Question 1

A graph's origin is the point of intersection of all lines or curves in the graph.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Theory and hypothesis are interchangeable terms for the same thing. 
B)  A hypothesis may result from a tested and confirmed theory. 
C)  A theory may result from a tested and confirmed hypothesis. 
D)  A hypothesis is a theory whose formulation relies on mathematics. 
A)  Theory and hypothesis are interchangeable terms for the same thing. 
B)  A hypothesis may result from a tested and confirmed theory. 
C)  A theory may result from a tested and confirmed hypothesis. 
D)  A hypothesis is a theory whose formulation relies on mathematics.

Question 3

Economic models are rarely constructed using

Accepted Answer

A)  equations. 
B)  words. 
C)  graphs. 
D)  physical objects. 
A)  equations. 
B)  words. 
C)  graphs. 
D)  physical objects.

Question 4

Throughout the 1980s, accounting departments in U.S. universities were unable to fill many available faculty positions. This fact suggests that the salaries offered by these departments

Accepted Answer

A)  suffered from the cost disease of the service sector. 
B)  were below the market price for qualified accountants. 
C)  created externalities. 
D)  failed to reflect productivity growth in teaching. 
A)  suffered from the cost disease of the service sector. 
B)  were below the market price for qualified accountants. 
C)  created externalities. 
D)  failed to reflect productivity growth in teaching.

Question 5

The slope of a curved line differs from that of a straight line in that

Accepted Answer

A)  the numerical value of the slope of a straight line is different at every point but is the same at every point for a curved line. 
B)  the numerical value of the slope of a straight line is always higher than the numerical value of the slope of a curved line. 
C)  the numerical value of the slope of a curved line is different at every point but is the same at every point for a straight line. 
D)  the numerical value of the slope of a curved line is an irrational number, but the numerical value of the slope of a straight line is always a rational number. 
E)  straight lines are more realistic, but curved lines are not descriptively accurate for the real world. 
A)  the numerical value of the slope of a straight line is different at every point but is the same at every point for a curved line. 
B)  the numerical value of the slope of a straight line is always higher than the numerical value of the slope of a curved line. 
C)  the numerical value of the slope of a curved line is different at every point but is the same at every point for a straight line. 
D)  the numerical value of the slope of a curved line is an irrational number, but the numerical value of the slope of a straight line is always a rational number. 
E)  straight lines are more realistic, but curved lines are not descriptively accurate for the real world.

Question 6

The marginal cost of an airline ticket is the total cost of operating a flight divided by the number of passengers who buy tickets.

Accepted Answer

A) True 
 B)False

Question 7

There are never any adverse consequences of government attempts to modify the laws of supply and demand.

Accepted Answer

A) True 
 B)False

Question 8

In contrast to the United States, the European Union has chosen

Accepted Answer

A)  greater wage inequality for lower unemployment. 
B)  less wage inequality and lower unemployment. 
C)  greater wage inequality and higher unemployment. 
D)  similar wage inequality but more unemployment. 
E)  less wage inequality for higher unemployment. 
A)  greater wage inequality for lower unemployment. 
B)  less wage inequality and lower unemployment. 
C)  greater wage inequality and higher unemployment. 
D)  similar wage inequality but more unemployment. 
E)  less wage inequality for higher unemployment.

Question 9

Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an example of a fiscal policy initiative?

Accepted Answer

A)  Lowering of interest rates 
B)  Increase in reserve requirements 
C)  Reduction in taxes 
D)  Decrease in money supply 
A)  Lowering of interest rates 
B)  Increase in reserve requirements 
C)  Reduction in taxes 
D)  Decrease in money supply

Question 12

Greater economic efficiency and income equality can usually both be achieved in an economy simultaneously.

Accepted Answer

A) True 
 B)False

Question 13

A theory is an explanation of the causal mechanism behind observed phenomena.

Accepted Answer

A) True 
 B)False

Question 14

Regarding economic models, which of the following statements is NOT true?

Accepted Answer

A)  An economic model is a simplified representation of a theory or part of a theory. 
B)  An economic model can provide clear answers for policy makers. 
C)  An economic model can clarify an important economic problem. 
D)  An economic model can show three-variable diagrams. 
A)  An economic model is a simplified representation of a theory or part of a theory. 
B)  An economic model can provide clear answers for policy makers. 
C)  An economic model can clarify an important economic problem. 
D)  An economic model can show three-variable diagrams.

Question 15

The market mechanism provides a financial incentive for firms to minimize the pollution they create.

Accepted Answer

A) True 
 B)False

Question 16

In economics, the true cost of making a choice is the value of what must be given up.

Accepted Answer

A) True 
 B)False

Question 17

When variable A rises by 10 units, variable B rises by 15 units. The slope of the line describing this relationship is

Accepted Answer

A)  always 2/3. 
B)  either 2/3 or 1.5, depending on which variable goes on which axis of the graph. 
C)  either 1.5 or −1.5, depending on which variable goes on which axis. 
D)  always −1.5. 
A)  always 2/3. 
B)  either 2/3 or 1.5, depending on which variable goes on which axis of the graph. 
C)  either 1.5 or −1.5, depending on which variable goes on which axis. 
D)  always −1.5.

Question 18

Economists and others use economic theory

Accepted Answer

A)  only to analyze situations in which money changes hands. 
B)  as a partial basis for public policy recommendations. 
C)  to confuse their enemies. 
D)  instead of using value judgments concerning important policy issues. 
A)  only to analyze situations in which money changes hands. 
B)  as a partial basis for public policy recommendations. 
C)  to confuse their enemies. 
D)  instead of using value judgments concerning important policy issues.

Question 19

The tangent at point A on a curve has a positive slope. Therefore, the curve has a

Accepted Answer

A)  positive slope at all points. 
B)  positive slope at point A. 
C)  negative slope at all points. 
D)  negative slope at point A. 
A)  positive slope at all points. 
B)  positive slope at point A. 
C)  negative slope at all points. 
D)  negative slope at point A.

Question 20

Economists make assumptions because

Accepted Answer

A)  this is a way of incorporating value judgments into their models. 
B)  their use allows complex situations to be analyzed. 
C)  this permits imperfect information to describe reality. 
D)  assumptions are the final product of careful economic analysis. 
E)  assumptions allow economists to avoid facts that contradict their theories. 
A)  this is a way of incorporating value judgments into their models. 
B)  their use allows complex situations to be analyzed. 
C)  this permits imperfect information to describe reality. 
D)  assumptions are the final product of careful economic analysis. 
E)  assumptions allow economists to avoid facts that contradict their theories.

Exam 1: What Is Economics

A graph's origin is the point of intersection of all lines or curves in the graph.

Which of the following statements is correct?

Economic models are rarely constructed using

Throughout the 1980s, accounting departments in U.S. universities were unable to fill many available faculty positions. This fact suggests that the salaries offered by these departments

The slope of a curved line differs from that of a straight line in that

The marginal cost of an airline ticket is the total cost of operating a flight divided by the number of passengers who buy tickets.

There are never any adverse consequences of government attempts to modify the laws of supply and demand.

In contrast to the United States, the European Union has chosen

Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.

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

Which of the following is an example of a fiscal policy initiative?

Greater economic efficiency and income equality can usually both be achieved in an economy simultaneously.

A theory is an explanation of the causal mechanism behind observed phenomena.

Regarding economic models, which of the following statements is NOT true?

The market mechanism provides a financial incentive for firms to minimize the pollution they create.

In economics, the true cost of making a choice is the value of what must be given up.

When variable A rises by 10 units, variable B rises by 15 units. The slope of the line describing this relationship is

Economists and others use economic theory

The tangent at point A on a curve has a positive slope. Therefore, the curve has a

Economists make assumptions because

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

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 Us Economy

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