Question 1

Which of the following is the best example of a normative economic statement?

Accepted Answer

A) The unemployment rate for women has been two times lower the overall rate. 
B) Increase in competition in the car manufacturing industry will result in price reduction for cars. 
C) Monopoly makes a decision based on market prices. 
D) A stronger regulation should be applied to polluting companies. 
A) The unemployment rate for women has been two times lower the overall rate. 
B) Increase in competition in the car manufacturing industry will result in price reduction for cars. 
C) Monopoly makes a decision based on market prices. 
D) A stronger regulation should be applied to polluting companies.

Question 2

Policies to lower the price level of goods in the nation are a concern of:

Accepted Answer

A) macroeconomics. 
B) microeconomics. 
C) both microeconomics and macroeconomics. 
D) political science. 
A) macroeconomics. 
B) microeconomics. 
C) both microeconomics and macroeconomics. 
D) political science.

Question 3

All of the following are examples of capital except:

Accepted Answer

A) the robot used to help produce your car. 
B) a computer used by your lecturer to write this exam. 
C) the factory that produces the costume jewellery you buy. 
D) the inventory of unsold goods at your local hardware store. 
E) an uncut diamond that you discover in your backyard. 
A) the robot used to help produce your car. 
B) a computer used by your lecturer to write this exam. 
C) the factory that produces the costume jewellery you buy. 
D) the inventory of unsold goods at your local hardware store. 
E) an uncut diamond that you discover in your backyard.

Question 4

The statement: 'John buys more of good X as his income increases,ceteris paribus',means:

Accepted Answer

A) John's income is being held constant. 
B) John's purchases of good X are being held constant. 
C) John's income and purchases of this good are being held constant. 
D) John's income is the only influence that is being allowed to change. 
E) the price of this good is being allowed to change. 
A) John's income is being held constant. 
B) John's purchases of good X are being held constant. 
C) John's income and purchases of this good are being held constant. 
D) John's income is the only influence that is being allowed to change. 
E) the price of this good is being allowed to change.

Question 5

An economic model is:

Accepted Answer

A) focused on all variables in the economy. 
B) used to design an economic theory. 
C) a pursuit of parsimony. 
D) designed to highlight minor details of the reality. 
A) focused on all variables in the economy. 
B) used to design an economic theory. 
C) a pursuit of parsimony. 
D) designed to highlight minor details of the reality.

Question 6

Macroeconomics is concerned with the issue of how monetary policy can slow down inflation.

Accepted Answer

A) True 
 B)False

Question 7

Normative statements:

Accepted Answer

A) are dealing with facts. 
B) express a collective judgement. 
C) can be tested. 
D) are the only statements that are true. 
A) are dealing with facts. 
B) express a collective judgement. 
C) can be tested. 
D) are the only statements that are true.

Question 8

The statement: 'It would be better to put up with price controls than to have continuing higher medical care prices',is an example of normative economic analysis.

Accepted Answer

A) True 
 B)False

Question 9

The statement: 'A tax cut means that people will work harder to earn more income',is an example of positive economic analysis.

Accepted Answer

A) True 
 B)False

Question 10

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions.This person has:

Accepted Answer

A) confused association and causation. 
B) misunderstood the ceteris paribus assumption. 
C) used normative economics to answer a positive question. 
D) built an untestable model. 
A) confused association and causation. 
B) misunderstood the ceteris paribus assumption. 
C) used normative economics to answer a positive question. 
D) built an untestable model.

Question 11

'It is not fair to increase the federal minimum wage because it causes an increase in unemployment among teenagers'.This is a:

Accepted Answer

A) statement of positive economics. 
B) statement of normative economics. 
C) testable value judgement. 
D) fallacy of composition. 
A) statement of positive economics. 
B) statement of normative economics. 
C) testable value judgement. 
D) fallacy of composition.

Question 12

Labour,land and capital are called:

Accepted Answer

A) goods and services. 
B) entrepreneurship. 
C) outputs. 
D) factors of production. 
A) goods and services. 
B) entrepreneurship. 
C) outputs. 
D) factors of production.

Question 13

Scarcity:

Accepted Answer

A) does not exist. 
B) implies that people must make a choice. 
C) exists only in developed countries. 
D) exists only in developing countries. 
A) does not exist. 
B) implies that people must make a choice. 
C) exists only in developed countries. 
D) exists only in developing countries.

Question 14

Microeconomics only looks at the behaviour of one consumer or one firm in a market,while macroeconomics looks at the behaviour of an entire industry or group of consumers.

Accepted Answer

A) True 
 B)False

Question 15

Positive economics is a/an:

Accepted Answer

A) reflection of individual or collective values. 
B) statement dealing with the facts. 
C) statement about usefulness of the economic model. 
D) analysis of what ought to be. 
A) reflection of individual or collective values. 
B) statement dealing with the facts. 
C) statement about usefulness of the economic model. 
D) analysis of what ought to be.

Question 16

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Accepted Answer

A) Why do national economies grow? 
B) What percentage of consumer income is spent on entertainment? 
C) Why do workers prefer a 4-day working week? 
D) What happens to worker productivity when a job shifts to a 4-day working week? 
E) How is the electricity industry harmed by the passage of new clean air legislation? 
A) Why do national economies grow? 
B) What percentage of consumer income is spent on entertainment? 
C) Why do workers prefer a 4-day working week? 
D) What happens to worker productivity when a job shifts to a 4-day working week? 
E) How is the electricity industry harmed by the passage of new clean air legislation?

Question 17

Economists:

Accepted Answer

A) always disagree over policy, predictions and applications. 
B) generally agree on theoretical fundamentals. 
C) never agree on predictions and theoretical fundamentals. 
D) always agree on personal values. 
A) always disagree over policy, predictions and applications. 
B) generally agree on theoretical fundamentals. 
C) never agree on predictions and theoretical fundamentals. 
D) always agree on personal values.

Question 18

A model (or theory):

Accepted Answer

A) is a statement about the causal relationship between variables, based on intuition. 
B) helps explain but cannot predict the relationship between variables. 
C) when expressed as an upward sloping graph, implies an inverse relationship between the variables. 
D) is a simplified description of reality. 
A) is a statement about the causal relationship between variables, based on intuition. 
B) helps explain but cannot predict the relationship between variables. 
C) when expressed as an upward sloping graph, implies an inverse relationship between the variables. 
D) is a simplified description of reality.

Question 19

The perpetual state of insufficiency of resources to satisfy people's unlimited wants is:

Accepted Answer

A) not a problem in developed countries. 
B) a contradiction that cannot be resolved. 
C) completely unrealistic. 
D) present in modern economies but not in the past. 
E) the definition of scarcity. 
A) not a problem in developed countries. 
B) a contradiction that cannot be resolved. 
C) completely unrealistic. 
D) present in modern economies but not in the past. 
E) the definition of scarcity.

Question 20

Macroeconomics is concerned with:

Accepted Answer

A) the study of the whole economy. 
B) the study of the economic behaviour of government decision makers. 
C) the study of the issues of how individual prices are determined in markets. 
D) the study of how firms determine output levels. 
A) the study of the whole economy. 
B) the study of the economic behaviour of government decision makers. 
C) the study of the issues of how individual prices are determined in markets. 
D) the study of how firms determine output levels.

Which of the following is the best example of a normative economic statement?

Policies to lower the price level of goods in the nation are a concern of:

All of the following are examples of capital except:

The statement: 'John buys more of good X as his income increases,ceteris paribus',means:

An economic model is:

Macroeconomics is concerned with the issue of how monetary policy can slow down inflation.

Normative statements:

The statement: 'It would be better to put up with price controls than to have continuing higher medical care prices',is an example of normative economic analysis.

The statement: 'A tax cut means that people will work harder to earn more income',is an example of positive economic analysis.

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions.This person has:

'It is not fair to increase the federal minimum wage because it causes an increase in unemployment among teenagers'.This is a:

Labour,land and capital are called:

Scarcity:

Microeconomics only looks at the behaviour of one consumer or one firm in a market,while macroeconomics looks at the behaviour of an entire industry or group of consumers.

Positive economics is a/an:

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Economists:

A model (or theory):

The perpetual state of insufficiency of resources to satisfy people's unlimited wants is:

Macroeconomics is concerned with:

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 1: Thinking like an economist

Which of the following is the best example of a normative economic statement?

Policies to lower the price level of goods in the nation are a concern of:

All of the following are examples of capital except:

The statement: 'John buys more of good X as his income increases,ceteris paribus',means:

An economic model is:

Macroeconomics is concerned with the issue of how monetary policy can slow down inflation.

Normative statements:

The statement: 'It would be better to put up with price controls than to have continuing higher medical care prices',is an example of normative economic analysis.

The statement: 'A tax cut means that people will work harder to earn more income',is an example of positive economic analysis.

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions.This person has:

'It is not fair to increase the federal minimum wage because it causes an increase in unemployment among teenagers'.This is a:

Labour,land and capital are called:

Scarcity:

Microeconomics only looks at the behaviour of one consumer or one firm in a market,while macroeconomics looks at the behaviour of an entire industry or group of consumers.

Positive economics is a/an:

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Economists:

A model (or theory):

The perpetual state of insufficiency of resources to satisfy people's unlimited wants is:

Macroeconomics is concerned with:

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Elasticity of demand and supply

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters