Question 1

The economic way of thinking will help you

Accepted Answer

A)  make decisions in financing your home. 
B)  decide whether the U.S. government should encourage or discourage immigration. 
C)  make better decisions concerning your education. 
D)  all of the above 
A)  make decisions in financing your home. 
B)  decide whether the U.S. government should encourage or discourage immigration. 
C)  make better decisions concerning your education. 
D)  all of the above D

Question 2

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. B

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. C

Question 4

A scientist who is studying earthquakes includes the impact of wind when performing some tests of damages to structures. This is an example of

Accepted Answer

A)  failing to understand how to do scientific methodology. 
B)  irrational behavior in noneconomic situations. 
C)  accounting for every possible phenomena that may effect the problem under examination. 
D)  failing to hold all other things constant. 
A)  failing to understand how to do scientific methodology. 
B)  irrational behavior in noneconomic situations. 
C)  accounting for every possible phenomena that may effect the problem under examination. 
D)  failing to hold all other things constant.

Question 5

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 6

Another word for "aggregate" is

Accepted Answer

A)  government. 
B)  partial. 
C)  public. 
D)  total. 
A)  government. 
B)  partial. 
C)  public. 
D)  total.

Question 7

Economists assume people behave

Accepted Answer

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

Question 8

An economic model should capture

Accepted Answer

A)  the essential relationships that help to analyze the problem. 
B)  all possible variables that apply to the problem. 
C)  only social value related variables. 
D)  all of the above. 
A)  the essential relationships that help to analyze the problem. 
B)  all possible variables that apply to the problem. 
C)  only social value related variables. 
D)  all of the above.

Question 9

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 10

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 11

A good economic model

Accepted Answer

A)  cannot be refuted. 
B)  describes the real world completely and in detail. 
C)  captures the essential relationships of the problem under consideration. 
D)  captures all relationships about the problem under consideration. 
A)  cannot be refuted. 
B)  describes the real world completely and in detail. 
C)  captures the essential relationships of the problem under consideration. 
D)  captures all relationships about the problem under consideration.

Question 12

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 13

"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 14

Normative economic analysis involves

Accepted Answer

A)  positive analysis. 
B)  value judgments. 
C)  if-then statements. 
D)  objective descriptions of the way things are. 
A)  positive analysis. 
B)  value judgments. 
C)  if-then statements. 
D)  objective descriptions of the way things are.

Question 15

People respond to incentives

Accepted Answer

A)  by ignoring negative incentives and responding to positive incentives only. 
B)  only when they are irrational. 
C)  by calculating their individual costs and benefits and determining which is greater. 
D)  when they have low incomes. 
A)  by ignoring negative incentives and responding to positive incentives only. 
B)  only when they are irrational. 
C)  by calculating their individual costs and benefits and determining which is greater. 
D)  when they have low incomes.

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

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 18

A theory or a model

Accepted Answer

A)  is a simplified, abstract view of reality. 
B)  is based on each economist's value judgments. 
C)  is a detailed analysis of what ought to be. 
D)  captures all aspects of the real world. 
A)  is a simplified, abstract view of reality. 
B)  is based on each economist's value judgments. 
C)  is a detailed analysis of what ought to be. 
D)  captures all aspects of the real world.

Question 19

If a straight line crosses the Y-axis at 5 and crosses the X-axis at 10, we can conclude that the slope of the line is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  infinity. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  infinity.

Question 20

Which of the following statements is NOT true?

Accepted Answer

A)  Economics is a social science. 
B)  Economics is an empirical science. 
C)  Economics does not use theories. 
D)  Economics is the study of how people allocate their limited resources to satisfy their unlimited wants. 
A)  Economics is a social science. 
B)  Economics is an empirical science. 
C)  Economics does not use theories. 
D)  Economics is the study of how people allocate their limited resources to satisfy their unlimited wants.

Exam 1: The Nature of Economics

The economic way of thinking will help you

Which of the following is a positive statement?

The macroeconomist would most likely study

A scientist who is studying earthquakes includes the impact of wind when performing some tests of damages to structures. This is an example of

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?

Another word for "aggregate" is

Economists assume people behave

An economic model should capture

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

Which of the following is a normative statement?

A good economic model

Microeconomics is concerned with the study of

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

Normative economic analysis involves

People respond to incentives

Economics is the study of how

When constructing economic models, economists are more concerned with

A theory or a model

If a straight line crosses the Y-axis at 5 and crosses the X-axis at 10, we can conclude that the slope of the line is

Which of the following statements is NOT true?

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

Measuring the Economys Performance

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

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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