Question 1

The opportunity cost of any action is

Accepted Answer

A)  irrelevant to economic theory 
B)  limited to the out-of-pocket cost incurred 
C)  the sunk cost plus the markup on materials and labor 
D)  what we gain in the process of consumption 
E)  what is sacrificed to pursue that action 
A)  irrelevant to economic theory 
B)  limited to the out-of-pocket cost incurred 
C)  the sunk cost plus the markup on materials and labor 
D)  what we gain in the process of consumption 
E)  what is sacrificed to pursue that action

Question 2

The statement that "at 10 percent,the interest rate is too high for families to buy the home they deserve," is a(n)

Accepted Answer

A)  positive statement 
B)  normative statement 
C)  morally ambiguous philosophical position 
D)  affront to the American dream 
E)  value judgment 
A)  positive statement 
B)  normative statement 
C)  morally ambiguous philosophical position 
D)  affront to the American dream 
E)  value judgment

Question 3

Which of the following explains why economists may disagree over positive issues?

Accepted Answer

A)  They have different beliefs and values. 
B)  They examine the same data to draw their conclusions. 
C)  They need to disagree in order to publish their research findings. 
D)  They often employ different models and statistical techniques when examining data. 
E)  Some work only on microeconomic issues,while others focus exclusively on macroeconomic issues. 
A)  They have different beliefs and values. 
B)  They examine the same data to draw their conclusions. 
C)  They need to disagree in order to publish their research findings. 
D)  They often employ different models and statistical techniques when examining data. 
E)  Some work only on microeconomic issues,while others focus exclusively on macroeconomic issues.

Question 4

Which of the following would be a concern of normative economics?

Accepted Answer

A)  measuring the actual distribution of income in the economy 
B)  recommending a change in government policy to make the distribution of income more equitable 
C)  determining the impact of higher income taxes on the distribution of income 
D)  determining the impact of a lower federal budget deficit on the distribution of income 
E)  measuring the change in the nation's income distribution since 1960 
A)  measuring the actual distribution of income in the economy 
B)  recommending a change in government policy to make the distribution of income more equitable 
C)  determining the impact of higher income taxes on the distribution of income 
D)  determining the impact of a lower federal budget deficit on the distribution of income 
E)  measuring the change in the nation's income distribution since 1960

Question 5

How retail gasoline stations behave in a local market is an example of a macroeconomic issue.

Accepted Answer

A) True 
 B)False

Question 6

The ultimate purpose of building an economic model is to

Accepted Answer

A)  challenge college students 
B)  constrain economic agents 
C)  predict behavior 
D)  change behavior 
E)  prevent behavior 
A)  challenge college students 
B)  constrain economic agents 
C)  predict behavior 
D)  change behavior 
E)  prevent behavior

Question 7

A critical assumption differs from a simplifying assumption in that a critical assumption

Accepted Answer

A)  is a means of getting rid of extraneous details in the model 
B)  cannot affect the conclusions of the model 
C)  can affect the conclusions of the model 
D)  is rarely used in economic models 
E)  is never a fundamental assumption 
A)  is a means of getting rid of extraneous details in the model 
B)  cannot affect the conclusions of the model 
C)  can affect the conclusions of the model 
D)  is rarely used in economic models 
E)  is never a fundamental assumption

Question 8

Understanding the distinction between positive and normative economic statements is important because it

Accepted Answer

A)  enables us to derive better forecasts of macroeconomic aggregates such as GDP 
B)  explains why economics is not a physical science 
C)  is the primary distinction between macroeconomics and microeconomics 
D)  provides a framework for understanding differences among economists 
E)  enables us to see the rationale behind economic models 
A)  enables us to derive better forecasts of macroeconomic aggregates such as GDP 
B)  explains why economics is not a physical science 
C)  is the primary distinction between macroeconomics and microeconomics 
D)  provides a framework for understanding differences among economists 
E)  enables us to see the rationale behind economic models

Question 9

When economists disagree about whether legislation is a good idea,even when they agree about its impacts,the disagreements are 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 10

The statement "The unemployment rate in the U.S.was 5 percent last month" is

Accepted Answer

A)  a value judgment 
B)  an economic opinion 
C)  a normative statement 
D)  a positive statement 
E)  totally beyond anything that should be permitted by modern society 
A)  a value judgment 
B)  an economic opinion 
C)  a normative statement 
D)  a positive statement 
E)  totally beyond anything that should be permitted by modern society

Question 11

Microeconomics is the branch of economics that concerns

Accepted Answer

A)  the overall health of the economy 
B)  the behavior of individual households,firms,and governments 
C)  the overall level of trade between nations 
D)  local governments only 
E)  the general level of output 
A)  the overall health of the economy 
B)  the behavior of individual households,firms,and governments 
C)  the overall level of trade between nations 
D)  local governments only 
E)  the general level of output

Question 12

In every economic system,scarcity imposes limitations on

Accepted Answer

A)  households,business firms,governments,and the nation as a whole 
B)  households and business firms,but not the governments 
C)  local and state governments,but not the federal government 
D)  households and governments,but not business firms 
E)  business firms,governments,and the nation as a whole 
A)  households,business firms,governments,and the nation as a whole 
B)  households and business firms,but not the governments 
C)  local and state governments,but not the federal government 
D)  households and governments,but not business firms 
E)  business firms,governments,and the nation as a whole

Question 13

The idea of opportunity cost suggests that the cost of a particular choice should be measured by the

Accepted Answer

A)  price of the good chosen 
B)  price of the good divided by income 
C)  value of the best alternative sacrificed 
D)  amount of the good consumed 
E)  sum of the costs of all foregone opportunities 
A)  price of the good chosen 
B)  price of the good divided by income 
C)  value of the best alternative sacrificed 
D)  amount of the good consumed 
E)  sum of the costs of all foregone opportunities

Question 14

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 tank is approximately

Accepted Answer

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

Question 15

The inflation rate for the economy as a whole is a

Accepted Answer

A)  normative value judgment 
B)  positive value judgment 
C)  macroeconomic statistic 
D)  microeconomic statistic 
E)  critical assumption 
A)  normative value judgment 
B)  positive value judgment 
C)  macroeconomic statistic 
D)  microeconomic statistic 
E)  critical assumption

Question 16

Suppose your friends take you out for dinner on your birthday and you have a much better time than you would have had doing anything else.There is still an opportunity cost,even though they will not let you pay for anything.

Accepted Answer

A) True 
 B)False

Question 17

Macroeconomics focuses on the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 18

Economists disagree about many things.When those disagreements are about which model best explains the economy,these disagreements are primarily over "positive" statements.

Accepted Answer

A) True 
 B)False

Question 19

A critical assumption made by all economic models is that

Accepted Answer

A)  few economic decision makers face constraints under capitalism 
B)  few economic decision makers face constraints under communism 
C)  every economic decision maker,except the extremely wealthy,faces constraints 
D)  every economic decision maker,except the federal government,faces constraints 
E)  every economic decision maker faces constraints under every economic system 
A)  few economic decision makers face constraints under capitalism 
B)  few economic decision makers face constraints under communism 
C)  every economic decision maker,except the extremely wealthy,faces constraints 
D)  every economic decision maker,except the federal government,faces constraints 
E)  every economic decision maker faces constraints under every economic system

Question 20

Which of the following is a positive statement?

Accepted Answer

A)  Driving speeds should be lowered so that fewer accidents will occur. 
B)  When per capita income falls,fewer meals are consumed at restaurants. 
C)  The minimum wage is too low;college students deserve a raise. 
D)  Cigarette sales should be made illegal in order to reduce the incidence of cancer. 
E)  Social Security is a good program for U.S.workers. 
A)  Driving speeds should be lowered so that fewer accidents will occur. 
B)  When per capita income falls,fewer meals are consumed at restaurants. 
C)  The minimum wage is too low;college students deserve a raise. 
D)  Cigarette sales should be made illegal in order to reduce the incidence of cancer. 
E)  Social Security is a good program for U.S.workers.

The opportunity cost of any action is

The statement that "at 10 percent,the interest rate is too high for families to buy the home they deserve," is a(n)

Which of the following explains why economists may disagree over positive issues?

Which of the following would be a concern of normative economics?

How retail gasoline stations behave in a local market is an example of a macroeconomic issue.

The ultimate purpose of building an economic model is to

A critical assumption differs from a simplifying assumption in that a critical assumption

Understanding the distinction between positive and normative economic statements is important because it

When economists disagree about whether legislation is a good idea,even when they agree about its impacts,the disagreements are usually over

The statement "The unemployment rate in the U.S.was 5 percent last month" is

Microeconomics is the branch of economics that concerns

In every economic system,scarcity imposes limitations on

The idea of opportunity cost suggests that the cost of a particular choice should be measured by the

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 tank is approximately

The inflation rate for the economy as a whole is a

Suppose your friends take you out for dinner on your birthday and you have a much better time than you would have had doing anything else.There is still an opportunity cost,even though they will not let you pay for anything.

Macroeconomics focuses on the economy as a whole.

Economists disagree about many things.When those disagreements are about which model best explains the economy,these disagreements are primarily over "positive" statements.

A critical assumption made by all economic models is that

Which of the following is a positive statement?

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?

The opportunity cost of any action is

The statement that "at 10 percent,the interest rate is too high for families to buy the home they deserve," is a(n)

Which of the following explains why economists may disagree over positive issues?

Which of the following would be a concern of normative economics?

How retail gasoline stations behave in a local market is an example of a macroeconomic issue.

The ultimate purpose of building an economic model is to

A critical assumption differs from a simplifying assumption in that a critical assumption

Understanding the distinction between positive and normative economic statements is important because it

When economists disagree about whether legislation is a good idea,even when they agree about its impacts,the disagreements are usually over

The statement "The unemployment rate in the U.S.was 5 percent last month" is

Microeconomics is the branch of economics that concerns

In every economic system,scarcity imposes limitations on

The idea of opportunity cost suggests that the cost of a particular choice should be measured by the

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 tank is approximately

The inflation rate for the economy as a whole is a

Suppose your friends take you out for dinner on your birthday and you have a much better time than you would have had doing anything else.There is still an opportunity cost,even though they will not let you pay for anything.

Macroeconomics focuses on the economy as a whole.

Economists disagree about many things.When those disagreements are about which model best explains the economy,these disagreements are primarily over "positive" statements.

A critical assumption made by all economic models is that

Which of the following is a positive statement?

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