Question 1

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 2

It has been found that people die at a much higher rate in hospitals than in most other environments, leading some to conclude that hospitals cause death.What is the problem with this reasoning?

Accepted Answer

This illustrates a confusion of correlat

Question 3

The use of chlorofluorocarbons in refrigerators and air conditioners is alleged to cause the destruction of the ozone layer that surrounds the earth.This layer protects humans from ultraviolet radiation, which causes skin cancer.Industry has been prohibited from using these substances in aerosol cans, but the government has been reluctant to ban their use altogether because of the serious economic consequences.Economists analyze such problems and refer to them as

Accepted Answer

A)  issues of unfairness. 
B)  examples of excess abstraction. 
C)  externalities. 
D)  comparative advantage issues. 
E)  examples of trade-offs between output and equality. 
A)  issues of unfairness. 
B)  examples of excess abstraction. 
C)  externalities. 
D)  comparative advantage issues. 
E)  examples of trade-offs between output and equality.

Question 4

In the United States, the fact that the gap between the rich and the poor has been increasing is often justified by economists on the grounds that greater

Accepted Answer

A)  efficiency can never be achieved without greater inequality. 
B)  inequality does not create any problems. 
C)  inequality is a desirable end in itself. 
D)  inequality is an undesirable consequence of greater efficiency. 
E)  efficiency should be achieved at any cost. 
A)  efficiency can never be achieved without greater inequality. 
B)  inequality does not create any problems. 
C)  inequality is a desirable end in itself. 
D)  inequality is an undesirable consequence of greater efficiency. 
E)  efficiency should be achieved at any cost.

Question 5

A theory is an explanation of the causal mechanism behind observed phenomena.

Accepted Answer

A) True 
 B)False

Question 6

There are frequently market solutions that the government can use to deal with externalities.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Externalities are social costs that affect parties external to a particular economic transaction.

Accepted Answer

A) True 
 B)False

Question 9

A ____ is a graph whose axes show the quantities of two inputs that are used to produce some output.

Accepted Answer

A)  production indifference map 
B)  two-variable diagram 
C)  scalar diagram 
D)  time-series graph 
A)  production indifference map 
B)  two-variable diagram 
C)  scalar diagram 
D)  time-series graph

Question 10

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 11

The slope of a line with rise of five and run of two is positive.

Accepted Answer

A) True 
 B)False

Question 12

What are the tools available to governments to mitigate cycles of boom and bust? Why do these tools fail?

Accepted Answer

Some of the tools available to the gover

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Graphs are valuable because they facilitate interpretation of data.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is correct?

Accepted Answer

A)  Theory and hypothesis are interchangeable terms for the same thing. 
B)  A hypothesis may result from a tested and confirmed theory. 
C)  A theory may result from a tested and confirmed hypothesis. 
D)  A hypothesis is a theory whose formulation relies on mathematics. 
A)  Theory and hypothesis are interchangeable terms for the same thing. 
B)  A hypothesis may result from a tested and confirmed theory. 
C)  A theory may result from a tested and confirmed hypothesis. 
D)  A hypothesis is a theory whose formulation relies on mathematics.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The term opportunity cost refers to the

Accepted Answer

A)  value of what is gained when a choice is made. 
B)  difference between the value of what is gained and the value of what is forgone when a choice is made. 
C)  value of what is forgone when a choice is made. 
D)  direct costs involved in making a choice. 
A)  value of what is gained when a choice is made. 
B)  difference between the value of what is gained and the value of what is forgone when a choice is made. 
C)  value of what is forgone when a choice is made. 
D)  direct costs involved in making a choice.

Question 18

In economics, abstraction from reality is necessary because of the complexity of the real world.

Accepted Answer

A) True 
 B)False

Question 19

People generally purchase less of a commodity as its price increases.This implies that the relationship between quantity purchased and the price of the commodity must have a

Accepted Answer

A)  slope always equal to one. 
B)  positive slope. 
C)  zero slope. 
D)  negative slope. 
A)  slope always equal to one. 
B)  positive slope. 
C)  zero slope. 
D)  negative slope.

Question 20

Economic theory

Accepted Answer

A)  is a deliberate simplification of factual relationships. 
B)  seeks to disprove a hypothesis. 
C)  is based mainly on assumptions. 
D)  seeks to prove political ideals. 
A)  is a deliberate simplification of factual relationships. 
B)  seeks to disprove a hypothesis. 
C)  is based mainly on assumptions. 
D)  seeks to prove political ideals.

Exam 1: What Is Economics?

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

It has been found that people die at a much higher rate in hospitals than in most other environments, leading some to conclude that hospitals cause death.What is the problem with this reasoning?

In the United States, the fact that the gap between the rich and the poor has been increasing is often justified by economists on the grounds that greater

A theory is an explanation of the causal mechanism behind observed phenomena.

There are frequently market solutions that the government can use to deal with externalities.

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

Externalities are social costs that affect parties external to a particular economic transaction.

A ____ is a graph whose axes show the quantities of two inputs that are used to produce some output.

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

The slope of a line with rise of five and run of two is positive.

What are the tools available to governments to mitigate cycles of boom and bust? Why do these tools fail?

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

Graphs are valuable because they facilitate interpretation of data.

Which of the following statements is correct?

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

The term opportunity cost refers to the

In economics, abstraction from reality is necessary because of the complexity of the real world.

People generally purchase less of a commodity as its price increases.This implies that the relationship between quantity purchased and the price of the commodity must have a

Economic theory

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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