Question 1

Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.

Accepted Answer

A) True 
 B)False

Question 2

Economists disagree on most economic issues facing an economy.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Both parties gain in a voluntary exchange.

Accepted Answer

A) True 
 B)False

Question 5

Rational choice requires that opportunity cost be

Accepted Answer

A) ignored in making a decision. 
B) considered for individual choices, but not for societal choices. 
C) computed, but not actually used in making a decision. 
D) considered as part of making a decision. 
E) used as the sole decision criterion. 
A) ignored in making a decision. 
B) considered for individual choices, but not for societal choices. 
C) computed, but not actually used in making a decision. 
D) considered as part of making a decision. 
E) used as the sole decision criterion.

Question 6

In the United States, the fact that the gap between the rich and the poor has been increasing is often justified by economists on the grounds that greater

Accepted Answer

A) efficiency can never be achieved without greater inequality. 
B) inequality does not create any problems. 
C) inequality is a desirable end in itself. 
D) inequality is an undesirable consequence of greater efficiency. 
E) efficiency should be achieved at any cost. 
A) efficiency can never be achieved without greater inequality. 
B) inequality does not create any problems. 
C) inequality is a desirable end in itself. 
D) inequality is an undesirable consequence of greater efficiency. 
E) efficiency should be achieved at any cost.

Question 7

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 8

Which of the following is an example of an undesirable side effect of the operation of the market mechanism?

Accepted Answer

A) negative externalities 
B) comparative advantages 
C) abstractions 
D) productivity growth 
A) negative externalities 
B) comparative advantages 
C) abstractions 
D) productivity growth

Question 9

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 10

An article in a recent economics periodical asks the question: "Is low inflation worth it?
" By "it," the article probably means

Accepted Answer

A) the loss of comparative advantage. 
B) enduring externalities. 
C) unemployment. 
D) repealing the law of supply and demand. 
E) the opportunity cost of higher interest rates. 
A) the loss of comparative advantage. 
B) enduring externalities. 
C) unemployment. 
D) repealing the law of supply and demand. 
E) the opportunity cost of higher interest rates.

Question 11

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 12

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 13

The use of abstraction in economics is analogous to the use of a road map providing directions to a location.

Accepted Answer

A) True 
 B)False

Question 14

How is a production indifference map helpful?

Accepted Answer

A production indifference map is a graph

Question 15

Only economists and other "social" scientists have areas of dispute within their disciplines.

Accepted Answer

A) True 
 B)False

Question 16

A ____ is a graph whose axes show the quantities of two inputs that are used to produce some output.

Accepted Answer

A) production indifference map 
B) two-variable diagram 
C) scalar diagram 
D) time-series graph 
A) production indifference map 
B) two-variable diagram 
C) scalar diagram 
D) time-series graph

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Economics

Accepted Answer

A) is a narrowly focused discipline. 
B) is a broad-ranging discipline. 
C) concerns itself only with the U.S.economy. 
D) says little about "everyday life." 
E) deals with minor problems. 
A) is a narrowly focused discipline. 
B) is a broad-ranging discipline. 
C) concerns itself only with the U.S.economy. 
D) says little about "everyday life." 
E) deals with minor problems.

Question 19

The achievement of greater efficiency in the United States has been at the expense of growing inequality.

Accepted Answer

A) True 
 B)False

Question 20

The statement "saccharine causes cancer" is not a theory; it is a hypothesis.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics

Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.

Economists disagree on most economic issues facing an economy.

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

Both parties gain in a voluntary exchange.

Rational choice requires that opportunity cost be

In the United States, the fact that the gap between the rich and the poor has been increasing is often justified by economists on the grounds that greater

Economic models

Which of the following is an example of an undesirable side effect of the operation of the market mechanism?

The law of comparative advantages explains why

An article in a recent economics periodical asks the question: "Is low inflation worth it? " By "it," the article probably means

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

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 use of abstraction in economics is analogous to the use of a road map providing directions to a location.

How is a production indifference map helpful?

Only economists and other "social" scientists have areas of dispute within their disciplines.

A ____ is a graph whose axes show the quantities of two inputs that are used to produce some output.

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

Economics

The achievement of greater efficiency in the United States has been at the expense of growing inequality.

The statement "saccharine causes cancer" is not a theory; it is a hypothesis.

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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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