Question 1

What is the difference between a theory and a hypothesis?

Accepted Answer

A) A hypothesis is a testable proposition and is tentatively accepted as a theory. 
B) A hypothesis abstracts from reality while a theory describes reality. 
C) A theory is not an established explanation but a hypothesis is. 
D) A theory abstracts from reality while a hypothesis describes reality. 
A) A hypothesis is a testable proposition and is tentatively accepted as a theory. 
B) A hypothesis abstracts from reality while a theory describes reality. 
C) A theory is not an established explanation but a hypothesis is. 
D) A theory abstracts from reality while a hypothesis describes reality.

Question 2

Which of the following will NOT directly add to improvements in human capital?

Accepted Answer

A) free business classes for low-level managers 
B) increases in take-home pay 
C) improved job training programs offered to employees 
D) an increase in the computer-proficiency requirements of all high school graduates 
A) free business classes for low-level managers 
B) increases in take-home pay 
C) improved job training programs offered to employees 
D) an increase in the computer-proficiency requirements of all high school graduates

Question 3

Which of the following is the erroneous view that is associated with the fallacy of composition?

Accepted Answer

A) An increase in the supply of money will cause a general increase in the level of prices. 
B) When two events are correlated, the one observed first must have caused the second. 
C) If something is true for an individual, then it must also be true for a group. 
D) A small change in an economic variable will have an unrecognizable but significant effect on the economy. 
A) An increase in the supply of money will cause a general increase in the level of prices. 
B) When two events are correlated, the one observed first must have caused the second. 
C) If something is true for an individual, then it must also be true for a group. 
D) A small change in an economic variable will have an unrecognizable but significant effect on the economy.

Question 4

What is a hypothesis?

Accepted Answer

A) It is a normative economic statement. 
B) It is a testable proposition. 
C) It is a statement that cannot be evaluated using real-world data. 
D) It is a model with no connection to the real world. 
A) It is a normative economic statement. 
B) It is a testable proposition. 
C) It is a statement that cannot be evaluated using real-world data. 
D) It is a model with no connection to the real world.

Question 5

Ten-year-old Tommy observes that people who play hockey are larger than average and tells his mom that he's going to play hockey because it will make him big and strong.What is the problem with Tommy's logic?

Accepted Answer

A) He is committing the fallacy of composition. 
B) He is committing the fallacy of decomposition. 
C) He is violating the ceteris paribus assumption. 
D) He is mistaking correlation for causation. 
A) He is committing the fallacy of composition. 
B) He is committing the fallacy of decomposition. 
C) He is violating the ceteris paribus assumption. 
D) He is mistaking correlation for causation.

Question 6

What two main branches of study can economics be divided into?

Accepted Answer

A) capitalism and communism 
B) microeconomics and macroeconomics 
C) demand and supply 
D) capitalism and socialism 
A) capitalism and communism 
B) microeconomics and macroeconomics 
C) demand and supply 
D) capitalism and socialism

Question 7

Which of the following statements about human capital is the most accurate?

Accepted Answer

A) It is the same as labour. 
B) It is a term describing the tools and equipment owned by households. 
C) It is a worker's physical effort when working with machines. 
D) It is the expertise or knowledge possessed by workers. 
A) It is the same as labour. 
B) It is a term describing the tools and equipment owned by households. 
C) It is a worker's physical effort when working with machines. 
D) It is the expertise or knowledge possessed by workers.

Question 8

Why does the problem of scarcity exist?

Accepted Answer

A) because resources are limited relative to wants 
B) because governments fail to intervene in the market place 
C) because resources are unlimited relative to wants 
D) because the world has many poor people 
A) because resources are limited relative to wants 
B) because governments fail to intervene in the market place 
C) because resources are unlimited relative to wants 
D) because the world has many poor people

Question 9

What problem is caused when not all human wants can be satisfied with current resources and technology?

Accepted Answer

A) scarcity 
B) normative economics 
C) the fallacy of composition 
D) ceteris paribus 
A) scarcity 
B) normative economics 
C) the fallacy of composition 
D) ceteris paribus

Question 10

Economists typically use controlled experiments to learn about how the economy functions.

Accepted Answer

A) True 
 B)False

Question 11

The expected marginal benefit to you from purchasing a new sport utility vehicle is $30 000.If the price of the new sport utility vehicle is $32 000,what will you do?

Accepted Answer

A) If you are acting rationally, you will borrow $2000 and purchase a new sport utility vehicle. 
B) You will not purchase the new sport utility vehicle at this time if you are acting rationally. 
C) If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $30 000. 
D) If you do not purchase the new sport utility vehicle, your net loss will be $2000. 
A) If you are acting rationally, you will borrow $2000 and purchase a new sport utility vehicle. 
B) You will not purchase the new sport utility vehicle at this time if you are acting rationally. 
C) If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $30 000. 
D) If you do not purchase the new sport utility vehicle, your net loss will be $2000.

Question 12

An economic study concludes that an investment tax credit would increase business investment next year.What is this conclusion an example of?

Accepted Answer

A) positive analysis 
B) the fallacy of composition 
C) normative analysis 
D) negative economic analysis 
A) positive analysis 
B) the fallacy of composition 
C) normative analysis 
D) negative economic analysis

Question 13

Explain why each of the following is considered an economic issue:
a.whether to spend Saturday evening at a hockey game
b.obtaining tickets to a U2 concert
c.your university considers your application for one of 25 available scholarships

Accepted Answer

Each of the following is an economic iss

Question 14

What question is economics fundamentally concerned with?

Accepted Answer

A) How can limited wants be used to satisfy limited resources? 
B) How are limited resources allocated to satisfy unlimited wants? 
C) How are scarce resources allocated to satisfy limited wants? 
D) How are limited resources allocated to satisfy scarce wants? 
A) How can limited wants be used to satisfy limited resources? 
B) How are limited resources allocated to satisfy unlimited wants? 
C) How are scarce resources allocated to satisfy limited wants? 
D) How are limited resources allocated to satisfy scarce wants?

Question 15

An economist at the University of Alberta in Edmonton has been asked to explain why the price of Albertan crude oil has fallen recently.Which steps should the professor take in order to assemble a scholarly answer?

Accepted Answer

A) Develop a hypothesis, test the proposition by engaging in empirical analysis, and examine the data to see if it fits with the facts. 
B) Gather data on crude oil prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations. 
C) The oil industry is controlled by a cartel and the economist should gather data from other similarly structured industries to determine a theory. 
D) Use a questionnaire to determine why residents of Alberta are not purchasing oil and create a theory based on this data. 
A) Develop a hypothesis, test the proposition by engaging in empirical analysis, and examine the data to see if it fits with the facts. 
B) Gather data on crude oil prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations. 
C) The oil industry is controlled by a cartel and the economist should gather data from other similarly structured industries to determine a theory. 
D) Use a questionnaire to determine why residents of Alberta are not purchasing oil and create a theory based on this data.

Question 16

If race-car driving is dangerous,why would any rational person choose to be a race-car driver?

Accepted Answer

A rational person might choose

Question 17

What is the difference between a hypothesis and a theory?

Accepted Answer

A hypothesis about behaviour is the firs

Question 18

Which of the following represents a normative statement?

Accepted Answer

A) The temperature outside is 32 degrees Celsius. 
B) The study of economics is more important than the study of history. 
C) A decrease in price leads to an increase in quantity demanded. 
D) People will buy less butter at $6.00 per kilogram than they will at $5.00 per kilogram. 
A) The temperature outside is 32 degrees Celsius. 
B) The study of economics is more important than the study of history. 
C) A decrease in price leads to an increase in quantity demanded. 
D) People will buy less butter at $6.00 per kilogram than they will at $5.00 per kilogram.

Question 19

What does "ceteris paribus" mean?

Accepted Answer

A) If events A and B occur together, one must cause the other. 
B) Other things are held constant. 
C) What is true for the individual must be true for the whole. 
D) All relevant details are included. 
A) If events A and B occur together, one must cause the other. 
B) Other things are held constant. 
C) What is true for the individual must be true for the whole. 
D) All relevant details are included.

Question 20

In order to acquire more of a good we must sacrifice production of another good (because resources are in limited supply).What concept is this an illustration of?

Accepted Answer

A) ceteris paribus 
B) specialization 
C) opportunity cost 
D) exchange 
A) ceteris paribus 
B) specialization 
C) opportunity cost 
D) exchange

What is the difference between a theory and a hypothesis?

Which of the following will NOT directly add to improvements in human capital?

Which of the following is the erroneous view that is associated with the fallacy of composition?

What is a hypothesis?

Ten-year-old Tommy observes that people who play hockey are larger than average and tells his mom that he's going to play hockey because it will make him big and strong.What is the problem with Tommy's logic?

What two main branches of study can economics be divided into?

Which of the following statements about human capital is the most accurate?

Why does the problem of scarcity exist?

What problem is caused when not all human wants can be satisfied with current resources and technology?

Economists typically use controlled experiments to learn about how the economy functions.

The expected marginal benefit to you from purchasing a new sport utility vehicle is $30 000.If the price of the new sport utility vehicle is $32 000,what will you do?

An economic study concludes that an investment tax credit would increase business investment next year.What is this conclusion an example of?

Explain why each of the following is considered an economic issue: a.whether to spend Saturday evening at a hockey game b.obtaining tickets to a U2 concert c.your university considers your application for one of 25 available scholarships

What question is economics fundamentally concerned with?

An economist at the University of Alberta in Edmonton has been asked to explain why the price of Albertan crude oil has fallen recently.Which steps should the professor take in order to assemble a scholarly answer?

If race-car driving is dangerous,why would any rational person choose to be a race-car driver?

What is the difference between a hypothesis and a theory?

Which of the following represents a normative statement?

What does "ceteris paribus" mean?

In order to acquire more of a good we must sacrifice production of another good (because resources are in limited supply).What concept is this an illustration of?

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters

Exam 1: The Role and Method of Economics

What is the difference between a theory and a hypothesis?

Which of the following will NOT directly add to improvements in human capital?

Which of the following is the erroneous view that is associated with the fallacy of composition?

What is a hypothesis?

Ten-year-old Tommy observes that people who play hockey are larger than average and tells his mom that he's going to play hockey because it will make him big and strong.What is the problem with Tommy's logic?

What two main branches of study can economics be divided into?

Which of the following statements about human capital is the most accurate?

Why does the problem of scarcity exist?

What problem is caused when not all human wants can be satisfied with current resources and technology?

Economists typically use controlled experiments to learn about how the economy functions.

The expected marginal benefit to you from purchasing a new sport utility vehicle is $30 000.If the price of the new sport utility vehicle is $32 000,what will you do?

An economic study concludes that an investment tax credit would increase business investment next year.What is this conclusion an example of?

Explain why each of the following is considered an economic issue: a.whether to spend Saturday evening at a hockey game b.obtaining tickets to a U2 concert c.your university considers your application for one of 25 available scholarships

What question is economics fundamentally concerned with?

An economist at the University of Alberta in Edmonton has been asked to explain why the price of Albertan crude oil has fallen recently.Which steps should the professor take in order to assemble a scholarly answer?

If race-car driving is dangerous,why would any rational person choose to be a race-car driver?

What is the difference between a hypothesis and a theory?

Which of the following represents a normative statement?

What does "ceteris paribus" mean?

In order to acquire more of a good we must sacrifice production of another good (because resources are in limited supply).What concept is this an illustration of?

Scarcity, trade-Offs, and Production Possibilities

Supply and Demand

Bringing Supply and Demand Together

Introduction to the Macroeconomy

Measuring Economic Performance

Economic Growth in the Global Economy

Aggregate Demand

Aggregate Supply and Macroeconomic Equilibrium

Fiscal Policy

Money and the Banking System

The Bank of Canada

Monetary Policy

International Trade

International Finance

Filters