Question 1

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 2

According to economists, when two people make exactly the opposite decision,

Accepted Answer

A)  one of them is acting irrationally. 
B)  each person evaluates the situation according to his/her individual self-interest. 
C)  one of them is acting out of spite. 
D)  one of them should compromise. 
A)  one of them is acting irrationally. 
B)  each person evaluates the situation according to his/her individual self-interest. 
C)  one of them is acting out of spite. 
D)  one of them should compromise.

Question 3

Analysis that involves value judgments about economic policies is

Accepted Answer

A)  positive economics. 
B)  normative economics. 
C)  microeconomics. 
D)  macroeconomics. 
A)  positive economics. 
B)  normative economics. 
C)  microeconomics. 
D)  macroeconomics.

Question 4

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 5

Ceteris paribus means

Accepted Answer

A)  "all variables are independent." 
B)  "other things being equal." 
C)  "some assumptions must be accepted without proof." 
D)  "some theories are not rational." 
A)  "all variables are independent." 
B)  "other things being equal." 
C)  "some assumptions must be accepted without proof." 
D)  "some theories are not rational."

Question 6

Microeconomics is concerned with studying which of the following?

Accepted Answer

A)  the determinants of national unemployment 
B)  the effects of monetary policy 
C)  the study of individual markets 
D)  all of the above 
A)  the determinants of national unemployment 
B)  the effects of monetary policy 
C)  the study of individual markets 
D)  all of the above

Question 7

The combination of psychology and economics to determine individual decision making is known as

Accepted Answer

A)  behavioral economics. 
B)  pyschomics. 
C)  the rule of thumb. 
D)  positive analysis. 
A)  behavioral economics. 
B)  pyschomics. 
C)  the rule of thumb. 
D)  positive analysis.

Question 8

Which of the following is a normative economic statement?

Accepted Answer

A)  An increase in corporate income taxes will cause the unemployment rate to increase. 
B)  The costs of medical care are increasing faster than the incomes of U.S. citizens. 
C)  Teenage unemployment is over ten percent. 
D)  Teenage unemployment is too high. 
A)  An increase in corporate income taxes will cause the unemployment rate to increase. 
B)  The costs of medical care are increasing faster than the incomes of U.S. citizens. 
C)  Teenage unemployment is over ten percent. 
D)  Teenage unemployment is too high.

Question 9

How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms?

Accepted Answer

A)  The butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community. 
B)  The butcher, the brewer, and the baker give us our dinner because they will be sued if they don't do so. 
C)  The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so. 
D)  The butcher, the brewer, and the baker give us our dinner because they view doing so as a public service. 
A)  The butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community. 
B)  The butcher, the brewer, and the baker give us our dinner because they will be sued if they don't do so. 
C)  The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so. 
D)  The butcher, the brewer, and the baker give us our dinner because they view doing so as a public service.

Question 10

What type of economics would most typically deal with aggregates?

Accepted Answer

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

Question 11

Suppose a survey is taken concerning car safety. According to the survey, people strongly desire safer cars and indicate they are willing to pay substantially more for safer cars. Using this information, one auto firm adds numerous safety features to its car, raising the price by several thousand dollars. Sales drop sharply, and the firm loses profits. What went wrong?

Accepted Answer

The automaker was relying on what people

Question 12

When two variables have a direct relationship, the slope is

Accepted Answer

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

Question 13

The impact of higher taxes would be examined by

Accepted Answer

A)  a microeconomist. 
B)  a macroeconomist. 
C)  both a macroeconomist and a microeconomist. 
D)  neither a macroeconomist nor a microeconomist. 
A)  a microeconomist. 
B)  a macroeconomist. 
C)  both a macroeconomist and a microeconomist. 
D)  neither a macroeconomist nor a microeconomist.

Question 14

The threat of a large fine for failure to pay income taxes is an example of

Accepted Answer

A)  the excessive power of the Internal Revenue Service. 
B)  the ineffectiveness of incentives to get people to pay their taxes. 
C)  a negative incentive to get all people to pay taxes. 
D)  people failing to consider all the benefits the government provides them. 
A)  the excessive power of the Internal Revenue Service. 
B)  the ineffectiveness of incentives to get people to pay their taxes. 
C)  a negative incentive to get all people to pay taxes. 
D)  people failing to consider all the benefits the government provides them.

Question 15

Because resources are scarce relative to wants, the study of economics concerns

Accepted Answer

A)  how money is important to people. 
B)  how individuals, businesses, and governments make choices. 
C)  how money is used to buy what people want. 
D)  None of the above are correct. 
A)  how money is important to people. 
B)  how individuals, businesses, and governments make choices. 
C)  how money is used to buy what people want. 
D)  None of the above are correct.

Question 16

During the Middle Ages, heretics were often burned at the stake. Were the heretics violating the assumption of rational self-interest? Explain.

Accepted Answer

For someone today, or even many people l

Question 17

A fundamental aspect of economics is to

Accepted Answer

A)  ensure that every firm makes a profit. 
B)  analyze how choices are made. 
C)  satisfy all our wants. 
D)  make sure that our resources will always be unlimited. 
A)  ensure that every firm makes a profit. 
B)  analyze how choices are made. 
C)  satisfy all our wants. 
D)  make sure that our resources will always be unlimited.

Question 18

Do economists analyze people's thought processes or do they look at what people actually do?

Accepted Answer

A)  Economists focus only on people's thought processes. 
B)  Economists focus on what people do, not their thought processes. 
C)  An economist's focus is about half-and-half between actions and thought processes. 
D)  Macroeconomists focus on thought processes while microeconomists focus on actions. 
A)  Economists focus only on people's thought processes. 
B)  Economists focus on what people do, not their thought processes. 
C)  An economist's focus is about half-and-half between actions and thought processes. 
D)  Macroeconomists focus on thought processes while microeconomists focus on actions.

Question 19

Macroeconomics is the study of

Accepted Answer

A)  aggregate economic variables. 
B)  output in particular industries. 
C)  prices in particular industries. 
D)  all of the above. 
A)  aggregate economic variables. 
B)  output in particular industries. 
C)  prices in particular industries. 
D)  all of the above.

Question 20

Rational self-interest means

Accepted Answer

A)  always increasing your wealth. 
B)  pursuing what makes you better off. 
C)  pursuing activities that maximize income. 
D)  always pursuing activities that are consistent with your faith. 
A)  always increasing your wealth. 
B)  pursuing what makes you better off. 
C)  pursuing activities that maximize income. 
D)  always pursuing activities that are consistent with your faith.

Exam 1: The Nature of Economics

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

According to economists, when two people make exactly the opposite decision,

Analysis that involves value judgments about economic policies is

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

Ceteris paribus means

Microeconomics is concerned with studying which of the following?

The combination of psychology and economics to determine individual decision making is known as

Which of the following is a normative economic statement?

How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms?

What type of economics would most typically deal with aggregates?

When two variables have a direct relationship, the slope is

The impact of higher taxes would be examined by

The threat of a large fine for failure to pay income taxes is an example of

Because resources are scarce relative to wants, the study of economics concerns

During the Middle Ages, heretics were often burned at the stake. Were the heretics violating the assumption of rational self-interest? Explain.

A fundamental aspect of economics is to

Do economists analyze people's thought processes or do they look at what people actually do?

Macroeconomics is the study of

Rational self-interest means

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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