Question 1

Economics is best defined as how people use scarce resources to satisfy unlimited wants.

Accepted Answer

A) True 
 B)False

Question 2

Most of the disagreement among economists involves normative debates.

Accepted Answer

A) True 
 B)False

Question 3

Someone who committed the association-is-causation fallacy might conclude that:

Accepted Answer

A)  event B, which followed event A, was caused by event A. 
B)  event B, which followed event A, was not necessarily caused by event A. 
C)  the simplest model is the best predictor of economic outcomes. 
D)  what is true for the individual is also true for the group. 
E)  what is true for the individual is not necessarily true for the group. 
A)  event B, which followed event A, was caused by event A. 
B)  event B, which followed event A, was not necessarily caused by event A. 
C)  the simplest model is the best predictor of economic outcomes. 
D)  what is true for the individual is also true for the group. 
E)  what is true for the individual is not necessarily true for the group.

Question 4

The association-is-causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

Accepted Answer

A) True 
 B)False

Question 5

In the economic model of consumer behavior, rational self-interest would likely be:

Accepted Answer

A)  a key variable. 
B)  the hypothesis of the model. 
C)  a behavioral assumption. 
D)  a prediction of the model. 
E)  a method of testing the model. 
A)  a key variable. 
B)  the hypothesis of the model. 
C)  a behavioral assumption. 
D)  a prediction of the model. 
E)  a method of testing the model.

Question 6

In economics, _____ means incremental, additional, or extra.

Accepted Answer

A)  benefit 
B)  marginal 
C)  causation 
D)  association 
E)  optimal 
A)  benefit 
B)  marginal 
C)  causation 
D)  association 
E)  optimal

Question 7

Which of the following is a normative economic statement?

Accepted Answer

A)  The U.S. rate of unemployment was lower in 2004 than it was in 1994. 
B)  Savings accounts earn interest, whereas checking accounts do not. 
C)  Congress must recognize that the growing national debt is the most serious problem that the country faces. 
D)  The unemployment rate increases when the percentage of the labor force without jobs increases. 
E)  The unemployment rate among teenagers is higher than the rate among adults. 
A)  The U.S. rate of unemployment was lower in 2004 than it was in 1994. 
B)  Savings accounts earn interest, whereas checking accounts do not. 
C)  Congress must recognize that the growing national debt is the most serious problem that the country faces. 
D)  The unemployment rate increases when the percentage of the labor force without jobs increases. 
E)  The unemployment rate among teenagers is higher than the rate among adults.

Question 8

Which of the following fundamental resources is the basis of labor?

Accepted Answer

A)  Capital 
B)  Natural resources 
C)  Time 
D)  Profit 
E)  Entrepreneurial ability 
A)  Capital 
B)  Natural resources 
C)  Time 
D)  Profit 
E)  Entrepreneurial ability

Question 9

Macroeconomics is the study of:

Accepted Answer

A)  the behavior of large firms in a market. 
B)  the profit-maximizing behavior of producers. 
C)  the behavior of the economy as a whole. 
D)  how to use the least amount of natural resources to produce goods and services. 
E)  utility-maximization by consumers. 
A)  the behavior of large firms in a market. 
B)  the profit-maximizing behavior of producers. 
C)  the behavior of the economy as a whole. 
D)  how to use the least amount of natural resources to produce goods and services. 
E)  utility-maximization by consumers.

Question 10

Unintended consequences of economic actions that may develop slowly over time as people react to events is known as:

Accepted Answer

A)  the association-is-causation fallacy. 
B)  the fallacy of composition. 
C)  a primary effect. 
D)  a secondary effect. 
E)  a behavioral assumption. 
A)  the association-is-causation fallacy. 
B)  the fallacy of composition. 
C)  a primary effect. 
D)  a secondary effect. 
E)  a behavioral assumption.

Question 11

A(n) _____ is a theory about how key variables relate to each other.

Accepted Answer

A)  assumption 
B)  prediction 
C)  normative statement 
D)  hypothesis 
E)  positive statement 
A)  assumption 
B)  prediction 
C)  normative statement 
D)  hypothesis 
E)  positive statement

Question 12

Sources of confusion in economic analysis include:

Accepted Answer

A)  fallacy of segmentation. 
B)  mistake of ignoring primary effects. 
C)  rational self-interest. 
D)  association-is-causation fallacy. 
E)  making positive economic statements. 
A)  fallacy of segmentation. 
B)  mistake of ignoring primary effects. 
C)  rational self-interest. 
D)  association-is-causation fallacy. 
E)  making positive economic statements.

Question 13

You observe that grocery shoppers choose the shortest line at the checkout. This is an example of:

Accepted Answer

A)  rational self-interest 
B)  selfishness 
C)  greed 
D)  blind materialism 
E)  altruism 
A)  rational self-interest 
B)  selfishness 
C)  greed 
D)  blind materialism 
E)  altruism

Question 14

For an economist, marginal means:

Accepted Answer

A)  incremental. 
B)  unimportant. 
C)  level or size. 
D)  scarcity. 
E)  inferior. 
A)  incremental. 
B)  unimportant. 
C)  level or size. 
D)  scarcity. 
E)  inferior.

Question 15

Which of the following is an example of physical capital?

Accepted Answer

A)  the owner of a pizza shop 
B)  bulldozers 
C)  a college education 
D)  carpentry skills 
E)  money 
A)  the owner of a pizza shop 
B)  bulldozers 
C)  a college education 
D)  carpentry skills 
E)  money

Question 16

The scientific method is useful:

Accepted Answer

A)  only in fields of science such as chemistry and physics. 
B)  for testing the validity of the prediction of economic theories. 
C)  for predicting the behavior of individual consumers and producers. 
D)  when no economic variables can be assumed to be constant. 
E)  only if a theory has been proven to be true. 
A)  only in fields of science such as chemistry and physics. 
B)  for testing the validity of the prediction of economic theories. 
C)  for predicting the behavior of individual consumers and producers. 
D)  when no economic variables can be assumed to be constant. 
E)  only if a theory has been proven to be true.

Question 17

The fallacy of composition involves assuming that:

Accepted Answer

A)  you can determine the composition of a complex product just by examining its exterior properties. 
B)  consumer durable goods today do not last as long as they did a generation ago. 
C)  any mistakes made in producing a product using an assembly line technique will lead to a compounding of errors as the product moves down the line. 
D)  what is true for any individual component in a group is true for the group as a whole. 
E)  what was true when a person was young will still be true today. 
A)  you can determine the composition of a complex product just by examining its exterior properties. 
B)  consumer durable goods today do not last as long as they did a generation ago. 
C)  any mistakes made in producing a product using an assembly line technique will lead to a compounding of errors as the product moves down the line. 
D)  what is true for any individual component in a group is true for the group as a whole. 
E)  what was true when a person was young will still be true today.

Question 18

Exhibit 1.2
  
-Refer to the circular-flow model in Exhibit 1.2. The flow from firms to product markets is:

Accepted Answer

A)  goods and services. 
B)  products. 
C)  labor, capital, natural resources, and entrepreneurial ability. 
D)  resources. 
E)  wages, interest, rent, and profit. 
A)  goods and services. 
B)  products. 
C)  labor, capital, natural resources, and entrepreneurial ability. 
D)  resources. 
E)  wages, interest, rent, and profit.

Question 19

Alan is a retired economist who enjoys building toy trains for his grandkids. He uses a workbench and tools from his garage, lumber he bought from the lumber store for $10, and varnish and paint he had left over from another project last year. Since a retired economist is always an economist, which of the following statements is he likely to make about building toy trains?

Accepted Answer

A)  I'm not paying for any resources, so the toy trains I'm building are a good example of free goods. 
B)  I only paid $10 for the lumber, so the toy trains I'm building are a good example of free goods. 
C)  I'm using scarce resources to build the toy trains. 
D)  The resources I'm using to build the toy trains are not scarce. 
E)  If I had used lumber that I cut from the tree in my backyard instead of buying it from the store, then the toy trains I'm building would be a good example of free goods. 
A)  I'm not paying for any resources, so the toy trains I'm building are a good example of free goods. 
B)  I only paid $10 for the lumber, so the toy trains I'm building are a good example of free goods. 
C)  I'm using scarce resources to build the toy trains. 
D)  The resources I'm using to build the toy trains are not scarce. 
E)  If I had used lumber that I cut from the tree in my backyard instead of buying it from the store, then the toy trains I'm building would be a good example of free goods.

Question 20

An economic model is useful if it:

Accepted Answer

A)  includes every detail of reality. 
B)  involves no unproven assumptions. 
C)  is expressed in equations. 
D)  makes accurate predictions. 
E)  is simple enough to be understood by a child. 
A)  includes every detail of reality. 
B)  involves no unproven assumptions. 
C)  is expressed in equations. 
D)  makes accurate predictions. 
E)  is simple enough to be understood by a child.

Economics is best defined as how people use scarce resources to satisfy unlimited wants.

Most of the disagreement among economists involves normative debates.

Someone who committed the association-is-causation fallacy might conclude that:

The association-is-causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

In the economic model of consumer behavior, rational self-interest would likely be:

In economics, _____ means incremental, additional, or extra.

Which of the following is a normative economic statement?

Which of the following fundamental resources is the basis of labor?

Macroeconomics is the study of:

Unintended consequences of economic actions that may develop slowly over time as people react to events is known as:

A(n) _____ is a theory about how key variables relate to each other.

Sources of confusion in economic analysis include:

You observe that grocery shoppers choose the shortest line at the checkout. This is an example of:

For an economist, marginal means:

Which of the following is an example of physical capital?

The scientific method is useful:

The fallacy of composition involves assuming that:

Exhibit 1.2 -Refer to the circular-flow model in Exhibit 1.2. The flow from firms to product markets is:

An economic model is useful if it:

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 1: The Art and Science of Economic Analysis.

Economics is best defined as how people use scarce resources to satisfy unlimited wants.

Most of the disagreement among economists involves normative debates.

Someone who committed the association-is-causation fallacy might conclude that:

The association-is-causation fallacy is the error of assuming that what is true for one member of a group must be true for the group.

In the economic model of consumer behavior, rational self-interest would likely be:

In economics, _____ means incremental, additional, or extra.

Which of the following is a normative economic statement?

Which of the following fundamental resources is the basis of labor?

Macroeconomics is the study of:

Unintended consequences of economic actions that may develop slowly over time as people react to events is known as:

A(n) _____ is a theory about how key variables relate to each other.

Sources of confusion in economic analysis include:

You observe that grocery shoppers choose the shortest line at the checkout. This is an example of:

For an economist, marginal means:

Which of the following is an example of physical capital?

The scientific method is useful:

The fallacy of composition involves assuming that:

Exhibit 1.2 -Refer to the circular-flow model in Exhibit 1.2. The flow from firms to product markets is:

An economic model is useful if it:

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters