Question 1

Microeconomics is concerned with the study of

Accepted Answer

A) the effects of inflation. 
B) the effects of government spending. 
C) the effects on individual producers of higher wages paid to workers. 
D) aggregates. 
A) the effects of inflation. 
B) the effects of government spending. 
C) the effects on individual producers of higher wages paid to workers. 
D) aggregates.

Question 2

Which of the following statements is a positive economic statement?

Accepted Answer

A) The Congress should pass the president's tax package. 
B) Tax rebates always give too much favor to rich people. 
C) The President's budget included an increase in unemployment insurance payments. 
D) none of the above 
A) The Congress should pass the president's tax package. 
B) Tax rebates always give too much favor to rich people. 
C) The President's budget included an increase in unemployment insurance payments. 
D) none of the above

Question 3

In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as

Accepted Answer

A) rationality. 
B) ceteris paribus. 
C) normative economics. 
D) behavioral economics. 
A) rationality. 
B) ceteris paribus. 
C) normative economics. 
D) behavioral economics.

Question 4

According to the bounded rationality hypothesis, an individual confronting a large number of complicated choices is most likely to respond by

Accepted Answer

A) using a simple rule of thumb to choose among a subset of easiest-to-evaluate options. 
B) using the ceteris paribus assumption to assist in simplifying and examining each of the possible options. 
C) utilizing readily available empirical evidence to assist in evaluating every option. 
D) assessing every available choice by developing sophisticated theories regarding each option. 
A) using a simple rule of thumb to choose among a subset of easiest-to-evaluate options. 
B) using the ceteris paribus assumption to assist in simplifying and examining each of the possible options. 
C) utilizing readily available empirical evidence to assist in evaluating every option. 
D) assessing every available choice by developing sophisticated theories regarding each option.

Question 5

A friend wants to learn how the unemployment rate is calculated and how inflation is measured. He asks you which economics course to take and you advise him to enroll in

Accepted Answer

A) macroeconomics. 
B) microeconomics. 
C) either micro- or macroeconomics. They both concentrate equally on those issues. 
D) financial accounting because economics doesn't address those topics in its courses. 
A) macroeconomics. 
B) microeconomics. 
C) either micro- or macroeconomics. They both concentrate equally on those issues. 
D) financial accounting because economics doesn't address those topics in its courses.

Question 6

Based on your understanding of your roommate's preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. How do you describe this event in terms of economic theory?

Accepted Answer

A) Your roommate is irrational. 
B) Your roommate does not know what is in his own best interests. 
C) You roommate does not know his own preferences as well as you do. 
D) You constructed a model that made a prediction, and the prediction was refuted. 
A) Your roommate is irrational. 
B) Your roommate does not know what is in his own best interests. 
C) You roommate does not know his own preferences as well as you do. 
D) You constructed a model that made a prediction, and the prediction was refuted.

Question 7

Economics

Accepted Answer

A) is a social science. 
B) is concerned with limited resources. 
C) is concerned with unlimited wants. 
D) All of the above are correct. 
A) is a social science. 
B) is concerned with limited resources. 
C) is concerned with unlimited wants. 
D) All of the above are correct.

Question 8

The President's statement that "to encourage economic growth, taxes should be cut"

Accepted Answer

A) would be an example of a normative statement. 
B) would be an example of a positive statement. 
C) would be an example of a microeconomic statement. 
D) would be a statement of mercantilist economic philosophy. 
A) would be an example of a normative statement. 
B) would be an example of a positive statement. 
C) would be an example of a microeconomic statement. 
D) would be a statement of mercantilist economic philosophy.

Question 9

Economics deals with

Accepted Answer

A) how to profit from the stock market. 
B) how to satisfy limited human wants. 
C) how society allocates unlimited resources. 
D) how individuals allocate scarce resources to satisfy unlimited human wants. 
A) how to profit from the stock market. 
B) how to satisfy limited human wants. 
C) how society allocates unlimited resources. 
D) how individuals allocate scarce resources to satisfy unlimited human wants.

Question 10

An example of a microeconomic decision is a situation in which

Accepted Answer

A) the Federal Reserve considers how much to increase the money supply during the coming month in an effort to constrain the rate of inflation. 
B) Congress and the president seek to reach a compromise on how much to increase government spending in an effort to influence national expenditures. 
C) a firm evaluates how much to reduce the price of its product in an effort to influence sales and boost its profits. 
D) the U.S. Treasury contemplates buying foreign currencies in an effort to influence exchange rates with an aim to boosting demand for U.S. goods and services. 
A) the Federal Reserve considers how much to increase the money supply during the coming month in an effort to constrain the rate of inflation. 
B) Congress and the president seek to reach a compromise on how much to increase government spending in an effort to influence national expenditures. 
C) a firm evaluates how much to reduce the price of its product in an effort to influence sales and boost its profits. 
D) the U.S. Treasury contemplates buying foreign currencies in an effort to influence exchange rates with an aim to boosting demand for U.S. goods and services.

Question 11

Microeconomics focuses on

Accepted Answer

A) individual decision makers. 
B) consumer decisions on small expenses. 
C) changes in national income. 
D) satisfying the needs of the economy. 
A) individual decision makers. 
B) consumer decisions on small expenses. 
C) changes in national income. 
D) satisfying the needs of the economy.

Question 12

Another term for "economic models" is

Accepted Answer

A) economic systems. 
B) economic theories. 
C) economic science. 
D) economic institutions. 
A) economic systems. 
B) economic theories. 
C) economic science. 
D) economic institutions.

Question 13

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

Accepted Answer

A) Farmers need some type of government aid. 
B) State governments should provide economic assistance to farmers. 
C) The federal government should provide economic assistance to farmers. 
D) The amount of financial assistance given to farmers is higher this year than it was 10 years ago. 
A) Farmers need some type of government aid. 
B) State governments should provide economic assistance to farmers. 
C) The federal government should provide economic assistance to farmers. 
D) The amount of financial assistance given to farmers is higher this year than it was 10 years ago.

Question 14

If an increase in one variable causes a decrease in another variable, this is

Accepted Answer

A) a direct relationship. 
B) a dependent relationship. 
C) an independent relationship. 
D) an inverse relationship. 
A) a direct relationship. 
B) a dependent relationship. 
C) an independent relationship. 
D) an inverse relationship.

Question 15

Modern economists are increasingly using microeconomic analysis in macroeconomics because

Accepted Answer

A) microeconomic theory is more scientific. 
B) aggregate outcomes stem from decisions made by individuals, business firms and government. 
C) macroeconomic subjects such as inflation affect all individuals. 
D) macroeconomics is older and more outdated. 
A) microeconomic theory is more scientific. 
B) aggregate outcomes stem from decisions made by individuals, business firms and government. 
C) macroeconomic subjects such as inflation affect all individuals. 
D) macroeconomics is older and more outdated.

Question 16

Which of the following is a positive statement?

Accepted Answer

A) An unemployment rate of 5.8 percent is too high. 
B) The unemployment rate is 5.8 percent. 
C) The unemployment rate should be below 5.8 percent. 
D) The unemployment rate should never be above 5.8 percent. 
A) An unemployment rate of 5.8 percent is too high. 
B) The unemployment rate is 5.8 percent. 
C) The unemployment rate should be below 5.8 percent. 
D) The unemployment rate should never be above 5.8 percent.

Question 17

Economics deals with choices

Accepted Answer

A) that involve the wants of individuals. 
B) that involve what people only need to survive. 
C) that people make without self-motivated interest. 
D) that people normally do not make. 
A) that involve the wants of individuals. 
B) that involve what people only need to survive. 
C) that people make without self-motivated interest. 
D) that people normally do not make.

Question 18

Which of the following would likely be considered as a topic of microeconomics?

Accepted Answer

A) a nation's unemployment rate 
B) Gross Domestic Product 
C) the price of apples 
D) the effects of fiscal policy on the economy 
A) a nation's unemployment rate 
B) Gross Domestic Product 
C) the price of apples 
D) the effects of fiscal policy on the economy

Question 19

Normative economics involves

Accepted Answer

A) a statement of fact. 
B) a statement of "what should be." 
C) a statement of "what is." 
D) a statement that is purely descriptive. 
A) a statement of fact. 
B) a statement of "what should be." 
C) a statement of "what is." 
D) a statement that is purely descriptive.

Question 20

The idea that people will not consciously make decisions that make them worse off is known as

Accepted Answer

A) rationality assumption. 
B) the decision duality. 
C) Adam Smith's doctrine. 
D) incentive assumption. 
A) rationality assumption. 
B) the decision duality. 
C) Adam Smith's doctrine. 
D) incentive assumption.

Microeconomics is concerned with the study of

Which of the following statements is a positive economic statement?

In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as

According to the bounded rationality hypothesis, an individual confronting a large number of complicated choices is most likely to respond by

A friend wants to learn how the unemployment rate is calculated and how inflation is measured. He asks you which economics course to take and you advise him to enroll in

Based on your understanding of your roommate's preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. How do you describe this event in terms of economic theory?

Economics

The President's statement that "to encourage economic growth, taxes should be cut"

Economics deals with

An example of a microeconomic decision is a situation in which

Microeconomics focuses on

Another term for "economic models" is

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

If an increase in one variable causes a decrease in another variable, this is

Modern economists are increasingly using microeconomic analysis in macroeconomics because

Which of the following is a positive statement?

Economics deals with choices

Which of the following would likely be considered as a topic of microeconomics?

Normative economics involves

The idea that people will not consciously make decisions that make them worse off is known as

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

Microeconomics is concerned with the study of

Which of the following statements is a positive economic statement?

In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as

According to the bounded rationality hypothesis, an individual confronting a large number of complicated choices is most likely to respond by

A friend wants to learn how the unemployment rate is calculated and how inflation is measured. He asks you which economics course to take and you advise him to enroll in

Based on your understanding of your roommate's preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. How do you describe this event in terms of economic theory?

Economics

The President's statement that "to encourage economic growth, taxes should be cut"

Economics deals with

An example of a microeconomic decision is a situation in which

Microeconomics focuses on

Another term for "economic models" is

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

If an increase in one variable causes a decrease in another variable, this is

Modern economists are increasingly using microeconomic analysis in macroeconomics because

Which of the following is a positive statement?

Economics deals with choices

Which of the following would likely be considered as a topic of microeconomics?

Normative economics involves

The idea that people will not consciously make decisions that make them worse off is known as

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