Question 1

When economists say scarcity, they mean:

Accepted Answer

A) there are only a limited number of consumers who would be interested in purchasing goods. 
B) the human desire for goods exceeds the available supply of time, goods and resources. 
C) most people in poorer countries do not have enough goods. 
D) goods are so expensive that only the rich can afford it. 
A) there are only a limited number of consumers who would be interested in purchasing goods. 
B) the human desire for goods exceeds the available supply of time, goods and resources. 
C) most people in poorer countries do not have enough goods. 
D) goods are so expensive that only the rich can afford it.

Question 2

To be valid, an economic model must:

Accepted Answer

A) include every activity which occurs in the real world. 
B) include at least 85 percent of the activity which occurs in the real world. 
C) be able to predict events occurring in the real world. 
D) exclude any link to the real world. 
E) not be based on an abstraction of the real world. 
A) include every activity which occurs in the real world. 
B) include at least 85 percent of the activity which occurs in the real world. 
C) be able to predict events occurring in the real world. 
D) exclude any link to the real world. 
E) not be based on an abstraction of the real world.

Question 3

Which of the following is most likely to represent causality rather than association?

Accepted Answer

A) In years that fashion dictates wider lapels on men's jackets, the stock market grows by at least 5 percent. 
B) Interest rates are higher in years ending with a 1 or a 6. 
C) Unemployment falls when the AFC champion wins the Super Bowl. 
D) Quantity demanded goes up when price falls because lower prices increase consumer purchasing power, ceteris paribus. 
A) In years that fashion dictates wider lapels on men's jackets, the stock market grows by at least 5 percent. 
B) Interest rates are higher in years ending with a 1 or a 6. 
C) Unemployment falls when the AFC champion wins the Super Bowl. 
D) Quantity demanded goes up when price falls because lower prices increase consumer purchasing power, ceteris paribus.

Question 4

Which of the following illustrates the concept of scarcity?

Accepted Answer

A) There is usually more than one use of your "free" time in the evening. 
B) More clean air is wanted than is available in large polluted metropolitan areas such as Los Angeles. 
C) There are many competing uses for the annual budget of your city, county, or state. 
D) All of the answers are correct. 
A) There is usually more than one use of your "free" time in the evening. 
B) More clean air is wanted than is available in large polluted metropolitan areas such as Los Angeles. 
C) There are many competing uses for the annual budget of your city, county, or state. 
D) All of the answers are correct.

Question 5

What type of economic analysis is limited to testable, verifiable statements?

Accepted Answer

A) Macroeconomics. 
B) Entrepreneurial economics. 
C) Positive economics. 
D) Normative economics. 
A) Macroeconomics. 
B) Entrepreneurial economics. 
C) Positive economics. 
D) Normative economics.

Question 6

A sub-discipline of economics that looks at the economy as a whole is:

Accepted Answer

A) macroeconomics. 
B) microeconomics. 
C) positive economics. 
D) normative economics. 
E) impossible to model. 
A) macroeconomics. 
B) microeconomics. 
C) positive economics. 
D) normative economics. 
E) impossible to model.

Question 7

Policies to lower the price level of goods in the nation are a concern of:

Accepted Answer

A) macroeconomics. 
B) microeconomics. 
C) both microeconomics and macroeconomics. 
D) political science. 
A) macroeconomics. 
B) microeconomics. 
C) both microeconomics and macroeconomics. 
D) political science.

Question 8

Money is one of our nation's resources (factors or means of production).

Accepted Answer

A) True 
 B)False

Question 9

Select the positive statement that completes the sentence: If wages rise more rapidly than productivity:

Accepted Answer

A) profits will fall. 
B) workers will earn 3\4 of GDP. 
C) the rate of inflation increases. 
D) all of these. 
A) profits will fall. 
B) workers will earn 3\4 of GDP. 
C) the rate of inflation increases. 
D) all of these.

Question 10

Scarcity:

Accepted Answer

A) is a problem only in the poorer countries of the world. 
B) can be solved by rapid advances in technology. 
C) is a problem that exists in every economy. 
D) is not a problem for the very rich. 
A) is a problem only in the poorer countries of the world. 
B) can be solved by rapid advances in technology. 
C) is a problem that exists in every economy. 
D) is not a problem for the very rich.

Question 11

Which of the following is not an example of a factor of production?

Accepted Answer

A) A forest. 
B) A computer program. 
C) A labor leader. 
D) Dollars. 
A) A forest. 
B) A computer program. 
C) A labor leader. 
D) Dollars.

Question 12

The statement, "John buys more of good X as his income increases, Ceteris paribus ," means:

Accepted Answer

A) John's income is being held constant. 
B) John's purchases of good X are being held constant. 
C) John's income and purchases of this good are being held constant. 
D) the price of this good is being allowed to change. 
A) John's income is being held constant. 
B) John's purchases of good X are being held constant. 
C) John's income and purchases of this good are being held constant. 
D) the price of this good is being allowed to change.

Question 13

"The government should provide health care for all citizens." This statement is an illustration of:

Accepted Answer

A) positive economic analysis. 
B) correlation analysis. 
C) fallacy of association analysis. 
D) normative economic analysis. 
A) positive economic analysis. 
B) correlation analysis. 
C) fallacy of association analysis. 
D) normative economic analysis.

Question 14

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

Accepted Answer

A) True 
 B)False

Question 15

Campaign speeches normally include normative economic statements.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a resource?

Accepted Answer

A) Land. 
B) Labor. 
C) Money. 
D) Capital. 
A) Land. 
B) Labor. 
C) Money. 
D) Capital.

Question 17

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Accepted Answer

A) cost per unit of output will rise. 
B) workers will gain their rightful share of total income. 
C) the rate of inflation will increase. 
D) profits will fall. 
A) cost per unit of output will rise. 
B) workers will gain their rightful share of total income. 
C) the rate of inflation will increase. 
D) profits will fall.

Question 18

Microeconomics approaches the study of economics from the viewpoint of:

Accepted Answer

A) inflation, unemployment, and economic growth. 
B) the federal government. 
C) individual economic units, such as consumers, firms, and units of government. 
D) the economy as a whole. 
A) inflation, unemployment, and economic growth. 
B) the federal government. 
C) individual economic units, such as consumers, firms, and units of government. 
D) the economy as a whole.

Question 19

A positive economic statement:

Accepted Answer

A) contains personal and social value judgments. 
B) is always a mathematical expression. 
C) should never be used by an economist. 
D) is proper provided the advocator is clear the position rests on personal assessment. 
E) is an unbiased report of the facts of the economy. 
A) contains personal and social value judgments. 
B) is always a mathematical expression. 
C) should never be used by an economist. 
D) is proper provided the advocator is clear the position rests on personal assessment. 
E) is an unbiased report of the facts of the economy.

Question 20

Scarcity can be eliminated if:

Accepted Answer

A) people satisfy needs rather than wants. 
B) sufficient new resources were discovered. 
C) output of goods and services were increased. 
D) none of these. 
A) people satisfy needs rather than wants. 
B) sufficient new resources were discovered. 
C) output of goods and services were increased. 
D) none of these.

Exam 1: Introducing the Economic Way of Thinking

When economists say scarcity, they mean:

To be valid, an economic model must:

Which of the following is most likely to represent causality rather than association?

Which of the following illustrates the concept of scarcity?

What type of economic analysis is limited to testable, verifiable statements?

A sub-discipline of economics that looks at the economy as a whole is:

Policies to lower the price level of goods in the nation are a concern of:

Money is one of our nation's resources (factors or means of production).

Select the positive statement that completes the sentence: If wages rise more rapidly than productivity:

Scarcity:

Which of the following is not an example of a factor of production?

The statement, "John buys more of good X as his income increases, Ceteris paribus ," means:

"The government should provide health care for all citizens." This statement is an illustration of:

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

Campaign speeches normally include normative economic statements.

Which of the following is not a resource?

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Microeconomics approaches the study of economics from the viewpoint of:

A positive economic statement:

Scarcity can be eliminated if:

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

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