Question 1

Which of the following statements is true regarding the textbook used in this course?

Accepted Answer

A)  The textbook presents only economic theory, so no value judgments are involved in the text. 
B)  The textbook does not include normative statements. 
C)  The microeconomic section of the book includes only positive analysis while the macroeconomic section includes normative analysis. 
D)  The selection of topics included in the book involves value judgments as well as economic theory. 
A)  The textbook presents only economic theory, so no value judgments are involved in the text. 
B)  The textbook does not include normative statements. 
C)  The microeconomic section of the book includes only positive analysis while the macroeconomic section includes normative analysis. 
D)  The selection of topics included in the book involves value judgments as well as economic theory.

Question 2

All of the following are aspects of microeconomics EXCEPT

Accepted Answer

A)  monopolies. 
B)  a firm maximizing profit. 
C)  a worker choosing one job over another. 
D)  the average level of prices of all goods and services produced in a country in a year. 
A)  monopolies. 
B)  a firm maximizing profit. 
C)  a worker choosing one job over another. 
D)  the average level of prices of all goods and services produced in a country in a year.

Question 3

Normative economic analysis tends to

Accepted Answer

A)  generate testable hypotheses. 
B)  include the way someone thinks things should be or ought to be. 
C)  involve descriptive statements. 
D)  lead to empirical testing of data. 
A)  generate testable hypotheses. 
B)  include the way someone thinks things should be or ought to be. 
C)  involve descriptive statements. 
D)  lead to empirical testing of data.

Question 4

Which of the following statements is a positive economic statement?

Accepted Answer

A)  The number of families living in poverty in the United States is too high. 
B)  One in every five children in the United States is living in poverty. 
C)  Government programs to help the poor are just making problems worse. 
D)  Increases in poverty rates signify a deterioration of the U.S. economy. 
A)  The number of families living in poverty in the United States is too high. 
B)  One in every five children in the United States is living in poverty. 
C)  Government programs to help the poor are just making problems worse. 
D)  Increases in poverty rates signify a deterioration of the U.S. economy.

Question 5

Distinguish between a command-and-control economic system and a price system.

Accepted Answer

In a command-and-control economic system

Question 6

Economics is the study of

Accepted Answer

A)  the allocation of scarce resources to satisfy unlimited wants. 
B)  why some people want certain goods and services. 
C)  earning the most income. 
D)  ways to use fewer resources. 
A)  the allocation of scarce resources to satisfy unlimited wants. 
B)  why some people want certain goods and services. 
C)  earning the most income. 
D)  ways to use fewer resources.

Question 7

The term ceteris paribus is an economic assumption that means

Accepted Answer

A)  let the buyer beware. 
B)  common sense is reality. 
C)  the detail is in the interrelationship. 
D)  other things being equal. 
A)  let the buyer beware. 
B)  common sense is reality. 
C)  the detail is in the interrelationship. 
D)  other things being equal.

Question 8

The study of an individual's choice about what type of computer to buy is a subject of

Accepted Answer

A)  macroeconomics. 
B)  microeconomics. 
C)  an aggregate concept. 
D)  not a concern for economic analysis. 
A)  macroeconomics. 
B)  microeconomics. 
C)  an aggregate concept. 
D)  not a concern for economic analysis.

Question 9

A possible rational reason why older people, on average, show less interest in learning how to use new technologies is because

Accepted Answer

A)  older people are not as smart as (today's) young people. 
B)  they are acting irrationally. 
C)  they have fewer years to gain a return from learning how to use new technologies. 
D)  the financial cost for older people is greater than the cost to younger people. 
A)  older people are not as smart as (today's) young people. 
B)  they are acting irrationally. 
C)  they have fewer years to gain a return from learning how to use new technologies. 
D)  the financial cost for older people is greater than the cost to younger people.

Question 10

Microeconomics focuses on

Accepted Answer

A)  individual decision makers within the economy. 
B)  the large parts of the economy. 
C)  changes in national income. 
D)  satisfying the needs of the economy. 
A)  individual decision makers within the economy. 
B)  the large parts of the economy. 
C)  changes in national income. 
D)  satisfying the needs of the economy.

Question 11

Economists assume people behave rationally, which means that people

Accepted Answer

A)  never make a mistake. 
B)  do not intentionally make decisions that make themselves worse off. 
C)  have the necessary information to always make correct decisions. 
D)  always understand the consequences of their decisions. 
A)  never make a mistake. 
B)  do not intentionally make decisions that make themselves worse off. 
C)  have the necessary information to always make correct decisions. 
D)  always understand the consequences of their decisions.

Question 12

Microeconomics is defined as that part of economic analysis that

Accepted Answer

A)  studies the behavior of the economy as a whole. 
B)  includes the problems of inflation and unemployment. 
C)  studies individual decision making by households and firms. 
D)  concerns aggregate production and consumption. 
A)  studies the behavior of the economy as a whole. 
B)  includes the problems of inflation and unemployment. 
C)  studies individual decision making by households and firms. 
D)  concerns aggregate production and consumption.

Question 13

Normative economic analysis involves

Accepted Answer

A)  true statements of facts only. 
B)  testable hypotheses by scientists. 
C)  value judgments and opinions. 
D)  purely descriptive statements. 
A)  true statements of facts only. 
B)  testable hypotheses by scientists. 
C)  value judgments and opinions. 
D)  purely descriptive statements.

Question 14

Macroeconomics deals with ________ while microeconomics deals with ________.

Accepted Answer

A)  choices important to people; choices not important to people 
B)  economywide choices; choices of individuals 
C)  choices that involve money; choices that does not involve money 
D)  choices of rich people; choices of poor people 
A)  choices important to people; choices not important to people 
B)  economywide choices; choices of individuals 
C)  choices that involve money; choices that does not involve money 
D)  choices of rich people; choices of poor people

Question 15

What would lead an economist to conclude that Theory A is superior to Theory B?

Accepted Answer

A)  Theory A predicts real-world events better than does Theory B. 
B)  The assumptions underlying Theory A are more realistic than are the assumptions underlying Theory B. 
C)  Theory A explains how people think, whereas Theory B only explains what they do. 
D)  Theory A is based on the assumption that an individual typically cannot determine what is in his or her own best interest, whereas Theory B assumes that each person knows what is in his or her own best interest and acts accordingly. 
A)  Theory A predicts real-world events better than does Theory B. 
B)  The assumptions underlying Theory A are more realistic than are the assumptions underlying Theory B. 
C)  Theory A explains how people think, whereas Theory B only explains what they do. 
D)  Theory A is based on the assumption that an individual typically cannot determine what is in his or her own best interest, whereas Theory B assumes that each person knows what is in his or her own best interest and acts accordingly.

Question 16

Which of the following is always true of rational behavior?

Accepted Answer

A)  It always entails pursuing one's own best interest. 
B)  It always yields the best possible outcome for all individuals. 
C)  It never involves the pursuit of greedy self-interest. 
D)  It never involves taking into account the interests of others. 
A)  It always entails pursuing one's own best interest. 
B)  It always yields the best possible outcome for all individuals. 
C)  It never involves the pursuit of greedy self-interest. 
D)  It never involves taking into account the interests of others.

Question 17

Which of the following is NOT a positive statement?

Accepted Answer

A)  The unemployment rate is 5.8 percent. 
B)  The inflation rate for 2002 was 2.3 percent. 
C)  The national debt is too high. 
D)  The federal government budget for 2004 is $2.2 trillion. 
A)  The unemployment rate is 5.8 percent. 
B)  The inflation rate for 2002 was 2.3 percent. 
C)  The national debt is too high. 
D)  The federal government budget for 2004 is $2.2 trillion.

Question 18

Wants are

Accepted Answer

A)  another term for needs. 
B)  the things people would consume if they had unlimited incomes. 
C)  the things people consume with their income. 
D)  all the things people really need in order to live comfortably. 
A)  another term for needs. 
B)  the things people would consume if they had unlimited incomes. 
C)  the things people consume with their income. 
D)  all the things people really need in order to live comfortably.

Question 19

Economics is a

Accepted Answer

A)  hard science. 
B)  physical science. 
C)  natural science. 
D)  social science. 
A)  hard science. 
B)  physical science. 
C)  natural science. 
D)  social science.

Question 20

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

Accepted Answer

A)  A vacation in Colorado is better than a vacation in Hawaii. 
B)  Hotels in Colorado are more expensive than are hotels in Hawaii. 
C)  The hotel vacancy rate in Hawaii will increase as airfares to Hawaii increase. 
D)  The busiest tourist month in Colorado is July. 
A)  A vacation in Colorado is better than a vacation in Hawaii. 
B)  Hotels in Colorado are more expensive than are hotels in Hawaii. 
C)  The hotel vacancy rate in Hawaii will increase as airfares to Hawaii increase. 
D)  The busiest tourist month in Colorado is July.

Exam 1: The Nature of Economics

Which of the following statements is true regarding the textbook used in this course?

All of the following are aspects of microeconomics EXCEPT

Normative economic analysis tends to

Which of the following statements is a positive economic statement?

Distinguish between a command-and-control economic system and a price system.

Economics is the study of

The term ceteris paribus is an economic assumption that means

The study of an individual's choice about what type of computer to buy is a subject of

A possible rational reason why older people, on average, show less interest in learning how to use new technologies is because

Microeconomics focuses on

Economists assume people behave rationally, which means that people

Microeconomics is defined as that part of economic analysis that

Normative economic analysis involves

Macroeconomics deals with ________ while microeconomics deals with ________.

What would lead an economist to conclude that Theory A is superior to Theory B?

Which of the following is always true of rational behavior?

Which of the following is NOT a positive statement?

Wants are

Economics is a

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

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

Filters

Macroeconomics deals with while microeconomics deals with .