Question 1

When an individual is behaving according to "rational self-interest," he/she:

Accepted Answer

A)  is behaving out of greed. 
B)  will always choose the path of least resistance. 
C)  will always buy the cheapest product. 
D)  is making choices that provide the greatest amount of satisfaction. 
E)  is making a lot of money. 
A)  is behaving out of greed. 
B)  will always choose the path of least resistance. 
C)  will always buy the cheapest product. 
D)  is making choices that provide the greatest amount of satisfaction. 
E)  is making a lot of money.

Question 2

The category of economics that contains statements about "what ought to be" is known as:

Accepted Answer

A)  positive economics. 
B)  normative economics. 
C)  objective economics. 
D)  applied economics. 
E)  welfare economics. 
A)  positive economics. 
B)  normative economics. 
C)  objective economics. 
D)  applied economics. 
E)  welfare economics.

Question 3

The study of inflation and unemployment in East Timor is in the realm of microeconomics.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true of positive economics?

Accepted Answer

A)  It is concerned with what ought to be. 
B)  It will usually indicate which economic policy is the best. 
C)  It produces verifiable statements. 
D)  It is strictly quantitative and so has little to say to those with philosophical goals to achieve in policymaking 
E)  It is the same as normative economics. 
A)  It is concerned with what ought to be. 
B)  It will usually indicate which economic policy is the best. 
C)  It produces verifiable statements. 
D)  It is strictly quantitative and so has little to say to those with philosophical goals to achieve in policymaking 
E)  It is the same as normative economics.

Question 5

An economy's resources:

Accepted Answer

A)  are limited in quantity. 
B)  are always efficiently utilized. 
C)  consist of land, labor, capital, and money. 
D)  are unrelated to its standard of living. 
E)  increase with the use of the latest technology. 
A)  are limited in quantity. 
B)  are always efficiently utilized. 
C)  consist of land, labor, capital, and money. 
D)  are unrelated to its standard of living. 
E)  increase with the use of the latest technology.

Question 6

Which of the following statements is in the realm of positive economics?

Accepted Answer

A)  The president should propose a tax cut because taxes are too high. 
B)  Studies show that if taxes are cut, unemployment falls. 
C)  The budget deficit is too high and should be lowered. 
D)  Studies show that a national debt of over a trillion dollars is bad for the country and should not be allowed to occur. 
E)  The share of defense spending in the budget ought to be changed. 
A)  The president should propose a tax cut because taxes are too high. 
B)  Studies show that if taxes are cut, unemployment falls. 
C)  The budget deficit is too high and should be lowered. 
D)  Studies show that a national debt of over a trillion dollars is bad for the country and should not be allowed to occur. 
E)  The share of defense spending in the budget ought to be changed.

Question 7

Which of the following defines an economic good?

Accepted Answer

A)  Anything that is provided by the government 
B)  Anything that is provided by the nonprofit institutions 
C)  Anything with a price on it 
D)  Anything that has a very high demand in the market 
E)  Anything that has a very high supply in the market 
A)  Anything that is provided by the government 
B)  Anything that is provided by the nonprofit institutions 
C)  Anything with a price on it 
D)  Anything that has a very high demand in the market 
E)  Anything that has a very high supply in the market

Question 8

Which of the following is a normative statement?

Accepted Answer

A)  Higher prices for cigarettes discourage people from buying cigarettes. 
B)  The Federal Reserve should lower interest rates to help boost residential construction. 
C)  High demand for cars drove up fuel prices. 
D)  Government expenditure on public health and sanitation declined over the years. 
E)  The U.S. experienced a high rate of unemployment in 2009. 
A)  Higher prices for cigarettes discourage people from buying cigarettes. 
B)  The Federal Reserve should lower interest rates to help boost residential construction. 
C)  High demand for cars drove up fuel prices. 
D)  Government expenditure on public health and sanitation declined over the years. 
E)  The U.S. experienced a high rate of unemployment in 2009.

Question 9

In economics, money is capital because it can be used to buy resources to produce goods.

Accepted Answer

A) True 
 B)False

Question 10

Scarcity impels an individual to make choices.

Accepted Answer

A) True 
 B)False

Question 11

"If I stand up at a baseball game, I can see better; therefore, everyone should stand up to see better." This statement illustrates:

Accepted Answer

A)  the fallacy of composition. 
B)  interpreting association as causation. 
C)  the scientific method. 
D)  positive economics. 
E)  normative economics. 
A)  the fallacy of composition. 
B)  interpreting association as causation. 
C)  the scientific method. 
D)  positive economics. 
E)  normative economics.

Question 12

Which of the following is a microeconomic concern?

Accepted Answer

A)  The rate of economic growth in the United States 
B)  The unemployment level for a country 
C)  How to maintain or improve the profits of a particular firm 
D)  Inflation 
E)  The national output of the United States 
A)  The rate of economic growth in the United States 
B)  The unemployment level for a country 
C)  How to maintain or improve the profits of a particular firm 
D)  Inflation 
E)  The national output of the United States

Question 13

A rational worker:

Accepted Answer

A)  always works for the least number of hours. 
B)  always works for the highest money wage, other things being equal. 
C)  never acts under conditions of uncertainty. 
D)  deals only with positive and never with normative issues. 
E)  would never quit a job until he or she had a better one 
A)  always works for the least number of hours. 
B)  always works for the highest money wage, other things being equal. 
C)  never acts under conditions of uncertainty. 
D)  deals only with positive and never with normative issues. 
E)  would never quit a job until he or she had a better one

Question 14

According to the text, human beings are self-interested, not selfish. This means:

Accepted Answer

A)  people are never selfish. 
B)  people never act in a spiteful or belligerent manner. 
C)  people never act in a fit of rage. 
D)  people contribute to charities and otherwise help others. 
E)  people care only about themselves and their families. 
A)  people are never selfish. 
B)  people never act in a spiteful or belligerent manner. 
C)  people never act in a fit of rage. 
D)  people contribute to charities and otherwise help others. 
E)  people care only about themselves and their families.

Question 15

Microeconomics is concerned primarily with how individuals make their economic decisions.

Accepted Answer

A) True 
 B)False

Question 16

An economic approach used to search out answers to questions about the real world depends on the principles of:

Accepted Answer

A)  scarcity and rational self-interest. 
B)  cost and benefit. 
C)  public good and private good. 
D)  economic good and economic bad. 
E)  self-interest and selfishness. 
A)  scarcity and rational self-interest. 
B)  cost and benefit. 
C)  public good and private good. 
D)  economic good and economic bad. 
E)  self-interest and selfishness.

Question 17

Approximately how many American adults hold a college degree?

Accepted Answer

A)  70 percent 
B)  10 percent 
C)  30 percent 
D)  45 percent 
E)  50 percent 
A)  70 percent 
B)  10 percent 
C)  30 percent 
D)  45 percent 
E)  50 percent

Question 18

Some economists have noted that throughout recent U.S. history, as the occurrence of sun spots has increased, so has the rate of overall inflation. If any of these economist based this observation on a short-term forecast of inflation, he/she would be:

Accepted Answer

A)  confusing the problems of scarcity and abundance. 
B)  committing the fallacy of composition. 
C)  committing the error of interpreting association as causation. 
D)  using normative analysis. 
E)  committing the fallacy of double counting. 
A)  confusing the problems of scarcity and abundance. 
B)  committing the fallacy of composition. 
C)  committing the error of interpreting association as causation. 
D)  using normative analysis. 
E)  committing the fallacy of double counting.

Question 19

Which of the following is considered to be the basic economic problem across all countries of the world?

Accepted Answer

A)  Inflation 
B)  Unemployment 
C)  Poverty 
D)  Scarcity 
E)  Wage disparity 
A)  Inflation 
B)  Unemployment 
C)  Poverty 
D)  Scarcity 
E)  Wage disparity

Question 20

People earn an income by selling their resources or by using them. Owners of land receive _____, while the owners of capital receive _____.

Accepted Answer

A)  rent; profit 
B)  wage; profit 
C)  profit; rent 
D)  rent; interest 
E)  interest; profit 
A)  rent; profit 
B)  wage; profit 
C)  profit; rent 
D)  rent; interest 
E)  interest; profit

Exam 1: Economics: the World Around You

When an individual is behaving according to "rational self-interest," he/she:

The category of economics that contains statements about "what ought to be" is known as:

The study of inflation and unemployment in East Timor is in the realm of microeconomics.

Which of the following is true of positive economics?

An economy's resources:

Which of the following statements is in the realm of positive economics?

Which of the following defines an economic good?

Which of the following is a normative statement?

In economics, money is capital because it can be used to buy resources to produce goods.

Scarcity impels an individual to make choices.

"If I stand up at a baseball game, I can see better; therefore, everyone should stand up to see better." This statement illustrates:

Which of the following is a microeconomic concern?

A rational worker:

According to the text, human beings are self-interested, not selfish. This means:

Microeconomics is concerned primarily with how individuals make their economic decisions.

An economic approach used to search out answers to questions about the real world depends on the principles of:

Approximately how many American adults hold a college degree?

Some economists have noted that throughout recent U.S. history, as the occurrence of sun spots has increased, so has the rate of overall inflation. If any of these economist based this observation on a short-term forecast of inflation, he/she would be:

Which of the following is considered to be the basic economic problem across all countries of the world?

People earn an income by selling their resources or by using them. Owners of land receive _____, while the owners of capital receive _____.

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

People earn an income by selling their resources or by using them. Owners of land receive _, while the owners of capital receive _.