
C) limited resources to satisfy virtually unlimited wants. 
D) unlimited resources to satisfy unlimited wants. 
A) limited resources to satisfy limited wants. 
B) unlimited resources to satisfy limited wants. 
C) limited resources to satisfy virtually unlimited wants. 
D) unlimited resources to satisfy unlimited wants.

Question 10

A popular video program, used to teach primary school children about economics, defines scarcity as "when you don't have enough of something." Evaluate this definition based on your understanding of the scarcity concept.

Accepted Answer

This definition is a bit simplistic for

Question 11

Which of the following is an example of a rational decision?

Accepted Answer

A) DeShawn enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the potential for injury it creates by not wearing one in the unlikely event he is in an accident. 
B) Jayla, a burglar who breaks into houses, decides to break into the house at 265 Elm Street, rather than the house next door because the house next door has a sign in the yard that says "home protected by a security system." 
C) Nicolas, a drug user, chooses to buy his cocaine from Samuel, because Samuel's cocaine is as good as the cocaine from other dealers, but Samuel has lower prices. 
D) All of the above are examples of rational choices. 
A) DeShawn enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the potential for injury it creates by not wearing one in the unlikely event he is in an accident. 
B) Jayla, a burglar who breaks into houses, decides to break into the house at 265 Elm Street, rather than the house next door because the house next door has a sign in the yard that says "home protected by a security system." 
C) Nicolas, a drug user, chooses to buy his cocaine from Samuel, because Samuel's cocaine is as good as the cocaine from other dealers, but Samuel has lower prices. 
D) All of the above are examples of rational choices.

Question 12

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) ____ economic statement, and the labor head's statement is a(n) ____ economic statement.

Accepted Answer

A) normative; normative 
B) normative; positive 
C) positive; normative 
D) positive; positive 
E) proper; improper 
A) normative; normative 
B) normative; positive 
C) positive; normative 
D) positive; positive 
E) proper; improper

Question 13

The statement, "John buys more of good X as his income increases, ceteris paribus," means

Accepted Answer

A) John's income is being held constant. 
B) John's purchases of good X are being held constant. 
C) John's income and purchases of this good are being held constant. 
D) John's income is the only influence that is being allowed to change. 
E) the price of this good is being allowed to change. 
A) John's income is being held constant. 
B) John's purchases of good X are being held constant. 
C) John's income and purchases of this good are being held constant. 
D) John's income is the only influence that is being allowed to change. 
E) the price of this good is being allowed to change.

Question 14

An opinion based on personal preferences and value judgments is called

Accepted Answer

A) an objective concept. 
B) a subjective concept. 
C) an unintended consequence. 
D) ceteris paribus. 
A) an objective concept. 
B) a subjective concept. 
C) an unintended consequence. 
D) ceteris paribus.

Question 15

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

Accepted Answer

A) the fallacy of composition. 
B) economizing behavior. 
C) the importance of secondary effects. 
D) the fact that association is not causation. 
A) the fallacy of composition. 
B) economizing behavior. 
C) the importance of secondary effects. 
D) the fact that association is not causation.

Question 16

A tradeoff exists between a clean environment and a higher level of income in that

Accepted Answer

A) studies show that individuals with higher levels of income actually pollute less than low-income individuals. 
B) efforts to reduce pollution typically are not completely successful. 
C) laws that reduce pollution raise costs of production and reduce incomes. 
D) by employing individuals to clean up pollution, employment and income both rise. 
A) studies show that individuals with higher levels of income actually pollute less than low-income individuals. 
B) efforts to reduce pollution typically are not completely successful. 
C) laws that reduce pollution raise costs of production and reduce incomes. 
D) by employing individuals to clean up pollution, employment and income both rise.

Question 17

The fallacy of composition is the incorrect view that

Accepted Answer

A) everything else is always held constant when a change occurs. 
B) a small change in an economic variable will have unrecognizable but significant consequences on the economy. 
C) when two events are associated, the one observed first must have caused the second. 
D) if something is true for an individual, then it must also be true for the group. 
A) everything else is always held constant when a change occurs. 
B) a small change in an economic variable will have unrecognizable but significant consequences on the economy. 
C) when two events are associated, the one observed first must have caused the second. 
D) if something is true for an individual, then it must also be true for the group.

Question 18

Which of the following is the best definition of economics?

Accepted Answer

A) An investigation of the quantities and prices of the various goods produced by the nations of the world. 
B) A study of why inflation and unemployment periodically plague the U.S.economy. 
C) An analysis of how individuals and societies deal with the problem of scarcity. 
D) An examination of the role that money plays in the economy. 
E) A study of how goods and services are distributed throughout the world. 
A) An investigation of the quantities and prices of the various goods produced by the nations of the world. 
B) A study of why inflation and unemployment periodically plague the U.S.economy. 
C) An analysis of how individuals and societies deal with the problem of scarcity. 
D) An examination of the role that money plays in the economy. 
E) A study of how goods and services are distributed throughout the world.

Question 19

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 rationally analyze social problems. 
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 rationally analyze social problems. 
E) All of the above are correct.

Question 20

When economists say an individual displays economizing behavior, they simply mean that she is

Accepted Answer

A) making a lot of money. 
B) buying only those products that are cheap and of low quality. 
C) learning how to run a business more effectively. 
D) seeking the lowest cost method to accomplish her objectives. 
A) making a lot of money. 
B) buying only those products that are cheap and of low quality. 
C) learning how to run a business more effectively. 
D) seeking the lowest cost method to accomplish her objectives.

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

Which of the following is a positive economic statement?

Economists make assumptions in order to

Which one of the following statements most accurately indicates the basic motivation for behavior?

Which of the following is a normative economic statement?

If people are self-interested, why does anyone give money to public radio?

The basic difference between macroeconomics and microeconomics is that

The economizing problem is essentially one of deciding how to make the best use of

A popular video program, used to teach primary school children about economics, defines scarcity as "when you don't have enough of something." Evaluate this definition based on your understanding of the scarcity concept.

Which of the following is an example of a rational decision?

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) economic statement, and the labor head's statement is a(n) economic statement.

The statement, "John buys more of good X as his income increases, ceteris paribus," means

An opinion based on personal preferences and value judgments is called

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

A tradeoff exists between a clean environment and a higher level of income in that

The fallacy of composition is the incorrect view that

Which of the following is the best definition of economics?

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

When economists say an individual displays economizing behavior, they simply mean that she is

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 1: The Economic Approach

Which of the following is consistent with the implications of the economic guidepost that information is costly to acquire?

Which of the following is a positive economic statement?

Economists make assumptions in order to

Which one of the following statements most accurately indicates the basic motivation for behavior?

Which of the following is a normative economic statement?

If people are self-interested, why does anyone give money to public radio?

The basic difference between macroeconomics and microeconomics is that

The economizing problem is essentially one of deciding how to make the best use of

A popular video program, used to teach primary school children about economics, defines scarcity as "when you don't have enough of something." Evaluate this definition based on your understanding of the scarcity concept.

Which of the following is an example of a rational decision?

The statement, "John buys more of good X as his income increases, ceteris paribus," means

An opinion based on personal preferences and value judgments is called

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

A tradeoff exists between a clean environment and a higher level of income in that

The fallacy of composition is the incorrect view that

Which of the following is the best definition of economics?

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

When economists say an individual displays economizing behavior, they simply mean that she is

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters