Question 1

Which person has the highest opportunity cost of obtaining a college degree (assuming that attending college requires giving up his or her current position)?

Accepted Answer

A)  Bill, who is unemployed. 
B)  Jane, who is an unwed mother and earns $15,000 a year. 
C)  Larry, who is a technician in the Navy earning $18,000 a year with free food and housing. 
D)  Mary, who has a job earning $60,000 a year as a computer programmer. 
E)  Unable to determine from the data given. 
A)  Bill, who is unemployed. 
B)  Jane, who is an unwed mother and earns $15,000 a year. 
C)  Larry, who is a technician in the Navy earning $18,000 a year with free food and housing. 
D)  Mary, who has a job earning $60,000 a year as a computer programmer. 
E)  Unable to determine from the data given.

Question 2

Economics is a social science in the sense that it

Accepted Answer

A)  rigorously examines human behavior. 
B)  is not as scientific as physics. 
C)  relies on historical data instead of mathematical data. 
D)  relies on statistics instead of mathematics. 
E)  All of the above are correct. 
A)  rigorously examines human behavior. 
B)  is not as scientific as physics. 
C)  relies on historical data instead of mathematical data. 
D)  relies on statistics instead of mathematics. 
E)  All of the above are correct.

Question 3

All two-dimensional graphs must have an origin, a horizontal axis, and a vertical axis.

Accepted Answer

A) True 
 B)False

Question 4

Carefully define the following terms, and explain their importance in economics.
a.opportunity cost
b.abstraction
c.theory
d.model
e.marginal analysis

Accepted Answer

a.Opportunity cost for a decision is the

Question 5

The optimal degree of abstraction depends on the objective of the analysis.

Accepted Answer

A) True 
 B)False

Question 6

An economist might be hired to answer which of the following questions?

Accepted Answer

A)  What will the price of oil be next year? 
B)  Why is the median income of women about half the median income of men? 
C)  How much will interest rates change as the federal deficit decreases? 
D)  How much will inflation change if import restrictions are imposed? 
E)  All of the above are correct. 
A)  What will the price of oil be next year? 
B)  Why is the median income of women about half the median income of men? 
C)  How much will interest rates change as the federal deficit decreases? 
D)  How much will inflation change if import restrictions are imposed? 
E)  All of the above are correct.

Question 7

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

Accepted Answer

Economists might disagree beca

Question 8

Which of the following mathematical expressions represents the equation of a straight line with a slope of zero at all points on a graph with Y on the vertical axis and X on the horizontal axis?

Accepted Answer

A)  Y = a + X 
B)  X = bY 
C)  X = a 
D)  Y = a 
A)  Y = a + X 
B)  X = bY 
C)  X = a 
D)  Y = a

Question 9

In both the 1970s and the 1990s, extreme economic events caused unemployment to move in the same direction as inflation.

Accepted Answer

A) True 
 B)False

Question 10

How does the United States differ from the European Union in how it balances the competing claims of equality and efficiency?

Accepted Answer

The United States has chosen greater eff

Question 11

The word "theory" means the same to the scientist as it does to the man on the street.

Accepted Answer

A) True 
 B)False

Question 12

Economic models are often expressed in

Accepted Answer

A)  equations. 
B)  words. 
C)  graphs. 
D)  physical objects.. 
A)  equations. 
B)  words. 
C)  graphs. 
D)  physical objects..

Question 13

Which of the following is an example of an undesirable side effect of the operation of the market mechanism?

Accepted Answer

A)  negative externalities 
B)  comparative advantages 
C)  abstractions 
D)  productivity growth 
A)  negative externalities 
B)  comparative advantages 
C)  abstractions 
D)  productivity growth

Question 14

A theory is a deliberate simplification or abstraction of factual relationships.

Accepted Answer

A) True 
 B)False

Question 15

A small increase in productivity growth can have a huge impact on a country's standard of living.

Accepted Answer

A) True 
 B)False

Question 16

A contour map illustrates a cause and effect relationship among three variables.

Accepted Answer

A) True 
 B)False

Question 17

Economics

Accepted Answer

A)  is a narrowly focused discipline. 
B)  is a broad-ranging discipline. 
C)  concerns itself only with the U.S.economy. 
D)  says little about "everyday life." 
E)  deals with minor problems. 
A)  is a narrowly focused discipline. 
B)  is a broad-ranging discipline. 
C)  concerns itself only with the U.S.economy. 
D)  says little about "everyday life." 
E)  deals with minor problems.

Question 18

A vertical line always has a slope of one.

Accepted Answer

A) True 
 B)False

Question 19

The law of comparative advantages explains why

Accepted Answer

A)  advanced nations will not trade with less-developed countries. 
B)  an advanced nation will not trade with other countries. 
C)  less-developed countries only trade among themselves. 
D)  nations trade with each other, regardless of their relative levels of economic development. 
E)  nations erect trade barriers. 
A)  advanced nations will not trade with less-developed countries. 
B)  an advanced nation will not trade with other countries. 
C)  less-developed countries only trade among themselves. 
D)  nations trade with each other, regardless of their relative levels of economic development. 
E)  nations erect trade barriers.

Question 20

Figure 1-1
  
-The slope of the line in Figure 1-1 is

Accepted Answer

A)  0.5. 
B)  2.0. 
C)  -0.5. 
D)  -2.0. 
A)  0.5. 
B)  2.0. 
C)  -0.5. 
D)  -2.0.

Exam 1: What Is Economics?

Which person has the highest opportunity cost of obtaining a college degree (assuming that attending college requires giving up his or her current position)?

Economics is a social science in the sense that it

All two-dimensional graphs must have an origin, a horizontal axis, and a vertical axis.

Carefully define the following terms, and explain their importance in economics. a.opportunity cost b.abstraction c.theory d.model e.marginal analysis

The optimal degree of abstraction depends on the objective of the analysis.

An economist might be hired to answer which of the following questions?

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

Which of the following mathematical expressions represents the equation of a straight line with a slope of zero at all points on a graph with Y on the vertical axis and X on the horizontal axis?

In both the 1970s and the 1990s, extreme economic events caused unemployment to move in the same direction as inflation.

How does the United States differ from the European Union in how it balances the competing claims of equality and efficiency?

The word "theory" means the same to the scientist as it does to the man on the street.

Economic models are often expressed in

Which of the following is an example of an undesirable side effect of the operation of the market mechanism?

A theory is a deliberate simplification or abstraction of factual relationships.

A small increase in productivity growth can have a huge impact on a country's standard of living.

A contour map illustrates a cause and effect relationship among three variables.

Economics

A vertical line always has a slope of one.

The law of comparative advantages explains why

Figure 1-1 -The slope of the line in Figure 1-1 is

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

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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