Exam 1: What Is Economics

In the United States the distribution of income is relatively unequal, and output is relatively high, while in the former Soviet Union the distribution of income was more equal and output per worker was much lower.Give one possible explanation for this phenomenon.

There are possible policies that could significantly reduce income inequality but opponents argue that such policies would be likely to lead to

An externality is defined as

A horizontal line has a slope of 0.

Arguably, the most important factor affecting economic well-being is

Which of the following statements is correct?

Figure 1-2 -Identify the slope of the two curves A and B in Figure 1-2.

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

Greater economic efficiency often leads to greater economic inequality.

Jack, an outstanding high school baseball player, has to decide whether to sign a contract with a major league baseball organization or to go to college.If Jack is determining his opportunity costs to go to college instead, he would include

Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied.

A vertical line always has a slope of one.

Why do economists abstract, and is it appropriate?

Attempts by the government to reduce the rate of inflation often result in higher unemployment in the short run.

The statement "saccharine causes cancer" is not a theory; it is a hypothesis.

The rationale for rent control is that it protects moderate- to low-income families from the burden of rapidly rising rents and from eviction if they are unable to pay.It also prevents landlords from reaping windfalls as property values rise.Opponents note that rent controls usually lead to a reduced supply of rental housing and shortages.The proponents of rent controls support them primarily on the grounds of

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

A government has the ability to use fiscal and monetary policy to mitigate the effects of economic fluctuations.

A recent article about the US economy asked, "What is the price of low inflation?" In this context, the price is likely to be measured by

Carefully distinguish between an economic theory and economic model.