Question 1

When economists say scarcity,they mean:

Accepted Answer

A)  there are only a limited number of consumers who would be interested in purchasing goods. 
B)  the human desire for goods exceeds the available supply of time, goods and resources. 
C)  most people in poorer countries do not have enough goods. 
D)  goods are so expensive that only the rich can afford it. 
A)  there are only a limited number of consumers who would be interested in purchasing goods. 
B)  the human desire for goods exceeds the available supply of time, goods and resources. 
C)  most people in poorer countries do not have enough goods. 
D)  goods are so expensive that only the rich can afford it.

Question 2

Normative economics deals with ____ and positive economics deals with ____.

Accepted Answer

A)  what should be; what is 
B)  fiction; fact 
C)  microeconomics; macroeconomics 
D)  negative aspects; positive aspects 
E)  changing circumstances; same circumstances 
A)  what should be; what is 
B)  fiction; fact 
C)  microeconomics; macroeconomics 
D)  negative aspects; positive aspects 
E)  changing circumstances; same circumstances

Question 3

Scarcity has no importance to understanding economics.

Accepted Answer

A) True 
 B)False

Question 4

The basic difference between macroeconomics and microeconomics is:

Accepted Answer

A)  microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. 
B)  microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. 
C)  microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. 
D)  microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment. 
A)  microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. 
B)  microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. 
C)  microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. 
D)  microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

Question 5

The statement "The income tax is unfair to those who work hard to earn their incomes" is an example of positive economic analysis.

Accepted Answer

A) True 
 B)False

Question 6

Select the positive statement that completes the sentence: If wages rise more rapidly than productivity:

Accepted Answer

A)  profits will fall. 
B)  workers will earn 3/4 of GDP. 
C)  the rate of inflation increases. 
D)  all of the above. 
A)  profits will fall. 
B)  workers will earn 3/4 of GDP. 
C)  the rate of inflation increases. 
D)  all of the above.

Question 7

The condition of scarcity:

Accepted Answer

A)  cannot be eliminated. 
B)  prevails in poor economies. 
C)  prevails in rich economies. 
D)  All of the above. 
A)  cannot be eliminated. 
B)  prevails in poor economies. 
C)  prevails in rich economies. 
D)  All of the above.

Question 8

Policies to increase the supply of money in the economy are primarily a concern of microeconomics.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is included in the study of macroeconomics?

Accepted Answer

A)  Salaries of college professors. 
B)  Computer prices. 
C)  Unemployment in the nation. 
D)  Silver prices. 
A)  Salaries of college professors. 
B)  Computer prices. 
C)  Unemployment in the nation. 
D)  Silver prices.

Question 10

Scarcity is a problem:

Accepted Answer

A)  measured by the amount of goods available. 
B)  of the poor, but not the rich. 
C)  because human wants are unlimited while resources are limited. 
D)  only in industrialized economies. 
A)  measured by the amount of goods available. 
B)  of the poor, but not the rich. 
C)  because human wants are unlimited while resources are limited. 
D)  only in industrialized economies.

Question 11

Distinguish macroeconomics and microeconomics.

Accepted Answer

Macroeconomics studies the ent

Question 12

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

Accepted Answer

A) True 
 B)False

Question 13

If the price of a textbook rises and then students purchase fewer textbooks,an economic model can show a cause-and-effect relationship only if which of the following conditions holds:

Accepted Answer

A)  students' incomes fall. 
B)  tuition decreases. 
C)  the number of students increases. 
D)  everything else is constant. 
E)  the bookstore no longer accepts used book trade-ins. 
A)  students' incomes fall. 
B)  tuition decreases. 
C)  the number of students increases. 
D)  everything else is constant. 
E)  the bookstore no longer accepts used book trade-ins.

Question 14

A positive economic statement:

Accepted Answer

A)  contains personal and social value judgments. 
B)  is always a mathematical expression. 
C)  should never be used by an economist. 
D)  is proper provided the advocator is clear the position rests on personal assessment. 
E)  is an unbiased report of the facts of the economy. 
A)  contains personal and social value judgments. 
B)  is always a mathematical expression. 
C)  should never be used by an economist. 
D)  is proper provided the advocator is clear the position rests on personal assessment. 
E)  is an unbiased report of the facts of the economy.

Question 15

The basic purpose of economic models is to:

Accepted Answer

A)  construct simplifying assumptions about the real world. 
B)  explain reality in all its complexity. 
C)  construct situations where controlled experiments can be carried out. 
D)  provide explanations for, and predictions of the relationship between variables. 
A)  construct simplifying assumptions about the real world. 
B)  explain reality in all its complexity. 
C)  construct situations where controlled experiments can be carried out. 
D)  provide explanations for, and predictions of the relationship between variables.

Question 16

The Ceteris paribus assumption is important when building economic models.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would eliminate scarcity as an economic problem?

Accepted Answer

A)  Moderation of people's competitive instincts. 
B)  Discovery of sufficiently large new energy reserves. 
C)  Resumption of steady productivity growth. 
D)  None of the above. 
A)  Moderation of people's competitive instincts. 
B)  Discovery of sufficiently large new energy reserves. 
C)  Resumption of steady productivity growth. 
D)  None of the above.

Exam 1: Introducing the Economic Way of Thinking

When economists say scarcity,they mean:

Normative economics deals with ____ and positive economics deals with ____.

Scarcity has no importance to understanding economics.

The basic difference between macroeconomics and microeconomics is:

The statement "The income tax is unfair to those who work hard to earn their incomes" is an example of positive economic analysis.

Select the positive statement that completes the sentence: If wages rise more rapidly than productivity:

The condition of scarcity:

Policies to increase the supply of money in the economy are primarily a concern of microeconomics.

Which of the following is included in the study of macroeconomics?

Scarcity is a problem:

Distinguish macroeconomics and microeconomics.

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

If the price of a textbook rises and then students purchase fewer textbooks,an economic model can show a cause-and-effect relationship only if which of the following conditions holds:

A positive economic statement:

The basic purpose of economic models is to:

The Ceteris paribus assumption is important when building economic models.

Which of the following would eliminate scarcity as an economic problem?

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

Normative economics deals with and positive economics deals with .