Question 1

How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms?

Accepted Answer

A) The butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community. 
B) The butcher, the brewer, and the baker give us our dinner because they will be sued if they don't do so. 
C) The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so. 
D) The butcher, the brewer, and the baker give us our dinner because they view doing so as a public service. 
A) The butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community. 
B) The butcher, the brewer, and the baker give us our dinner because they will be sued if they don't do so. 
C) The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so. 
D) The butcher, the brewer, and the baker give us our dinner because they view doing so as a public service.

Question 2

Which of the following statements about economic models is TRUE?

Accepted Answer

A) A good economic model is complex. 
B) A good model does not rely on any assumptions. 
C) Every model is based on a set of assumptions. 
D) Economic models are designed to explain what people need. 
A) A good economic model is complex. 
B) A good model does not rely on any assumptions. 
C) Every model is based on a set of assumptions. 
D) Economic models are designed to explain what people need.

Question 3

The macroeconomist would most likely study

Accepted Answer

A) the effects of changing apple prices on the market for oranges. 
B) the effects of an increase in wage rates on a woman's decision to enter the labor force. 
C) the effects of a lower income tax rates on the nation's total production of goods and services. 
D) the effect of increased union wages on the cost of producing automobiles. 
A) the effects of changing apple prices on the market for oranges. 
B) the effects of an increase in wage rates on a woman's decision to enter the labor force. 
C) the effects of a lower income tax rates on the nation's total production of goods and services. 
D) the effect of increased union wages on the cost of producing automobiles.

Question 4

In a market system, the what, how and for whom questions in economics are determined by

Accepted Answer

A) those who are not in the market. 
B) buyers and sellers together. 
C) the central authority. 
D) no one. 
A) those who are not in the market. 
B) buyers and sellers together. 
C) the central authority. 
D) no one.

Question 5

A decision made by a rational person

Accepted Answer

A) is intended to make the person worse off. 
B) would always make the person wealthier. 
C) is identical to a decision that would be made by any other person facing the same choices. 
D) is intended to make the person better off. 
A) is intended to make the person worse off. 
B) would always make the person wealthier. 
C) is identical to a decision that would be made by any other person facing the same choices. 
D) is intended to make the person better off.

Question 6

Economics is most precisely defined as

Accepted Answer

A) a study of what people need to survive. 
B) a study of how culture evolves in different geographic areas. 
C) the same as the study of finance and management. 
D) the study of how people make choices. 
A) a study of what people need to survive. 
B) a study of how culture evolves in different geographic areas. 
C) the same as the study of finance and management. 
D) the study of how people make choices.

Question 7

Assumptions in models tend to make

Accepted Answer

A) the model predict what the scientist wants the results to be. 
B) the model more realistic. 
C) the model more applicable to specific circumstances. 
D) the model always predict the future accurately. 
A) the model predict what the scientist wants the results to be. 
B) the model more realistic. 
C) the model more applicable to specific circumstances. 
D) the model always predict the future accurately.

Question 8

When constructing economic models, economists are more concerned with

Accepted Answer

A) what people say than what they do. 
B) what people think than what they say. 
C) what people do than what they say. 
D) what people say than what they do or think. 
A) what people say than what they do. 
B) what people think than what they say. 
C) what people do than what they say. 
D) what people say than what they do or think.

Question 9

Which expression below matches most closely the way economists go about testing their models?

Accepted Answer

A) "Consistency is the hobgoblin of small minds." 
B) "Seeing the results is the only way to know if you are right." 
C) "A bird in the hand is worth two in the bush." 
D) "In the long run we are all dead." 
A) "Consistency is the hobgoblin of small minds." 
B) "Seeing the results is the only way to know if you are right." 
C) "A bird in the hand is worth two in the bush." 
D) "In the long run we are all dead."

Question 10

Which of the following statements is an example of positive economic analysis?

Accepted Answer

A) The inflation rate is too high. 
B) The government should worry less about inflation and more about unemployment. 
C) If the government increases the rate of growth of the money supply, the inflation rate will increase, ceteris paribus. 
D) The elderly live on a fixed income, so the government has an obligation to keep inflation rates low. 
A) The inflation rate is too high. 
B) The government should worry less about inflation and more about unemployment. 
C) If the government increases the rate of growth of the money supply, the inflation rate will increase, ceteris paribus. 
D) The elderly live on a fixed income, so the government has an obligation to keep inflation rates low.

Question 11

Microeconomics is concerned with studying which of the following?

Accepted Answer

A) the determinants of national unemployment 
B) the effects of monetary policy 
C) the study of individual markets 
D) all of the above 
A) the determinants of national unemployment 
B) the effects of monetary policy 
C) the study of individual markets 
D) all of the above

Question 12

Which of the following is an example of a positive economic statement?

Accepted Answer

A) In order to reduce the budget deficit, tax rates should be increased. 
B) In order to increase employment, the minimum wage should be decreased. 
C) If payroll taxes are raised, then the Social Security crisis will be resolved. 
D) If gas prices fall, consumers should purchase more gas. 
A) In order to reduce the budget deficit, tax rates should be increased. 
B) In order to increase employment, the minimum wage should be decreased. 
C) If payroll taxes are raised, then the Social Security crisis will be resolved. 
D) If gas prices fall, consumers should purchase more gas.

Question 13

Which of the following is NOT an alleged "unrealistic" assumption that proponents of behavioral economics suggest are commonly utilized in traditional economic models based on the rationality assumption?

Accepted Answer

A) unbounded selfishness 
B) unbounded rationality 
C) unbounded will power 
D) unbounded resources 
A) unbounded selfishness 
B) unbounded rationality 
C) unbounded will power 
D) unbounded resources

Question 14

Economics is a

Accepted Answer

A) hard science. 
B) physical science. 
C) natural science. 
D) social science. 
A) hard science. 
B) physical science. 
C) natural science. 
D) social science.

Question 15

When we say that an individual behaves according to "rational self-interest," we mean that this individual

Accepted Answer

A) is motivated by greed. 
B) will always buy the most fashionable items available. 
C) will always buy the cheapest products available on the market. 
D) is making choices that he or she believes will leave him or her better off. 
A) is motivated by greed. 
B) will always buy the most fashionable items available. 
C) will always buy the cheapest products available on the market. 
D) is making choices that he or she believes will leave him or her better off.

Question 16

Economics is the study of how

Accepted Answer

A) people make money. 
B) preferences are determined. 
C) psychology influences preferences. 
D) people make choices. 
A) people make money. 
B) preferences are determined. 
C) psychology influences preferences. 
D) people make choices.

Question 17

Economic resources are

Accepted Answer

A) all the items that people would purchase if they had limited wants. 
B) all the unlimited items that people would purchase with limited income. 
C) items of value that are used to make other things that satisfy people's wants. 
D) the total planned expenditures throughout the nation. 
A) all the items that people would purchase if they had limited wants. 
B) all the unlimited items that people would purchase with limited income. 
C) items of value that are used to make other things that satisfy people's wants. 
D) the total planned expenditures throughout the nation.

Question 18

Which of the following is a normative statement?

Accepted Answer

A) The Gross Domestic Product is the dollar value of all goods and services produced in a country in a year. 
B) Fiscal policy is determined by the Congress and the president. 
C) Tax cuts ought to be enacted for the good of the economy. 
D) Monetary policy is determined by the Federal Reserve System. 
A) The Gross Domestic Product is the dollar value of all goods and services produced in a country in a year. 
B) Fiscal policy is determined by the Congress and the president. 
C) Tax cuts ought to be enacted for the good of the economy. 
D) Monetary policy is determined by the Federal Reserve System.

Question 19

Which one of the following is an example of a normative statement?

Accepted Answer

A) A vacation in Colorado is better than a vacation in Hawaii. 
B) Hotels in Colorado are more expensive than are hotels in Hawaii. 
C) The hotel vacancy rate in Hawaii will increase as airfares to Hawaii increase. 
D) The busiest tourist month in Colorado is July. 
A) A vacation in Colorado is better than a vacation in Hawaii. 
B) Hotels in Colorado are more expensive than are hotels in Hawaii. 
C) The hotel vacancy rate in Hawaii will increase as airfares to Hawaii increase. 
D) The busiest tourist month in Colorado is July.

Question 20

Economics is a part of the

Accepted Answer

A) social sciences. 
B) natural sciences. 
C) biological sciences. 
D) organizational sciences. 
A) social sciences. 
B) natural sciences. 
C) biological sciences. 
D) organizational sciences.

How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms?

Which of the following statements about economic models is TRUE?

The macroeconomist would most likely study

In a market system, the what, how and for whom questions in economics are determined by

A decision made by a rational person

Economics is most precisely defined as

Assumptions in models tend to make

When constructing economic models, economists are more concerned with

Which expression below matches most closely the way economists go about testing their models?

Which of the following statements is an example of positive economic analysis?

Microeconomics is concerned with studying which of the following?

Which of the following is an example of a positive economic statement?

Which of the following is NOT an alleged "unrealistic" assumption that proponents of behavioral economics suggest are commonly utilized in traditional economic models based on the rationality assumption?

Economics is a

When we say that an individual behaves according to "rational self-interest," we mean that this individual

Economics is the study of how

Economic resources are

Which of the following is a normative statement?

Which one of the following is an example of a normative statement?

Economics is a part of the

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 1: The Nature of Economics

How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms?

Which of the following statements about economic models is TRUE?

The macroeconomist would most likely study

In a market system, the what, how and for whom questions in economics are determined by

A decision made by a rational person

Economics is most precisely defined as

Assumptions in models tend to make

When constructing economic models, economists are more concerned with

Which expression below matches most closely the way economists go about testing their models?

Which of the following statements is an example of positive economic analysis?

Microeconomics is concerned with studying which of the following?

Which of the following is an example of a positive economic statement?

Which of the following is NOT an alleged "unrealistic" assumption that proponents of behavioral economics suggest are commonly utilized in traditional economic models based on the rationality assumption?

Economics is a

When we say that an individual behaves according to "rational self-interest," we mean that this individual

Economics is the study of how

Economic resources are

Which of the following is a normative statement?

Which one of the following is an example of a normative statement?

Economics is a part of the

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters