Question 1

Economists make assumptions because

Accepted Answer

A)  they need to incorporate value judgments into their models. 
B)  analysis without assumptions would be impossibly complex. 
C)  they always have imperfect information about reality. 
D)  assumptions are the final product of careful economic analysis. 
E)  assumptions allow economists to ignore things that they cannot explain. 
A)  they need to incorporate value judgments into their models. 
B)  analysis without assumptions would be impossibly complex. 
C)  they always have imperfect information about reality. 
D)  assumptions are the final product of careful economic analysis. 
E)  assumptions allow economists to ignore things that they cannot explain.

Question 2

Harry Truman is credited with the statement,"Give me a one-armed economist," because economists are likely to say,"On the one hand,...on the other hand." Why do economists "waffle" more than physicists or chemists?

Accepted Answer

Economists describe human behavior,which

Question 3

The law of comparative advantages explains why

Accepted Answer

A)  advanced nations will not trade with less-developed countries. 
B)  an advanced nation will not trade with other countries. 
C)  less-developed countries only trade among themselves. 
D)  nations trade with each other, regardless of their relative levels of economic development. 
E)  nations erect trade barriers. 
A)  advanced nations will not trade with less-developed countries. 
B)  an advanced nation will not trade with other countries. 
C)  less-developed countries only trade among themselves. 
D)  nations trade with each other, regardless of their relative levels of economic development. 
E)  nations erect trade barriers.

Question 4

For the typical student,taking an introductory course in economics should

Accepted Answer

A)  turn the student into an economist. 
B)  teach the student solutions to most social problems. 
C)  teach the student how to answer complex social questions. 
D)  help the student learn to rationally analyze social problems. 
E)  All of the above are correct. 
A)  turn the student into an economist. 
B)  teach the student solutions to most social problems. 
C)  teach the student how to answer complex social questions. 
D)  help the student learn to rationally analyze social problems. 
E)  All of the above are correct.

Question 5

Economic analysis and policy are made more difficult by

Accepted Answer

A)  having so much data to work with. 
B)  inadequate and imperfect information. 
C)  an incomplete consensus on the basic goals of social policy. 
D)  the lack of public interest and opinion on economic questions. 
E)  the major economic problems society faces. 
A)  having so much data to work with. 
B)  inadequate and imperfect information. 
C)  an incomplete consensus on the basic goals of social policy. 
D)  the lack of public interest and opinion on economic questions. 
E)  the major economic problems society faces.

Question 6

If you leave your money in the bank at a fixed interest rate and allow for compounding of interest,show what will happen to your savings over time.Indicate with a graph whether there is a negative or positive slope between savings and time and what happens to the slope over time.

Accepted Answer

Figure 1-3
 @#IMG-DLM& 
Placing time on the horizo

Question 7

The government uses fiscal and monetary policy to mitigate the effects of economic fluctuations.

Accepted Answer

A) True 
 B)False

Question 8

The terms "correlation" and "causation" are synonymous.

Accepted Answer

A) True 
 B)False

Question 9

Economic models

Accepted Answer

A)  are always based on realistic assumptions. 
B)  usually predict perfectly. 
C)  can never be tested with real world data. 
D)  are used to describe cause-and-effect relationships. 
E)  are too simple to be of much use. 
A)  are always based on realistic assumptions. 
B)  usually predict perfectly. 
C)  can never be tested with real world data. 
D)  are used to describe cause-and-effect relationships. 
E)  are too simple to be of much use.

Question 10

Abstraction can lead to gross distortions of pertinent facts.

Accepted Answer

A) True 
 B)False

Question 11

Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college.How would an economist look at the matter?

Accepted Answer

A)  There is no opportunity cost, assuming that future earnings actually increase as expected. 
B)  The opportunity cost is much less than it would appear, assuming that earnings increase. 
C)  Opportunity cost is a meaningless concept in this situation. 
D)  The college students are completely correct in all respects. 
E)  There is still an opportunity cost, even if it is justified by higher future earnings. 
A)  There is no opportunity cost, assuming that future earnings actually increase as expected. 
B)  The opportunity cost is much less than it would appear, assuming that earnings increase. 
C)  Opportunity cost is a meaningless concept in this situation. 
D)  The college students are completely correct in all respects. 
E)  There is still an opportunity cost, even if it is justified by higher future earnings.

Question 12

The steepness of a curve is partially determined by the units of measurement.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Slope will vary along a curve (as opposed to a straight line).

Accepted Answer

A) True 
 B)False

Question 15

Opportunity cost is the highest possible price you can receive when you sell an object.

Accepted Answer

A) True 
 B)False

Question 16

The beginning point of a graph (the 0,0 point)is known as

Accepted Answer

A)  ground zero. 
B)  mother lode. 
C)  the origin. 
D)  square one. 
E)  the beginning. 
A)  ground zero. 
B)  mother lode. 
C)  the origin. 
D)  square one. 
E)  the beginning.

Question 17

You have just bought a used car,and drive away satisfied that you've made a good deal on the purchase.What would an economist say about your "gain" on the deal?

Accepted Answer

A)  Your gain has clearly meant that the seller lost on the deal. 
B)  The seller has clearly gained, and you have actually lost on the deal. 
C)  Both you and the seller have gained something. 
D)  If your gain is too large, then the deal should be re-negotiated. 
E)  If the seller's loss is too large, then the deal should be re-negotiated. 
A)  Your gain has clearly meant that the seller lost on the deal. 
B)  The seller has clearly gained, and you have actually lost on the deal. 
C)  Both you and the seller have gained something. 
D)  If your gain is too large, then the deal should be re-negotiated. 
E)  If the seller's loss is too large, then the deal should be re-negotiated.

Question 18

Standby passengers on airlines who pay low rates for seats benefit from the low price.How are the airlines affected?

Accepted Answer

A)  They lose, because the standby passengers do not cover the full cost of the seats. 
B)  They gain, because the additional revenue covers the "fixed costs" of the flight. 
C)  They lose, because the gain of the passengers must necessarily come at the expense of the airline. 
D)  They benefit as long as the additional revenue from the passengers exceeds the marginal cost. 
E)  Uncertain, because economic theory says nothing about this sort of situation. 
A)  They lose, because the standby passengers do not cover the full cost of the seats. 
B)  They gain, because the additional revenue covers the "fixed costs" of the flight. 
C)  They lose, because the gain of the passengers must necessarily come at the expense of the airline. 
D)  They benefit as long as the additional revenue from the passengers exceeds the marginal cost. 
E)  Uncertain, because economic theory says nothing about this sort of situation.

Question 19

Government controls over market prices frequently "backfire."

Accepted Answer

A) True 
 B)False

Question 20

Because there is a trade-off between total output and equality of income distribution,

Accepted Answer

A)  greater equality of distribution will generally result in higher levels of output. 
B)  greater output is generally associated with more equal distribution. 
C)  policies designed to increase output will only succeed if distribution is more equal. 
D)  policies intended to expand output must necessarily fail. 
E)  policies designed to equalize distribution may adversely affect the size of output. 
A)  greater equality of distribution will generally result in higher levels of output. 
B)  greater output is generally associated with more equal distribution. 
C)  policies designed to increase output will only succeed if distribution is more equal. 
D)  policies intended to expand output must necessarily fail. 
E)  policies designed to equalize distribution may adversely affect the size of output.

Economists make assumptions because

Harry Truman is credited with the statement,"Give me a one-armed economist," because economists are likely to say,"On the one hand,...on the other hand." Why do economists "waffle" more than physicists or chemists?

The law of comparative advantages explains why

For the typical student,taking an introductory course in economics should

Economic analysis and policy are made more difficult by

If you leave your money in the bank at a fixed interest rate and allow for compounding of interest,show what will happen to your savings over time.Indicate with a graph whether there is a negative or positive slope between savings and time and what happens to the slope over time.

The government uses fiscal and monetary policy to mitigate the effects of economic fluctuations.

The terms "correlation" and "causation" are synonymous.

Economic models

Abstraction can lead to gross distortions of pertinent facts.

Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college.How would an economist look at the matter?

The steepness of a curve is partially determined by the units of measurement.

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

Slope will vary along a curve (as opposed to a straight line).

Opportunity cost is the highest possible price you can receive when you sell an object.

The beginning point of a graph (the 0,0 point)is known as

You have just bought a used car,and drive away satisfied that you've made a good deal on the purchase.What would an economist say about your "gain" on the deal?

Standby passengers on airlines who pay low rates for seats benefit from the low price.How are the airlines affected?

Government controls over market prices frequently "backfire."

Because there is a trade-off between total output and equality of income distribution,

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

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Exam 1: What Is Economics?

Economists make assumptions because

Harry Truman is credited with the statement,"Give me a one-armed economist," because economists are likely to say,"On the one hand,...on the other hand." Why do economists "waffle" more than physicists or chemists?

The law of comparative advantages explains why

For the typical student,taking an introductory course in economics should

Economic analysis and policy are made more difficult by

If you leave your money in the bank at a fixed interest rate and allow for compounding of interest,show what will happen to your savings over time.Indicate with a graph whether there is a negative or positive slope between savings and time and what happens to the slope over time.

The government uses fiscal and monetary policy to mitigate the effects of economic fluctuations.

The terms "correlation" and "causation" are synonymous.

Economic models

Abstraction can lead to gross distortions of pertinent facts.

Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college.How would an economist look at the matter?

The steepness of a curve is partially determined by the units of measurement.

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

Slope will vary along a curve (as opposed to a straight line).

Opportunity cost is the highest possible price you can receive when you sell an object.

The beginning point of a graph (the 0,0 point)is known as

You have just bought a used car,and drive away satisfied that you've made a good deal on the purchase.What would an economist say about your "gain" on the deal?

Standby passengers on airlines who pay low rates for seats benefit from the low price.How are the airlines affected?

Government controls over market prices frequently "backfire."

Because there is a trade-off between total output and equality of income distribution,

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

Filters