Question 1

Abstraction can be thought of as

Accepted Answer

A) avoiding reality in order to build theory. 
B) omitting unimportant details in order to understand complex phenomena. 
C) relying on absurdity to explain simplicity. 
D) making complex assumptions when simple facts are sufficient. 
E) stylizing reality rather than analyzing cause and effect. 
A) avoiding reality in order to build theory. 
B) omitting unimportant details in order to understand complex phenomena. 
C) relying on absurdity to explain simplicity. 
D) making complex assumptions when simple facts are sufficient. 
E) stylizing reality rather than analyzing cause and effect.

Question 2

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.

Question 3

Since a trade-off exists between total output and equality of income distribution,

Accepted Answer

A) greater equality of distribution will generally result in higher levels of output. 
B) greater output is generally associated with more equal distribution. 
C) policies designed to increase output will only succeed if distribution is more equal. 
D) policies intended to expand output must necessarily fail. 
E) policies designed to equalize distribution may adversely affect the size of output. 
A) greater equality of distribution will generally result in higher levels of output. 
B) greater output is generally associated with more equal distribution. 
C) policies designed to increase output will only succeed if distribution is more equal. 
D) policies intended to expand output must necessarily fail. 
E) policies designed to equalize distribution may adversely affect the size of output.

Question 4

Suppose that a curve has a slope equal to zero at some point A.To the right of A, the curve may

Accepted Answer

A) have a positive slope. 
B) have a negative slope. 
C) be a straight line. 
D) All of these responses are correct. 
A) have a positive slope. 
B) have a negative slope. 
C) be a straight line. 
D) All of these responses are correct.

Question 5

It is impossible for both nations to gain when trading with one other.

Accepted Answer

A) True 
 B)False

Question 6

You have just bought a used car and drive away satisfied that you've made a good deal on the purchase.What would an economist say about your "gain" on the deal?

Accepted Answer

A) Your gain has clearly meant that the seller lost on the deal. 
B) The seller has clearly gained, and you have actually lost on the deal. 
C) Both you and the seller have gained something. 
D) If your gain is too large, then the deal should be renegotiated. 
E) If the seller's loss is too large, then the deal should be renegotiated. 
A) Your gain has clearly meant that the seller lost on the deal. 
B) The seller has clearly gained, and you have actually lost on the deal. 
C) Both you and the seller have gained something. 
D) If your gain is too large, then the deal should be renegotiated. 
E) If the seller's loss is too large, then the deal should be renegotiated.

Question 7

A model that is an oversimplification for one purpose will likely be an oversimplification for other purposes as well.

Accepted Answer

A) True 
 B)False

Question 8

A horizontal line always has a slope of one.

Accepted Answer

A) True 
 B)False

Question 9

Economists are often perceived as disagreeing with each other.Is this the way things really are?

Accepted Answer

A) No, economists agree on much more than is commonly supposed. 
B) No, the problem is that some economists are smarter than others. 
C) No, economists "stage" disagreements for public amusement. 
D) Yes, economists rarely agree on much of anything. 
E) Yes, economists are unable to analyze problems dispassionately. 
A) No, economists agree on much more than is commonly supposed. 
B) No, the problem is that some economists are smarter than others. 
C) No, economists "stage" disagreements for public amusement. 
D) Yes, economists rarely agree on much of anything. 
E) Yes, economists are unable to analyze problems dispassionately.

Question 10

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

Accepted Answer

A) True 
 B)False

Question 11

The Phillips curve illustrates the trade-off between inflation and economic growth.

Accepted Answer

A) True 
 B)False

Question 12

Opportunity cost includes

Accepted Answer

A) only the actual amount spent on a choice. 
B) the value of foregone actions but not dollar outlays. 
C) the value of foregone options plus the dollar outlays associated with a choice. 
D) the amount you are paid to select an opportunity. 
A) only the actual amount spent on a choice. 
B) the value of foregone actions but not dollar outlays. 
C) the value of foregone options plus the dollar outlays associated with a choice. 
D) the amount you are paid to select an opportunity.

Question 13

A graph conveys information about a cause-and-effect relationship.

Accepted Answer

A) True 
 B)False

Question 14

The principle of comparative advantage explains how

Accepted Answer

A) one nation can take advantage of another one through international trade. 
B) two nations may engage in mutually beneficial trade, even though one of them is more productive than the other. 
C) one individual can take advantage of another through international trade. 
D) some people are good at producing everything, while others have no comparative advantages. 
E) some nations end up with large trade surpluses. 
A) one nation can take advantage of another one through international trade. 
B) two nations may engage in mutually beneficial trade, even though one of them is more productive than the other. 
C) one individual can take advantage of another through international trade. 
D) some people are good at producing everything, while others have no comparative advantages. 
E) some nations end up with large trade surpluses.

Question 15

It is possible to represent three dimensions on a two-dimensional graph by using

Accepted Answer

A) a contour map. 
B) a razor blade. 
C) curved lines. 
D) All of these responses are correct. 
A) a contour map. 
B) a razor blade. 
C) curved lines. 
D) All of these responses are correct.

Question 16

The concept of economic efficiency refers to the size of the "economic pie" whereas the concept of equality refers to how the "pie" is distributed.

Accepted Answer

A) True 
 B)False

Question 17

Economic efficiency and income equality are often conflicting goals in an economy.

Accepted Answer

A) True 
 B)False

Question 18

One of the consequences of allowing wages to fall in the United States has been growing wage inequality.

Accepted Answer

A) True 
 B)False

Question 19

Opportunity cost is the

Accepted Answer

A) cost incurred when one fails to take advantage of an opportunity. 
B) cost incurred in order to increase the availability of attractive opportunities. 
C) cost of the best option forgone as a result of choosing an alternative. 
D) drudgery of the undesirable aspects of an option. 
A) cost incurred when one fails to take advantage of an opportunity. 
B) cost incurred in order to increase the availability of attractive opportunities. 
C) cost of the best option forgone as a result of choosing an alternative. 
D) drudgery of the undesirable aspects of an option.

Question 20

An introductory course in economics should allow a student to

Accepted Answer

A) turn into an economist. 
B) develop solutions to most social problems. 
C) answer all complex social questions. 
D) make rational decisions. 
E) All of these responses are correct. 
A) turn into an economist. 
B) develop solutions to most social problems. 
C) answer all complex social questions. 
D) make rational decisions. 
E) All of these responses are correct.

Exam 1: What Is Economics

Abstraction can be thought of as

Economic theory

Since a trade-off exists between total output and equality of income distribution,

Suppose that a curve has a slope equal to zero at some point A.To the right of A, the curve may

It is impossible for both nations to gain when trading with one other.

You have just bought a used car and drive away satisfied that you've made a good deal on the purchase.What would an economist say about your "gain" on the deal?

A model that is an oversimplification for one purpose will likely be an oversimplification for other purposes as well.

A horizontal line always has a slope of one.

Economists are often perceived as disagreeing with each other.Is this the way things really are?

Eliminating important details in economic analysis is necessary to understand the complexity of the economy.

The Phillips curve illustrates the trade-off between inflation and economic growth.

Opportunity cost includes

A graph conveys information about a cause-and-effect relationship.

The principle of comparative advantage explains how

It is possible to represent three dimensions on a two-dimensional graph by using

The concept of economic efficiency refers to the size of the "economic pie" whereas the concept of equality refers to how the "pie" is distributed.

Economic efficiency and income equality are often conflicting goals in an economy.

One of the consequences of allowing wages to fall in the United States has been growing wage inequality.

Opportunity cost is the

An introductory course in economics should allow a student to

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

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