Question 1

Which of the following would be of particular interest to a microeconomist?

Accepted Answer

A) The price of fruit the typical household consumes. 
B) The nation's inflation rate. 
C) The nation's rate of unemployment. 
D) The budget of the national government. 
E) The growth of the economy. 
A) The price of fruit the typical household consumes. 
B) The nation's inflation rate. 
C) The nation's rate of unemployment. 
D) The budget of the national government. 
E) The growth of the economy.

Question 2

Which of the following is an example of a normative economic statement?

Accepted Answer

A) The inflation rate in the United States decreased from 4 percent last year to 3 percent this year as a result of lower energy prices. 
B) The economy grew at an annual rate of 5 percent during the first quarter of this year. 
C) If two automobile companies merge, it is likely that the price of automobiles will rise. 
D) An increase in international trade benefits some workers but hurts others. 
E) The minimum wage should be increased so that low income workers can afford to keep up with the cost of living. 
A) The inflation rate in the United States decreased from 4 percent last year to 3 percent this year as a result of lower energy prices. 
B) The economy grew at an annual rate of 5 percent during the first quarter of this year. 
C) If two automobile companies merge, it is likely that the price of automobiles will rise. 
D) An increase in international trade benefits some workers but hurts others. 
E) The minimum wage should be increased so that low income workers can afford to keep up with the cost of living.

Question 3

Which of the following represents a positive statement?

Accepted Answer

A) A higher income tax rate will reduce the amount of time that people spend working. 
B) Teenage unemployment should be reduced. 
C) We should raise the standard of living for the elderly. 
D) A decrease in tax rates is needed to help the poor. 
A) A higher income tax rate will reduce the amount of time that people spend working. 
B) Teenage unemployment should be reduced. 
C) We should raise the standard of living for the elderly. 
D) A decrease in tax rates is needed to help the poor.

Question 4

An entrepreneur is:

Accepted Answer

A) an employee in a factory. 
B) the manager of a factory. 
C) the person who conceives and starts a business. 
D) the person who contracts to work for a specific price. 
E) the person who does not assume any risk in business. 
A) an employee in a factory. 
B) the manager of a factory. 
C) the person who conceives and starts a business. 
D) the person who contracts to work for a specific price. 
E) the person who does not assume any risk in business.

Question 5

Capital resources include money and other financial assets.

Accepted Answer

A) True 
 B)False

Question 6

The creative ability of persons to combine and direct resources to produce new products is known as:

Accepted Answer

A) economizing. 
B) entrepreneurship. 
C) value judgment. 
D) product sensitivity. 
A) economizing. 
B) entrepreneurship. 
C) value judgment. 
D) product sensitivity.

Question 7

An economic model is defined as:

Accepted Answer

A) a value judgment. 
B) a presentation of all possible relevant real-world variables. 
C) a simplified representation of the way in which facts are related. 
D) data adjusted for irrational actions. 
A) a value judgment. 
B) a presentation of all possible relevant real-world variables. 
C) a simplified representation of the way in which facts are related. 
D) data adjusted for irrational actions.

Question 8

A normative economic statement is:

Accepted Answer

A) a statement of fact. 
B) a statement of opinion which advocates a particular position. 
C) not acceptable in the economics profession. 
D) the only acceptable manner to present economic information. 
E) a statement based upon government-supplied information. 
A) a statement of fact. 
B) a statement of opinion which advocates a particular position. 
C) not acceptable in the economics profession. 
D) the only acceptable manner to present economic information. 
E) a statement based upon government-supplied information.

Question 9

Factors which determine the price of corn would be studied in macroeconomics.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a factor of production?

Accepted Answer

A) A computer chip. 
B) The service of a lawyer. 
C) Dollars. 
D) All of these are factors of production. 
A) A computer chip. 
B) The service of a lawyer. 
C) Dollars. 
D) All of these are factors of production.

Question 11

A conditional statement such as if event A occurs, then event B follows is an example of normative economics.

Accepted Answer

A) True 
 B)False

Question 12

The factors of production are which of the following?

Accepted Answer

A) The outputs generated by the production process of transforming land, labor, and capital into goods and services. 
B) The land resources, such as natural resources, that are unimproved by human economic activity. 
C) Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories). 
D) Labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services. 
A) The outputs generated by the production process of transforming land, labor, and capital into goods and services. 
B) The land resources, such as natural resources, that are unimproved by human economic activity. 
C) Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories). 
D) Labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services.

Question 13

Ceteris paribus means:

Accepted Answer

A) an association of variables. 
B) all other things remain constant. 
C) a cause and effect relationship. 
D) considering the influences of other variables. 
A) an association of variables. 
B) all other things remain constant. 
C) a cause and effect relationship. 
D) considering the influences of other variables.

Question 14

An economic forecast:

Accepted Answer

A) will always be true. 
B) is more reliable than a weather forecast. 
C) will never provide valuable information. 
D) should not be relied upon to predict economic events. 
E) is always based upon a Ceteris paribus condition. 
A) will always be true. 
B) is more reliable than a weather forecast. 
C) will never provide valuable information. 
D) should not be relied upon to predict economic events. 
E) is always based upon a Ceteris paribus condition.

Question 15

Economists most often disagree over positive rather than normative economic issues.

Accepted Answer

A) True 
 B)False

Question 16

The branch of economics that focuses on economywide variables like inflation and unemployment is called:

Accepted Answer

A) macroeconomics. 
B) microeconomics. 
C) free-market economics. 
D) aggregate economics. 
A) macroeconomics. 
B) microeconomics. 
C) free-market economics. 
D) aggregate economics.

Question 17

Which of the following is a normative statement?

Accepted Answer

A) The deduction for state taxes cost the federal government $100 billion per year. 
B) Taxpayers in North Carolina pay state taxes which are above the national average. 
C) Twenty-two states use a lottery to raise state taxes. 
D) Congress is considering the president's tax plan to increase taxes which is a fair plan. 
A) The deduction for state taxes cost the federal government $100 billion per year. 
B) Taxpayers in North Carolina pay state taxes which are above the national average. 
C) Twenty-two states use a lottery to raise state taxes. 
D) Congress is considering the president's tax plan to increase taxes which is a fair plan.

Question 18

Your scarcity problem would disappear if you were rich.

Accepted Answer

A) True 
 B)False

Question 19

Scarcity is a problem:

Accepted Answer

A) measured by the amount of goods available. 
B) of the poor, but not the rich. 
C) because human wants are unlimited while resources are limited. 
D) only in industrialized economies. 
A) measured by the amount of goods available. 
B) of the poor, but not the rich. 
C) because human wants are unlimited while resources are limited. 
D) only in industrialized economies.

Question 20

The condition of scarcity:

Accepted Answer

A) cannot be eliminated. 
B) prevails in poor economies. 
C) prevails in rich economies. 
D) All of these. 
A) cannot be eliminated. 
B) prevails in poor economies. 
C) prevails in rich economies. 
D) All of these.

Exam 1: Introducing the Economic Way of Thinking

Which of the following would be of particular interest to a microeconomist?

Which of the following is an example of a normative economic statement?

Which of the following represents a positive statement?

An entrepreneur is:

Capital resources include money and other financial assets.

The creative ability of persons to combine and direct resources to produce new products is known as:

An economic model is defined as:

A normative economic statement is:

Factors which determine the price of corn would be studied in macroeconomics.

Which of the following is not a factor of production?

A conditional statement such as if event A occurs, then event B follows is an example of normative economics.

The factors of production are which of the following?

Ceteris paribus means:

An economic forecast:

Economists most often disagree over positive rather than normative economic issues.

The branch of economics that focuses on economywide variables like inflation and unemployment is called:

Which of the following is a normative statement?

Your scarcity problem would disappear if you were rich.

Scarcity is a problem:

The condition of scarcity:

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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