Question 1

To test their theories, economists usually have to

Accepted Answer

A)  set up careful laboratory experiments with all variables controlled. 
B)  first examine theory and what has happened in the past in the real world. 
C)  use only models that have a proven record of success. 
D)  anticipate every factor with 100 percent accuracy. 
A)  set up careful laboratory experiments with all variables controlled. 
B)  first examine theory and what has happened in the past in the real world. 
C)  use only models that have a proven record of success. 
D)  anticipate every factor with 100 percent accuracy.

Question 2

The primary objective of economics is

Accepted Answer

A)  to learn how to create more resources. 
B)  to study how people make choices with limited resources. 
C)  to learn how to make the most profits with a given amount of resources. 
D)  to study why some people are never happy with the resources they have. 
A)  to learn how to create more resources. 
B)  to study how people make choices with limited resources. 
C)  to learn how to make the most profits with a given amount of resources. 
D)  to study why some people are never happy with the resources they have.

Question 3

Positive economics

Accepted Answer

A)  always gives an optimistic spin to economic news. 
B)  is concerned with the economic policies that should be implemented. 
C)  is objective. 
D)  was not used by nineteenth century economists. 
A)  always gives an optimistic spin to economic news. 
B)  is concerned with the economic policies that should be implemented. 
C)  is objective. 
D)  was not used by nineteenth century economists.

Question 4

Macroeconomics is concerned with

Accepted Answer

A)  individual consumers. 
B)  government decision making concerning farm price supports. 
C)  aggregates. 
D)  the effects on a corporation of a strike by the United Auto Workers. 
A)  individual consumers. 
B)  government decision making concerning farm price supports. 
C)  aggregates. 
D)  the effects on a corporation of a strike by the United Auto Workers.

Question 5

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 6

In the definition of economics,

Accepted Answer

A)  both resources and wants are limited. 
B)  both resources and wants are unlimited. 
C)  resources are limited and wants are unlimited. 
D)  resources are unlimited and wants are limited. 
A)  both resources and wants are limited. 
B)  both resources and wants are unlimited. 
C)  resources are limited and wants are unlimited. 
D)  resources are unlimited and wants are limited.

Question 7

What is economics and what does it try to explain?

Accepted Answer

Economics is the study of how people all

Question 8

The "paired observation" of (14, 6) means

Accepted Answer

A)  x = 14, y = 6. 
B)  x = 6, y = 14. 
C)  x = any multiple of 14, y = any multiple of 6. 
D)  the origin is at 14 and 6. 
A)  x = 14, y = 6. 
B)  x = 6, y = 14. 
C)  x = any multiple of 14, y = any multiple of 6. 
D)  the origin is at 14 and 6.

Question 9

One reason why economists often use models in their analysis is that

Accepted Answer

A)  a model helps us to understand, explain, and predict economic phenomena in the real world. 
B)  a model accurately pictures every detail of the real world economy. 
C)  a model relates to individual thought processes rather than behavior. 
D)  it is relatively easy to perfectly specify a model. 
A)  a model helps us to understand, explain, and predict economic phenomena in the real world. 
B)  a model accurately pictures every detail of the real world economy. 
C)  a model relates to individual thought processes rather than behavior. 
D)  it is relatively easy to perfectly specify a model.

Question 10

In building a model the assumption that allows economists to study only the factors being analyzed is the

Accepted Answer

A)  rationality assumption. 
B)  ceteris paribus assumption. 
C)  the self-interest assumption. 
D)  the scarcity assumption. 
A)  rationality assumption. 
B)  ceteris paribus assumption. 
C)  the self-interest assumption. 
D)  the scarcity assumption.

Question 11

The impact of an increase in the gasoline tax on SUV sales is

Accepted Answer

A)  a macroeconomics topic because it deals with taxes. 
B)  a microeconomics topic because it deals with one industry. 
C)  not an economic issue, but rather a political issue. 
D)  insignificant. 
A)  a macroeconomics topic because it deals with taxes. 
B)  a microeconomics topic because it deals with one industry. 
C)  not an economic issue, but rather a political issue. 
D)  insignificant.

Question 12

Which of the following statements concerning the distinction between positive and normative economics is true?

Accepted Answer

A)  Positive statements are concerned with what is, while normative statements are concerned with what someone thinks should be. 
B)  Positive statements are concerned with what people think, while normative statements are concerned with what people do. 
C)  Positive statements are true while normative statements are false. 
D)  Positive statements are concerned with what is while normative statements are concerned with what will be. 
A)  Positive statements are concerned with what is, while normative statements are concerned with what someone thinks should be. 
B)  Positive statements are concerned with what people think, while normative statements are concerned with what people do. 
C)  Positive statements are true while normative statements are false. 
D)  Positive statements are concerned with what is while normative statements are concerned with what will be.

Question 13

The study of how a particular firm might choose to maximize its profits would fall into what type of analysis?

Accepted Answer

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

Question 14

Economic analysis is used

Accepted Answer

A)  only in economics classrooms. 
B)  only by business people. 
C)  only by policy makers. 
D)  in all decision making. 
A)  only in economics classrooms. 
B)  only by business people. 
C)  only by policy makers. 
D)  in all decision making.

Question 15

The distinction between microeconomics and macroeconomics is

Accepted Answer

A)  clearly drawn, and there is no overlap between them. 
B)  determined by economists in a clear and concise manner. 
C)  narrowly drawn, and microeconomic analysis often relies on macroeconomic tools. 
D)  often blurred because aggregates are made up of individuals and firms. 
A)  clearly drawn, and there is no overlap between them. 
B)  determined by economists in a clear and concise manner. 
C)  narrowly drawn, and microeconomic analysis often relies on macroeconomic tools. 
D)  often blurred because aggregates are made up of individuals and firms.

Question 16

The way that a society uses to allocate resources to satisfy human wants is called

Accepted Answer

A)  an economic system. 
B)  an assumption. 
C)  realism. 
D)  a physical science. 
A)  an economic system. 
B)  an assumption. 
C)  realism. 
D)  a physical science.

Question 17

The term or phrase most likely to indicate a normative statement is

Accepted Answer

A)  "ceteris paribus." 
B)  "factual." or "what is" statement. 
C)  "holding other things constant." 
D)  "should" or "ought to." 
A)  "ceteris paribus." 
B)  "factual." or "what is" statement. 
C)  "holding other things constant." 
D)  "should" or "ought to."

Question 18

The slope of a straight line

Accepted Answer

A)  is the same at all points along that line. 
B)  cannot be defined. 
C)  changes from one point to the next on that line. 
D)  is always equal to zero. 
A)  is the same at all points along that line. 
B)  cannot be defined. 
C)  changes from one point to the next on that line. 
D)  is always equal to zero.

Question 19

-In the above graphs, an inverse relationship is shown by

Accepted Answer

A)  Graph A. 
B)  Graph B. 
C)  Graph C. 
D)  Graph D. 
A)  Graph A. 
B)  Graph B. 
C)  Graph C. 
D)  Graph D.

Question 20

Which statement most accurately defines economics?

Accepted Answer

A)  Economics is the study of how people make money. 
B)  Economics is the study of how people make choices to satisfy their wants. 
C)  Economics is the study of values a society should choose. 
D)  Economics is the study of how to eliminate scarcity. 
A)  Economics is the study of how people make money. 
B)  Economics is the study of how people make choices to satisfy their wants. 
C)  Economics is the study of values a society should choose. 
D)  Economics is the study of how to eliminate scarcity.

Exam 1: The Nature of Economics

To test their theories, economists usually have to

The primary objective of economics is

Positive economics

Macroeconomics is concerned with

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

In the definition of economics,

What is economics and what does it try to explain?

The "paired observation" of (14, 6) means

One reason why economists often use models in their analysis is that

In building a model the assumption that allows economists to study only the factors being analyzed is the

The impact of an increase in the gasoline tax on SUV sales is

Which of the following statements concerning the distinction between positive and normative economics is true?

The study of how a particular firm might choose to maximize its profits would fall into what type of analysis?

Economic analysis is used

The distinction between microeconomics and macroeconomics is

The way that a society uses to allocate resources to satisfy human wants is called

The term or phrase most likely to indicate a normative statement is

The slope of a straight line

-In the above graphs, an inverse relationship is shown by

Which statement most accurately defines economics?

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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