Question 1

Two advisors to the president have given their policy recommendations,and they are in disagreement.Why do these economists disagree?

Accepted Answer

A)  because they do not have all relevant information about the problem 
B)  because they disagree on the nature of some cause-effect relationship 
C)  because they have different values and opinions 
D)  All of the above are reasons for disagreements among economists. 
A)  because they do not have all relevant information about the problem 
B)  because they disagree on the nature of some cause-effect relationship 
C)  because they have different values and opinions 
D)  All of the above are reasons for disagreements among economists.

Question 2

A horizontal line has a slope of 0.

Accepted Answer

A) True 
 B)False

Question 3

All two-dimensional graphs must have an origin,a horizontal axis,and a vertical axis.

Accepted Answer

A) True 
 B)False

Question 4

The use of chlorofluorocarbons in refrigerators and air conditioners is alleged to cause the destruction of the ozone layer that surrounds the earth.This layer protects humans from ultraviolet radiation,which causes skin cancer.Industry has been prohibited from using these substances in aerosol cans,but the government has been reluctant to ban their use altogether because of the serious economic consequences.Economists analyze such problems and refer to them as

Accepted Answer

A)  issues of unfairness. 
B)  examples of excess abstraction. 
C)  externalities. 
D)  comparative advantage issues. 
E)  examples of trade-offs between output and equality. 
A)  issues of unfairness. 
B)  examples of excess abstraction. 
C)  externalities. 
D)  comparative advantage issues. 
E)  examples of trade-offs between output and equality.

Question 5

Economic theory is necessary and extremely important because of its relationship to economic policy.

Accepted Answer

A) True 
 B)False

Question 6

When interdiction efforts manage to stem the flow of illegal drugs into the United States,assuming no change in demand,the price of these substances rises.This price increase leads to more crime as addicts attempt to maintain their now more-expensive habits.Economists call this side-effect of the drug business

Accepted Answer

A)  the illusion of rationality. 
B)  an externality. 
C)  the cost disease of personal services. 
D)  inflation. 
E)  unemployment. 
A)  the illusion of rationality. 
B)  an externality. 
C)  the cost disease of personal services. 
D)  inflation. 
E)  unemployment.

Question 7

Two variables that systematically change together are correlated.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A useful economic model

Accepted Answer

A)  deals only with possibilities that actually occurred. 
B)  makes only realistic assumptions. 
C)  may make some unrealistic assumptions in order to simplify a complex reality. 
D)  should avoid drawing conclusions that have public policy implications, since economics is not equipped to make value judgments. 
A)  deals only with possibilities that actually occurred. 
B)  makes only realistic assumptions. 
C)  may make some unrealistic assumptions in order to simplify a complex reality. 
D)  should avoid drawing conclusions that have public policy implications, since economics is not equipped to make value judgments.

Question 10

In the fall of 1992,candidate Bill Clinton's campaign office had a large sign which read,"It's the economy,stupid." This was meant to say that

Accepted Answer

A)  economic problems were the most important in the campaign. 
B)  there is no agreement on economic goals. 
C)  economists have let the country down. 
D)  economic theory is too abstract for people to understand. 
E)  there has been a loss of comparative advantage. 
A)  economic problems were the most important in the campaign. 
B)  there is no agreement on economic goals. 
C)  economists have let the country down. 
D)  economic theory is too abstract for people to understand. 
E)  there has been a loss of comparative advantage.

Question 11

During a war,a government will often draft people,most of whom are presently employed,into the army.An economist,computing the real cost of the war,would be sure to include which of the following items?

Accepted Answer

A)  the value of the civilian goods no longer produced by the new soldiers 
B)  the cost of feeding and clothing the new soldiers 
C)  the dollar cost of the payroll 
D)  the higher prices of civilian goods due to wartime shortages 
E)  the cost of transporting the soldiers to combat 
A)  the value of the civilian goods no longer produced by the new soldiers 
B)  the cost of feeding and clothing the new soldiers 
C)  the dollar cost of the payroll 
D)  the higher prices of civilian goods due to wartime shortages 
E)  the cost of transporting the soldiers to combat

Question 12

The marginal cost of an airline ticket is the total cost of flying the plane divided by the number of passengers.

Accepted Answer

A) True 
 B)False

Question 13

A contour map illustrates which of the following?

Accepted Answer

A)  the cause-effect relationship between two variables 
B)  the cause-effect relationship between three variables 
C)  the way that three variables are correlated 
D)  the way that one variable affects another, which in turn affects a third variable 
E)  the way that two variables are correlated and in turn cause changes in a third variable 
A)  the cause-effect relationship between two variables 
B)  the cause-effect relationship between three variables 
C)  the way that three variables are correlated 
D)  the way that one variable affects another, which in turn affects a third variable 
E)  the way that two variables are correlated and in turn cause changes in a third variable

Question 14

In both the 1970s and the 1990s,extreme economic events caused unemployment to move in the same direction as inflation.

Accepted Answer

A) True 
 B)False

Question 15

In the United States the distribution of income is relatively unequal,and output is relatively high,while in the former Soviet Union the distribution of income was more equal and output per worker was much lower.Give one possible explanation for this phenomenon.

Accepted Answer

This problem illustrates the trade-off b

Question 16

The opportunity cost to you of an action is

Accepted Answer

A)  how much you must pay for the opportunity to take the action. 
B)  the value to you of the next best action you could have taken. 
C)  the cost to society of giving you the opportunity to take the action. 
D)  the dollar cost to you of the action. 
A)  how much you must pay for the opportunity to take the action. 
B)  the value to you of the next best action you could have taken. 
C)  the cost to society of giving you the opportunity to take the action. 
D)  the dollar cost to you of the action.

Question 17

A theory can best be defined as

Accepted Answer

A)  an untested assertion of untested fact. 
B)  a collection of assumptions that simplify the real world. 
C)  an opinion of a reliable person who studies a subject or discipline. 
D)  a deliberate simplification of factual relationships that attempts to explain how those relationships work. 
E)  the body of knowledge that has been scientifically verified by the scientific community. 
A)  an untested assertion of untested fact. 
B)  a collection of assumptions that simplify the real world. 
C)  an opinion of a reliable person who studies a subject or discipline. 
D)  a deliberate simplification of factual relationships that attempts to explain how those relationships work. 
E)  the body of knowledge that has been scientifically verified by the scientific community.

Question 18

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 19

Carefully define the following terms and explain their importance.
a.variable
b.ray
c.slope
d.contour map

Accepted Answer

a.A variable is an object,such as price,

Question 20

Externalities are created when parties not involved in an economic transaction are affected by it.

Accepted Answer

A) True 
 B)False

Two advisors to the president have given their policy recommendations,and they are in disagreement.Why do these economists disagree?

A horizontal line has a slope of 0.

All two-dimensional graphs must have an origin,a horizontal axis,and a vertical axis.

Economic theory is necessary and extremely important because of its relationship to economic policy.

Two variables that systematically change together are correlated.

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

A useful economic model

In the fall of 1992,candidate Bill Clinton's campaign office had a large sign which read,"It's the economy,stupid." This was meant to say that

During a war,a government will often draft people,most of whom are presently employed,into the army.An economist,computing the real cost of the war,would be sure to include which of the following items?

The marginal cost of an airline ticket is the total cost of flying the plane divided by the number of passengers.

A contour map illustrates which of the following?

In both the 1970s and the 1990s,extreme economic events caused unemployment to move in the same direction as inflation.

In the United States the distribution of income is relatively unequal,and output is relatively high,while in the former Soviet Union the distribution of income was more equal and output per worker was much lower.Give one possible explanation for this phenomenon.

The opportunity cost to you of an action is

A theory can best be defined as

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

Carefully define the following terms and explain their importance. a.variable b.ray c.slope d.contour map

Externalities are created when parties not involved in an economic transaction are affected by it.

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

Exam 1: What Is Economics?

Two advisors to the president have given their policy recommendations,and they are in disagreement.Why do these economists disagree?

A horizontal line has a slope of 0.

All two-dimensional graphs must have an origin,a horizontal axis,and a vertical axis.

Economic theory is necessary and extremely important because of its relationship to economic policy.

Two variables that systematically change together are correlated.

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

A useful economic model

In the fall of 1992,candidate Bill Clinton's campaign office had a large sign which read,"It's the economy,stupid." This was meant to say that

During a war,a government will often draft people,most of whom are presently employed,into the army.An economist,computing the real cost of the war,would be sure to include which of the following items?

The marginal cost of an airline ticket is the total cost of flying the plane divided by the number of passengers.

A contour map illustrates which of the following?

In both the 1970s and the 1990s,extreme economic events caused unemployment to move in the same direction as inflation.

In the United States the distribution of income is relatively unequal,and output is relatively high,while in the former Soviet Union the distribution of income was more equal and output per worker was much lower.Give one possible explanation for this phenomenon.

The opportunity cost to you of an action is

A theory can best be defined as

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

Carefully define the following terms and explain their importance. a.variable b.ray c.slope d.contour map

Externalities are created when parties not involved in an economic transaction are affected by it.

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