Question 1

In international trade, one country's gain is another country's loss.

Accepted Answer

A) True 
 B)False

Question 2

A horizontal line has a slope of

Accepted Answer

A)  one. 
B)  zero. 
C)  infinity. 
D)  undefined. 
A)  one. 
B)  zero. 
C)  infinity. 
D)  undefined.

Question 3

In economic theorizing, common sense will always lead to the correct answer.

Accepted Answer

A) True 
 B)False

Question 4

Economists may disagree about how to solve an economic problem because they

Accepted Answer

A)  use different models to analyze the problem and its solutions. 
B)  have different political and moral beliefs. 
C)  disagree about the facts of the situation. 
D)  All of these responses are correct. 
A)  use different models to analyze the problem and its solutions. 
B)  have different political and moral beliefs. 
C)  disagree about the facts of the situation. 
D)  All of these responses are correct.

Question 5

If trade between two countries is voluntary, one can expect that

Accepted Answer

A)  one country's gain is necessarily the other's loss. 
B)  one country will exploit the other one. 
C)  neither country really gains from trade. 
D)  the larger country will always gain at the expense of the smaller. 
E)  both countries expect to gain something. 
A)  one country's gain is necessarily the other's loss. 
B)  one country will exploit the other one. 
C)  neither country really gains from trade. 
D)  the larger country will always gain at the expense of the smaller. 
E)  both countries expect to gain something.

Question 6

Over the last 40 years, the gap between the rich and the poor in the United States has been increasing. Economists have justified this outcome by noting that

Accepted Answer

A)  efficiency can never be achieved without greater inequality. 
B)  inequality is not a problem. 
C)  inequality is a desirable policy outcome. 
D)  inequality is a necessary consequence of achieving greater efficiency. 
E)  efficiency should be achieved regardless of the cost. 
A)  efficiency can never be achieved without greater inequality. 
B)  inequality is not a problem. 
C)  inequality is a desirable policy outcome. 
D)  inequality is a necessary consequence of achieving greater efficiency. 
E)  efficiency should be achieved regardless of the cost.

Question 7

A horizontal line has a slope of 0.

Accepted Answer

A) True 
 B)False

Question 8

When the economy experiences a bust, the government knows exactly which policies will spur an economic recovery.

Accepted Answer

A) True 
 B)False

Question 9

What is the role of value judgments in economic analysis?

Accepted Answer

Economists employ value judgments in mak

Question 10

Because there is a trade-off between inflation and unemployment in the short run,

Accepted Answer

A)  lower unemployment will typically cause inflation to fall. 
B)  policies designed to reduce unemployment will typically set off a recession. 
C)  policies designed to reduce inflation will cause unemployment to fall as well. 
D)  higher inflation will generally be associated with higher unemployment. 
E)  lower inflation will generally be associated with higher unemployment. 
A)  lower unemployment will typically cause inflation to fall. 
B)  policies designed to reduce unemployment will typically set off a recession. 
C)  policies designed to reduce inflation will cause unemployment to fall as well. 
D)  higher inflation will generally be associated with higher unemployment. 
E)  lower inflation will generally be associated with higher unemployment.

Question 11

Economic analysis requires both mathematical reasoning and historical study.

Accepted Answer

A) True 
 B)False

Question 12

A theory is an untested assertion of alleged fact.

Accepted Answer

A) True 
 B)False

Question 13

It is not possible for both parties to gain in a voluntary trade.

Accepted Answer

A) True 
 B)False

Question 14

Airlines can use marginal analysis to set ticket prices, which can increase profits for the company.

Accepted Answer

A) True 
 B)False

Question 15

The relatively low rate of inflation coupled with a low unemployment rate that occurred in the 1990s represented a "normal" economic situation.

Accepted Answer

A) True 
 B)False

Question 16

Economic problems are made manageable by stripping away some of the unnecessary details.

Accepted Answer

A) True 
 B)False

Question 17

Why do economists tend to create models in diagrammatic form?

Accepted Answer

A)  Diagrams distort reality, and theory is an attempt to avoid reality. 
B)  Because they are unable to construct physical models of their theories. 
C)  Economic reality can only be represented in diagrams. 
D)  Most economists like to draw as much as possible. 
E)  All of these responses are correct. 
A)  Diagrams distort reality, and theory is an attempt to avoid reality. 
B)  Because they are unable to construct physical models of their theories. 
C)  Economic reality can only be represented in diagrams. 
D)  Most economists like to draw as much as possible. 
E)  All of these responses are correct.

Question 18

Externalities are costs to society, which have an impact on parties not directly involved into a particular economic transaction.

Accepted Answer

A) True 
 B)False

Question 19

A horizontal line always has a slope of one.

Accepted Answer

A) True 
 B)False

Question 20

"Correlation" is a measure of how one variable causes another to change.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics

In international trade, one country's gain is another country's loss.

A horizontal line has a slope of

In economic theorizing, common sense will always lead to the correct answer.

Economists may disagree about how to solve an economic problem because they

If trade between two countries is voluntary, one can expect that

Over the last 40 years, the gap between the rich and the poor in the United States has been increasing. Economists have justified this outcome by noting that

A horizontal line has a slope of 0.

When the economy experiences a bust, the government knows exactly which policies will spur an economic recovery.

What is the role of value judgments in economic analysis?

Because there is a trade-off between inflation and unemployment in the short run,

Economic analysis requires both mathematical reasoning and historical study.

A theory is an untested assertion of alleged fact.

It is not possible for both parties to gain in a voluntary trade.

Airlines can use marginal analysis to set ticket prices, which can increase profits for the company.

The relatively low rate of inflation coupled with a low unemployment rate that occurred in the 1990s represented a "normal" economic situation.

Economic problems are made manageable by stripping away some of the unnecessary details.

Why do economists tend to create models in diagrammatic form?

Externalities are costs to society, which have an impact on parties not directly involved into a particular economic transaction.

A horizontal line always has a slope of one.

"Correlation" is a measure of how one variable causes another to change.

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

Filters