Question 1

The slope of a nonlinear curve is ________ when the curve is rising, and ________ when the curve is falling.

Accepted Answer

A) negative, positive 
B) negative, negative 
C) positive, negative 
D) positive, positive 
A) negative, positive 
B) negative, negative 
C) positive, negative 
D) positive, positive

Question 2

Under a pure price system, the decision of resource allocation is made by

Accepted Answer

A) the head of the government. 
B) a queen or king. 
C) individuals who own the resources. 
D) no one. 
A) the head of the government. 
B) a queen or king. 
C) individuals who own the resources. 
D) no one.

Question 3

Positive economic analysis is supposed to be

Accepted Answer

A) true. 
B) free of value judgments. 
C) just and fair. 
D) moral and honest. 
A) true. 
B) free of value judgments. 
C) just and fair. 
D) moral and honest.

Question 4

Which of the following is NOT a focus of the study of economics?

Accepted Answer

A) how individual preferences are formed 
B) unemployment 
C) inflation 
D) prices in particular markets 
A) how individual preferences are formed 
B) unemployment 
C) inflation 
D) prices in particular markets

Question 5

Economists assume people behave

Accepted Answer

A) instinctively. 
B) rationally. 
C) irrationally. 
D) greedily. 
A) instinctively. 
B) rationally. 
C) irrationally. 
D) greedily.

Question 6

"All Americans should have access to health care" is an example of

Accepted Answer

A) a positive statement. 
B) a microeconomic argument. 
C) a factual statement. 
D) a normative statement. 
A) a positive statement. 
B) a microeconomic argument. 
C) a factual statement. 
D) a normative statement.

Question 7

In an economic model, assumptions

Accepted Answer

A) must be applicable to all real-world situations. 
B) must be eliminated before being used to make sure the model is realistic. 
C) are not important in determining the usefulness of the model. 
D) define the set of circumstances in which the model is most likely to be applicable in the real world. 
A) must be applicable to all real-world situations. 
B) must be eliminated before being used to make sure the model is realistic. 
C) are not important in determining the usefulness of the model. 
D) define the set of circumstances in which the model is most likely to be applicable in the real world.

Question 8

Economics is a social science that involves the study of how individuals

Accepted Answer

A) develop their tastes and preferences. 
B) maximize their wealth. 
C) define happiness. 
D) choose among alternatives to satisfy their unlimited wants. 
A) develop their tastes and preferences. 
B) maximize their wealth. 
C) define happiness. 
D) choose among alternatives to satisfy their unlimited wants.

Question 9

Economic models are NOT used to

Accepted Answer

A) explain economic phenomena. 
B) predict economic phenomena. 
C) understand economic phenomena. 
D) describe all economic phenomena in minute detail. 
A) explain economic phenomena. 
B) predict economic phenomena. 
C) understand economic phenomena. 
D) describe all economic phenomena in minute detail.

Question 10

The ceteris paribus assumption is important in economics because

Accepted Answer

A) all empirical data are equal. 
B) it would be impossible to relate the effects of changes in one variable on another without holding some variables constant. 
C) economic data move very slowly over time and so they can always be considered constant. 
D) models are always complex and require as many variables as possible. 
A) all empirical data are equal. 
B) it would be impossible to relate the effects of changes in one variable on another without holding some variables constant. 
C) economic data move very slowly over time and so they can always be considered constant. 
D) models are always complex and require as many variables as possible.

Question 11

Which of the following is a positive statement?

Accepted Answer

A) We need to carefully protect our borders. 
B) Hyperinflation is the most damaging thing that can occur in an economy. 
C) When tax revenues are less than government spending there is a budget deficit. 
D) Foreign aid should be reduced to help our budget deficit. 
A) We need to carefully protect our borders. 
B) Hyperinflation is the most damaging thing that can occur in an economy. 
C) When tax revenues are less than government spending there is a budget deficit. 
D) Foreign aid should be reduced to help our budget deficit.

Question 12

"If A occurs then B will follow" is a

Accepted Answer

A) positive statement. 
B) normative statement. 
C) non-testable statement. 
D) statement lacking in logic. 
A) positive statement. 
B) normative statement. 
C) non-testable statement. 
D) statement lacking in logic.

Question 13

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

Accepted Answer

A) A digital camera costs more than a disposable camera. 
B) Most digital cameras sold in the United States are imported from other countries. 
C) A camera makes a good wedding gift. 
D) More people will buy digital cameras as their prices decline. 
A) A digital camera costs more than a disposable camera. 
B) Most digital cameras sold in the United States are imported from other countries. 
C) A camera makes a good wedding gift. 
D) More people will buy digital cameras as their prices decline.

Question 14

A useful economic model

Accepted Answer

A) utilizes only the two most important factors to analyze the problem under consideration. 
B) generates statements that are incapable of refutation. 
C) represents every detail of the real world. 
D) yields usable predictions and implications for the real world. 
A) utilizes only the two most important factors to analyze the problem under consideration. 
B) generates statements that are incapable of refutation. 
C) represents every detail of the real world. 
D) yields usable predictions and implications for the real world.

Question 15

A relationship between two variables in which one variable increases at the same time that the other increases is called

Accepted Answer

A) nonlinear. 
B) constant. 
C) inverse. 
D) direct. 
A) nonlinear. 
B) constant. 
C) inverse. 
D) direct.

Question 16

Which of the following best describes how economists test the empirical predictions of economic models?

Accepted Answer

A) Economists survey individuals to learn about how people think through decisions about how much to purchase or to produce. 
B) Economists collect and analyze real-world observations of people's actions to discern if those actions accord with theories' predictions. 
C) Based on theories about thought processes, economists seek to determine which thought processes predominate in determining how a person decides what actions to take. 
D) Recognizing that people always do what they say they will do, economists rely exclusively on information gleaned from polls and surveys conducted by poll takers and market researchers. 
A) Economists survey individuals to learn about how people think through decisions about how much to purchase or to produce. 
B) Economists collect and analyze real-world observations of people's actions to discern if those actions accord with theories' predictions. 
C) Based on theories about thought processes, economists seek to determine which thought processes predominate in determining how a person decides what actions to take. 
D) Recognizing that people always do what they say they will do, economists rely exclusively on information gleaned from polls and surveys conducted by poll takers and market researchers.

Question 17

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

Accepted Answer

A) Public school teachers are not paid enough. 
B) The average public school teacher earns less than the average truck driver. 
C) The average public school teacher earns more than the average truck driver. 
D) Students in smaller classes perform better on standardized tests. 
A) Public school teachers are not paid enough. 
B) The average public school teacher earns less than the average truck driver. 
C) The average public school teacher earns more than the average truck driver. 
D) Students in smaller classes perform better on standardized tests.

Question 18

A five-cent deposit on beer bottles

Accepted Answer

A) provides a positive incentive because it rewards people for recycling. 
B) provides a negative incentive because it punishes people who do not recycle. 
C) is an irrational policy, because it fails to take into account incentives. 
D) is an irrational policy, because it fails to take into account self-interest. 
A) provides a positive incentive because it rewards people for recycling. 
B) provides a negative incentive because it punishes people who do not recycle. 
C) is an irrational policy, because it fails to take into account incentives. 
D) is an irrational policy, because it fails to take into account self-interest.

Question 19

A common approach that economists use to understand, explain and predict economic phenomena is to

Accepted Answer

A) form a theory or model. 
B) conduct experiments in a science lab. 
C) ask what people think. 
D) examine people's thought processes. 
A) form a theory or model. 
B) conduct experiments in a science lab. 
C) ask what people think. 
D) examine people's thought processes.

Question 20

When the president says that "High inflation rates are a much more serious economic problem than high unemployment rates," it is an example of

Accepted Answer

A) a normative statement. 
B) an empirically proven fact. 
C) a positive statement. 
D) an irrational argument. 
A) a normative statement. 
B) an empirically proven fact. 
C) a positive statement. 
D) an irrational argument.

The slope of a nonlinear curve is when the curve is rising, and when the curve is falling.

Under a pure price system, the decision of resource allocation is made by

Positive economic analysis is supposed to be

Which of the following is NOT a focus of the study of economics?

Economists assume people behave

"All Americans should have access to health care" is an example of

In an economic model, assumptions

Economics is a social science that involves the study of how individuals

Economic models are NOT used to

The ceteris paribus assumption is important in economics because

Which of the following is a positive statement?

"If A occurs then B will follow" is a

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

A useful economic model

A relationship between two variables in which one variable increases at the same time that the other increases is called

Which of the following best describes how economists test the empirical predictions of economic models?

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

A five-cent deposit on beer bottles

A common approach that economists use to understand, explain and predict economic phenomena is to

When the president says that "High inflation rates are a much more serious economic problem than high unemployment rates," it is an example of

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

The slope of a nonlinear curve is ________ when the curve is rising, and ________ when the curve is falling.

Under a pure price system, the decision of resource allocation is made by

Positive economic analysis is supposed to be

Which of the following is NOT a focus of the study of economics?

Economists assume people behave

"All Americans should have access to health care" is an example of

In an economic model, assumptions

Economics is a social science that involves the study of how individuals

Economic models are NOT used to

The ceteris paribus assumption is important in economics because

Which of the following is a positive statement?

"If A occurs then B will follow" is a

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

A useful economic model

A relationship between two variables in which one variable increases at the same time that the other increases is called

Which of the following best describes how economists test the empirical predictions of economic models?

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

A five-cent deposit on beer bottles

A common approach that economists use to understand, explain and predict economic phenomena is to

When the president says that "High inflation rates are a much more serious economic problem than high unemployment rates," it is an example of

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

The slope of a nonlinear curve is when the curve is rising, and when the curve is falling.