Question 1

Which of the following is NOT a positive statement?

Accepted Answer

A) The unemployment rate is 5.8 percent. 
B) The inflation rate for 2002 was 2.3 percent. 
C) The national debt is too high. 
D) The federal government budget for 2004 is $2.2 trillion. 
A) The unemployment rate is 5.8 percent. 
B) The inflation rate for 2002 was 2.3 percent. 
C) The national debt is too high. 
D) The federal government budget for 2004 is $2.2 trillion.

Question 2

Economics is the study of

Accepted Answer

A) the allocation of scarce resources to satisfy unlimited wants. 
B) why some people want certain goods and services. 
C) earning the most income. 
D) ways to use fewer resources. 
A) the allocation of scarce resources to satisfy unlimited wants. 
B) why some people want certain goods and services. 
C) earning the most income. 
D) ways to use fewer resources.

Question 3

Distinguish between macroeconomics and microeconomics.

Accepted Answer

Macroeconomics is concerned with the beh

Question 4

The questions that an economic system attempts to solve include

Accepted Answer

A) what to produce. 
B) how to produce items. 
C) for whom items are produced. 
D) all of the above. 
A) what to produce. 
B) how to produce items. 
C) for whom items are produced. 
D) all of the above.

Question 5

What type of economics would most typically deal with aggregates?

Accepted Answer

A) macroeconomics 
B) microeconomics 
C) labor economics 
D) environmental economics 
A) macroeconomics 
B) microeconomics 
C) labor economics 
D) environmental economics

Question 6

Macroeconomics might study which of the following?

Accepted Answer

A) the causes of domestic unemployment 
B) decision making undertaken by firms 
C) decision making undertaken by households 
D) determinants of the prices of rare goods (e.g., diamonds) 
A) the causes of domestic unemployment 
B) decision making undertaken by firms 
C) decision making undertaken by households 
D) determinants of the prices of rare goods (e.g., diamonds)

Question 7

Analysis that involves value judgments about economic policies is

Accepted Answer

A) positive economics. 
B) normative economics. 
C) microeconomics. 
D) macroeconomics. 
A) positive economics. 
B) normative economics. 
C) microeconomics. 
D) macroeconomics.

Question 8

Which of the following is a positive economic statement?

Accepted Answer

A) No individual should live in poverty. 
B) The rate of unemployment of young African-Americans exceeds that of white Americans. 
C) Unemployment is a more serious problem than inflation. 
D) Economic considerations are less relevant than ethical issues in deciding national policy. 
A) No individual should live in poverty. 
B) The rate of unemployment of young African-Americans exceeds that of white Americans. 
C) Unemployment is a more serious problem than inflation. 
D) Economic considerations are less relevant than ethical issues in deciding national policy.

Question 9

"A positive economic statement is always true and a normative economic statement is always false." Do you agree or disagree with this statement?
 Explain.

Accepted Answer

Disagree. A positive statement is one th

Question 10

The headline in the local paper today is "College tuition next fall rise by 6 percent." This statement is an example of

Accepted Answer

A) a normative statement. 
B) a positive statement. 
C) an invalid statement. 
D) ceteris paribus. 
A) a normative statement. 
B) a positive statement. 
C) an invalid statement. 
D) ceteris paribus.

Question 11

In economics, items that are used to produce goods and services are known as

Accepted Answer

A) wants. 
B) aggregates. 
C) factors of need. 
D) resources. 
A) wants. 
B) aggregates. 
C) factors of need. 
D) resources.

Question 12

All of the following are examples of macroeconomic problems EXCEPT

Accepted Answer

A) inflationary pressures caused by an increase in the cost of petroleum. 
B) unemployment caused by a fall off in the level of residential construction. 
C) a decline in the rate of overall economic growth. 
D) consumers deciding to buy more fish and less beef because of concerns about a healthier diet. 
A) inflationary pressures caused by an increase in the cost of petroleum. 
B) unemployment caused by a fall off in the level of residential construction. 
C) a decline in the rate of overall economic growth. 
D) consumers deciding to buy more fish and less beef because of concerns about a healthier diet.

Question 13

Which is NOT true about the use of economic models?

Accepted Answer

A) Economic models are simplified representations of the real world. 
B) Economists always use experiments in science laboratories to test their theories. 
C) Economists use what has already happened in the real world to test their theories. 
D) Economists are employed to explain economic phenomena but are never used to predict what might happen next. 
A) Economic models are simplified representations of the real world. 
B) Economists always use experiments in science laboratories to test their theories. 
C) Economists use what has already happened in the real world to test their theories. 
D) Economists are employed to explain economic phenomena but are never used to predict what might happen next.

Question 14

Charitable donations to the Red Cross

Accepted Answer

A) can be explained by the rational ignorance theory. 
B) can be explained by the rational self-interest theory. 
C) cannot be explained by the rational self-interest theory. 
D) prove that there is no scarcity in the United States. 
A) can be explained by the rational ignorance theory. 
B) can be explained by the rational self-interest theory. 
C) cannot be explained by the rational self-interest theory. 
D) prove that there is no scarcity in the United States.

Question 15

When studying individuals' economic behavior, economists assume that

Accepted Answer

A) individuals understand the rationale for all their actions. 
B) individuals act as if they were rational. 
C) only educated people act as if they were rational. 
D) self-interest is of limited relevance in predicting an individual's actions. 
A) individuals understand the rationale for all their actions. 
B) individuals act as if they were rational. 
C) only educated people act as if they were rational. 
D) self-interest is of limited relevance in predicting an individual's actions.

Question 16

Normative economics

Accepted Answer

A) is never studied at the undergraduate level. 
B) involves value judgments. 
C) is always objective. 
D) cannot be applied to all economic problems. 
A) is never studied at the undergraduate level. 
B) involves value judgments. 
C) is always objective. 
D) cannot be applied to all economic problems.

Question 17

Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

Accepted Answer

A) incentives 
B) resources 
C) rationality 
D) aggregates 
A) incentives 
B) resources 
C) rationality 
D) aggregates

Question 18

Which of the following statements is TRUE?

Accepted Answer

A) No economic model captures every detail that affects a problem. 
B) Economic models always make accurate predictions about behaviors. 
C) Economic models must fully reflect reality. 
D) Economic models use economists' opinions with no use of data. 
A) No economic model captures every detail that affects a problem. 
B) Economic models always make accurate predictions about behaviors. 
C) Economic models must fully reflect reality. 
D) Economic models use economists' opinions with no use of data.

Question 19

In an inverse relationship

Accepted Answer

A) one variable rises while the other falls. 
B) both variables rise together. 
C) both variables fall together. 
D) the two variables have nothing to do with each other. 
A) one variable rises while the other falls. 
B) both variables rise together. 
C) both variables fall together. 
D) the two variables have nothing to do with each other.

Question 20

Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using

Accepted Answer

A) the ceteris paribus assumption. 
B) an economic model based on unrealistic assumptions. 
C) a flawed economic model. 
D) an untestable proposition. 
A) the ceteris paribus assumption. 
B) an economic model based on unrealistic assumptions. 
C) a flawed economic model. 
D) an untestable proposition.

Which of the following is NOT a positive statement?

Economics is the study of

Distinguish between macroeconomics and microeconomics.

The questions that an economic system attempts to solve include

What type of economics would most typically deal with aggregates?

Macroeconomics might study which of the following?

Analysis that involves value judgments about economic policies is

Which of the following is a positive economic statement?

"A positive economic statement is always true and a normative economic statement is always false." Do you agree or disagree with this statement? Explain.

The headline in the local paper today is "College tuition next fall rise by 6 percent." This statement is an example of

In economics, items that are used to produce goods and services are known as

All of the following are examples of macroeconomic problems EXCEPT

Which is NOT true about the use of economic models?

Charitable donations to the Red Cross

When studying individuals' economic behavior, economists assume that

Normative economics

Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

Which of the following statements is TRUE?

In an inverse relationship

Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using

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

Which of the following is NOT a positive statement?

Economics is the study of

Distinguish between macroeconomics and microeconomics.

The questions that an economic system attempts to solve include

What type of economics would most typically deal with aggregates?

Macroeconomics might study which of the following?

Analysis that involves value judgments about economic policies is

Which of the following is a positive economic statement?

"A positive economic statement is always true and a normative economic statement is always false." Do you agree or disagree with this statement? Explain.

The headline in the local paper today is "College tuition next fall rise by 6 percent." This statement is an example of

In economics, items that are used to produce goods and services are known as

All of the following are examples of macroeconomic problems EXCEPT

Which is NOT true about the use of economic models?

Charitable donations to the Red Cross

When studying individuals' economic behavior, economists assume that

Normative economics

Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

Which of the following statements is TRUE?

In an inverse relationship

Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using

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