Question 1

Which of the following is assumed in virtually every economic model?

Accepted Answer

A)  Inefficiency exists in the economy. 
B)  Decision makers operate in the face of unlimited resources. 
C)  All decision makers face constraints. 
D)  Normative economic statements are derived from mathematical equations. 
E)  Positive statements are derived from normative statements. 
A)  Inefficiency exists in the economy. 
B)  Decision makers operate in the face of unlimited resources. 
C)  All decision makers face constraints. 
D)  Normative economic statements are derived from mathematical equations. 
E)  Positive statements are derived from normative statements.

Question 2

The objective of an economic model is to

Accepted Answer

A)  be an accurate description of reality 
B)  yield better understanding of important relationships 
C)  use simplifying assumptions to make positive economic statements 
D)  use basic principles of economics to derive fundamental assumptions about human behavior 
E)  predict real-world occurrences with complete accuracy 
A)  be an accurate description of reality 
B)  yield better understanding of important relationships 
C)  use simplifying assumptions to make positive economic statements 
D)  use basic principles of economics to derive fundamental assumptions about human behavior 
E)  predict real-world occurrences with complete accuracy

Question 3

A simplifying assumption

Accepted Answer

A)  affects the important conclusions of an economic model 
B)  increases the level of detail in an economic model 
C)  makes an economic model a more concrete representation of reality 
D)  eliminates unnecessary details from an economic model 
E)  limits the validity of an economic model's conclusions 
A)  affects the important conclusions of an economic model 
B)  increases the level of detail in an economic model 
C)  makes an economic model a more concrete representation of reality 
D)  eliminates unnecessary details from an economic model 
E)  limits the validity of an economic model's conclusions

Question 4

Microeconomics is the study of

Accepted Answer

A)  government decisions 
B)  the federal government's budget 
C)  the economic behavior of entire nations 
D)  the economic behavior of individual decision makers 
E)  the overall economy 
A)  government decisions 
B)  the federal government's budget 
C)  the economic behavior of entire nations 
D)  the economic behavior of individual decision makers 
E)  the overall economy

Question 5

The study of economics would be superfluous if __________ did not exist.

Accepted Answer

A)  demand 
B)  capital 
C)  corporations 
D)  profit 
E)  scarcity 
A)  demand 
B)  capital 
C)  corporations 
D)  profit 
E)  scarcity

Question 6

A particular music store,Discs-R-Us,sells over 3,000 different compact disks.Pat's opportunity cost of choosing to purchase a compact disk by Pearl Jam

Accepted Answer

A)  is zero if he does not like any other compact disk 
B)  is how much he would have enjoyed his second-favorite compact disk 
C)  depends on the compact disks not sold by the store 
D)  is negative 
E)  is how much he would have enjoyed a compact disk by Vanilla Ice 
A)  is zero if he does not like any other compact disk 
B)  is how much he would have enjoyed his second-favorite compact disk 
C)  depends on the compact disks not sold by the store 
D)  is negative 
E)  is how much he would have enjoyed a compact disk by Vanilla Ice

Question 7

The Congressional Budget Office and the Office of Management and Budget each produce deficit forecasts for a fiscal year.They use models that are mostly similar but have notable differences.As such,the disagreements are likely usually over

Accepted Answer

A)  normative issues 
B)  positive issues 
C)  the mathematical calculations in an economic model 
D)  whether microeconomics or macroeconomics is more important 
E)  whether economic theory is useful in explaining the behavior of actors in the economy 
A)  normative issues 
B)  positive issues 
C)  the mathematical calculations in an economic model 
D)  whether microeconomics or macroeconomics is more important 
E)  whether economic theory is useful in explaining the behavior of actors in the economy

Question 8

The term capital,as used by economists,refers to

Accepted Answer

A)  money 
B)  the physical space in which production occurs 
C)  the time allocated to producing goods and services 
D)  financial securities such as stocks and bonds 
E)  machinery and equipment that is not used up during the production process 
A)  money 
B)  the physical space in which production occurs 
C)  the time allocated to producing goods and services 
D)  financial securities such as stocks and bonds 
E)  machinery and equipment that is not used up during the production process

Question 9

If Sally purchases a particular compact disk,it is because the opportunity cost is higher than it would be for any other compact disk.

Accepted Answer

A) True 
 B)False

Question 10

Macroeconomics studies the determination of

Accepted Answer

A)  total output,total employment,the general price level,and the general level of interest rates 
B)  total output and the general level of interest rates only 
C)  total employment and the general level of prices only 
D)  the interaction of individual economic actors in specific markets and industries 
E)  the levels of employment and prices in specific markets and industries 
A)  total output,total employment,the general price level,and the general level of interest rates 
B)  total output and the general level of interest rates only 
C)  total employment and the general level of prices only 
D)  the interaction of individual economic actors in specific markets and industries 
E)  the levels of employment and prices in specific markets and industries

Question 11

What an economic decision maker must give up when choosing one economic activity over others is known as the

Accepted Answer

A)  alternative cost 
B)  decision cost 
C)  foregone cost 
D)  opportunity cost 
E)  accounting cost 
A)  alternative cost 
B)  decision cost 
C)  foregone cost 
D)  opportunity cost 
E)  accounting cost

Question 12

The basic problem of economics arises when there are unlimited resources available to fulfill society's limited wants.

Accepted Answer

A) True 
 B)False

Question 13

Reasons for studying economics include

Accepted Answer

A)  all of the following 
B)  to better understand world issues by applying the tools of economic analysis 
C)  to help design more effective solutions to society's problems 
D)  to help prepare for careers in fields such as law and politics 
E)  to better understand the impact of world events on an individual's life 
A)  all of the following 
B)  to better understand world issues by applying the tools of economic analysis 
C)  to help design more effective solutions to society's problems 
D)  to help prepare for careers in fields such as law and politics 
E)  to better understand the impact of world events on an individual's life

Question 14

All of the following are examples of constraints faced by decision makers,except one.Which is the exception?

Accepted Answer

A)  income for a consumer 
B)  natural resources for a firm 
C)  time for a laborer 
D)  consumer wants 
E)  wealth for a consumer 
A)  income for a consumer 
B)  natural resources for a firm 
C)  time for a laborer 
D)  consumer wants 
E)  wealth for a consumer

Question 15

The knowledge that students gain while in college is referred to by economists as human capital.

Accepted Answer

A) True 
 B)False

Question 16

In order to eliminate unnecessary details and highlight the essential features of an economic model,an economist makes

Accepted Answer

A)  critical assumptions 
B)  macroeconomic assumptions 
C)  normative assumptions 
D)  positive assumptions 
E)  simplifying assumptions 
A)  critical assumptions 
B)  macroeconomic assumptions 
C)  normative assumptions 
D)  positive assumptions 
E)  simplifying assumptions

Question 17

The opportunity cost of a particular economic activity

Accepted Answer

A)  is the same for each individual considering the activity 
B)  can differ among different individuals considering the activity 
C)  excludes the monetary cost of the activity 
D)  equals the money cost of the activity minus its time cost 
E)  has the same time cost for each individual considering the activity 
A)  is the same for each individual considering the activity 
B)  can differ among different individuals considering the activity 
C)  excludes the monetary cost of the activity 
D)  equals the money cost of the activity minus its time cost 
E)  has the same time cost for each individual considering the activity

Question 18

The study of how consumers and producers interact in individual markets is

Accepted Answer

A)  macroeconomics 
B)  labor economics 
C)  microeconomics 
D)  econometrics 
E)  development economics 
A)  macroeconomics 
B)  labor economics 
C)  microeconomics 
D)  econometrics 
E)  development economics

Question 19

A physician's knowledge and skills are referred to by economists as

Accepted Answer

A)  human capital 
B)  labor 
C)  physical capital 
D)  entrepreneurship 
E)  intellectual raw materials 
A)  human capital 
B)  labor 
C)  physical capital 
D)  entrepreneurship 
E)  intellectual raw materials

Question 20

In one year,a weapons plant can manufacture either 1,000 more guns or 50 more tanks.The plant's opportunity cost of an extra gun is approximately

Accepted Answer

A)  50 tanks 
B)  20 guns 
C)  20 tanks 
D)  1/20 of a tank 
E)  1/50 of a tank 
A)  50 tanks 
B)  20 guns 
C)  20 tanks 
D)  1/20 of a tank 
E)  1/50 of a tank

Which of the following is assumed in virtually every economic model?

The objective of an economic model is to

A simplifying assumption

Microeconomics is the study of

The study of economics would be superfluous if __________ did not exist.

A particular music store,Discs-R-Us,sells over 3,000 different compact disks.Pat's opportunity cost of choosing to purchase a compact disk by Pearl Jam

The Congressional Budget Office and the Office of Management and Budget each produce deficit forecasts for a fiscal year.They use models that are mostly similar but have notable differences.As such,the disagreements are likely usually over

The term capital,as used by economists,refers to

If Sally purchases a particular compact disk,it is because the opportunity cost is higher than it would be for any other compact disk.

Macroeconomics studies the determination of

What an economic decision maker must give up when choosing one economic activity over others is known as the

The basic problem of economics arises when there are unlimited resources available to fulfill society's limited wants.

Reasons for studying economics include

All of the following are examples of constraints faced by decision makers,except one.Which is the exception?

The knowledge that students gain while in college is referred to by economists as human capital.

In order to eliminate unnecessary details and highlight the essential features of an economic model,an economist makes

The opportunity cost of a particular economic activity

The study of how consumers and producers interact in individual markets is

A physician's knowledge and skills are referred to by economists as

In one year,a weapons plant can manufacture either 1,000 more guns or 50 more tanks.The plant's opportunity cost of an extra gun is approximately

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters

Exam 1: What is Economics?

Which of the following is assumed in virtually every economic model?

The objective of an economic model is to

A simplifying assumption

Microeconomics is the study of

The study of economics would be superfluous if __________ did not exist.

A particular music store,Discs-R-Us,sells over 3,000 different compact disks.Pat's opportunity cost of choosing to purchase a compact disk by Pearl Jam

The Congressional Budget Office and the Office of Management and Budget each produce deficit forecasts for a fiscal year.They use models that are mostly similar but have notable differences.As such,the disagreements are likely usually over

The term capital,as used by economists,refers to

If Sally purchases a particular compact disk,it is because the opportunity cost is higher than it would be for any other compact disk.

Macroeconomics studies the determination of

What an economic decision maker must give up when choosing one economic activity over others is known as the

The basic problem of economics arises when there are unlimited resources available to fulfill society's limited wants.

Reasons for studying economics include

All of the following are examples of constraints faced by decision makers,except one.Which is the exception?

The knowledge that students gain while in college is referred to by economists as human capital.

In order to eliminate unnecessary details and highlight the essential features of an economic model,an economist makes

The opportunity cost of a particular economic activity

The study of how consumers and producers interact in individual markets is

A physician's knowledge and skills are referred to by economists as

In one year,a weapons plant can manufacture either 1,000 more guns or 50 more tanks.The plant's opportunity cost of an extra gun is approximately

Scarcity, Choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

What Macroeconomics Tries to Explain

Production, Income, and Employment

The Price Level and Inflation

The Classical Long run Model

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-run Macro Model

Fiscal Policy

Money, Banks, and the Federal Reserve

The Money Market and Monetary Policy

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Filters