Question 1

A microeconomist would study all of the following issues EXCEPT

Accepted Answer

A)  the impact of a change in consumer income on the sales of corn. 
B)  the impact of a snowstorm on the sales of snow shovels. 
C)  the most efficient means for General Motors to produce an automobile. 
D)  the effect of a change in income taxes on the nation's rate of unemployment. 
A)  the impact of a change in consumer income on the sales of corn. 
B)  the impact of a snowstorm on the sales of snow shovels. 
C)  the most efficient means for General Motors to produce an automobile. 
D)  the effect of a change in income taxes on the nation's rate of unemployment.

Question 2

Economic theory predicts that people make choices in a manner that

Accepted Answer

A)  makes them well liked by others. 
B)  makes them better off. 
C)  reflects the fact that resources are unlimited. 
D)  shows that they do not respond to monetary incentives. 
A)  makes them well liked by others. 
B)  makes them better off. 
C)  reflects the fact that resources are unlimited. 
D)  shows that they do not respond to monetary incentives.

Question 3

A difference between biology and economics is that

Accepted Answer

A)  economists use models and biologists use theories. 
B)  biologists often use laboratory methods and economists do less often. 
C)  economics explains events while biology predict events. 
D)  biologists use the scientific method while economists do not. 
A)  economists use models and biologists use theories. 
B)  biologists often use laboratory methods and economists do less often. 
C)  economics explains events while biology predict events. 
D)  biologists use the scientific method while economists do not.

Question 4

Economics is an empirical science, which means that economists

Accepted Answer

A)  look at evidence to see whether or not the model is applicable. 
B)  test their models by utilizing unknown variables. 
C)  do only laboratory experiments. 
D)  refuse to test their models since the usefulness of a model is determined by whether it is logical or not. 
A)  look at evidence to see whether or not the model is applicable. 
B)  test their models by utilizing unknown variables. 
C)  do only laboratory experiments. 
D)  refuse to test their models since the usefulness of a model is determined by whether it is logical or not.

Question 5

A decision made by a rational person

Accepted Answer

A)  is intended to make the person worse off. 
B)  would always make the person wealthier. 
C)  is identical to a decision that would be made by any other person facing the same choices. 
D)  is intended to make the person better off. 
A)  is intended to make the person worse off. 
B)  would always make the person wealthier. 
C)  is identical to a decision that would be made by any other person facing the same choices. 
D)  is intended to make the person better off.

Question 6

Macroeconomics is concerned with studying the

Accepted Answer

A)  behavior of individual decision makers. 
B)  behavior of the economy as a whole. 
C)  prices of specific companies' stocks. 
D)  wants of individuals. 
A)  behavior of individual decision makers. 
B)  behavior of the economy as a whole. 
C)  prices of specific companies' stocks. 
D)  wants of individuals.

Question 7

In a market system, ________ provide signals about whether resources are relatively scarce or abundant.

Accepted Answer

A)  prices 
B)  economists 
C)  government officials 
D)  scientists and engineers 
A)  prices 
B)  economists 
C)  government officials 
D)  scientists and engineers

Question 8

The assumption that individuals will not intentionally make decisions that will leave them worse off is known as

Accepted Answer

A)  microeconomic analysis. 
B)  macroeconomic analysis. 
C)  a model or theory. 
D)  the rationality assumption. 
A)  microeconomic analysis. 
B)  macroeconomic analysis. 
C)  a model or theory. 
D)  the rationality assumption.

Question 9

Economics can be described as the study of how people use ________ resources to satisfy ________ wants.

Accepted Answer

A)  unlimited; unlimited 
B)  unlimited; limited 
C)  limited; unlimited 
D)  limited; limited 
A)  unlimited; unlimited 
B)  unlimited; limited 
C)  limited; unlimited 
D)  limited; limited

Question 10

Assumptions in models tend to make

Accepted Answer

A)  the model predict what the scientist wants the results to be. 
B)  the model more realistic. 
C)  the model more applicable to specific circumstances. 
D)  the model always predict the future accurately. 
A)  the model predict what the scientist wants the results to be. 
B)  the model more realistic. 
C)  the model more applicable to specific circumstances. 
D)  the model always predict the future accurately.

Question 11

The assumption that individuals do NOT intentionally make decisions that would leave them worse off is referred to as

Accepted Answer

A)  the premium assumption. 
B)  the law of comparative advantage. 
C)  the rationality assumption. 
D)  the law of demand. 
A)  the premium assumption. 
B)  the law of comparative advantage. 
C)  the rationality assumption. 
D)  the law of demand.

Question 12

If people act as if they systematically pursue their own self-interest, then they will most likely

Accepted Answer

A)  respond irrationally to any incentive. 
B)  respond to a given incentive in a random manner. 
C)  respond predictably to a given incentive. 
D)  not respond to any incentive. 
A)  respond irrationally to any incentive. 
B)  respond to a given incentive in a random manner. 
C)  respond predictably to a given incentive. 
D)  not respond to any incentive.

Question 13

Which of the following statements about economic models is true?

Accepted Answer

A)  Economic models are not empirically testable. 
B)  The predictive power of models is not important. 
C)  Economic models are designed so that every detail of the real world can be analyzed. 
D)  Every economic model is based on a set of assumptions. 
A)  Economic models are not empirically testable. 
B)  The predictive power of models is not important. 
C)  Economic models are designed so that every detail of the real world can be analyzed. 
D)  Every economic model is based on a set of assumptions.

Question 14

Economists assume people are motivated by

Accepted Answer

A)  unlimited resources. 
B)  pride. 
C)  self-interest. 
D)  social justice. 
A)  unlimited resources. 
B)  pride. 
C)  self-interest. 
D)  social justice.

Question 15

"No individual should have less than $20,000 income in the United States in 2010" is an example of

Accepted Answer

A)  a normative statement. 
B)  a positive statement. 
C)  an illogical and refutable statement. 
D)  a truism. 
A)  a normative statement. 
B)  a positive statement. 
C)  an illogical and refutable statement. 
D)  a truism.

Question 16

The value of a model is determined by

Accepted Answer

A)  the usefulness of its predictions in the real world. 
B)  the extent of the profit earned by applying it. 
C)  the realism of its assumptions. 
D)  the model's attention to real world details. 
A)  the usefulness of its predictions in the real world. 
B)  the extent of the profit earned by applying it. 
C)  the realism of its assumptions. 
D)  the model's attention to real world details.

Question 17

The issues that an economic system attempts to solve include:

Accepted Answer

A)  what to produce. 
B)  how to produce items. 
C)  for whom items are produced. 
D)  all of the above. 
A)  what to produce. 
B)  how to produce items. 
C)  for whom items are produced. 
D)  all of the above.

Question 18

Which of these social sciences deals most with models of behavior rather than with thought processes?

Accepted Answer

A)  Psychology 
B)  Sociology 
C)  Psychiatry 
D)  Economics 
A)  Psychology 
B)  Sociology 
C)  Psychiatry 
D)  Economics

Question 19

A mixed economic system is best described an economy with a mix of

Accepted Answer

A)  state and federal governments. 
B)  domestic and foreign buyers. 
C)  free markets and government control. 
D)  for-profit organizations and not-for-profit organizations. 
A)  state and federal governments. 
B)  domestic and foreign buyers. 
C)  free markets and government control. 
D)  for-profit organizations and not-for-profit organizations.

Question 20

Macroeconomics deals with

Accepted Answer

A)  aggregates within the economy. 
B)  specific sectors within the economy. 
C)  the retail industry only. 
D)  decisions made by firms. 
A)  aggregates within the economy. 
B)  specific sectors within the economy. 
C)  the retail industry only. 
D)  decisions made by firms.

Exam 1: The Nature of Economics

A microeconomist would study all of the following issues EXCEPT

Economic theory predicts that people make choices in a manner that

A difference between biology and economics is that

Economics is an empirical science, which means that economists

A decision made by a rational person

Macroeconomics is concerned with studying the

In a market system, ________ provide signals about whether resources are relatively scarce or abundant.

The assumption that individuals will not intentionally make decisions that will leave them worse off is known as

Economics can be described as the study of how people use ________ resources to satisfy ________ wants.

Assumptions in models tend to make

The assumption that individuals do NOT intentionally make decisions that would leave them worse off is referred to as

If people act as if they systematically pursue their own self-interest, then they will most likely

Which of the following statements about economic models is true?

Economists assume people are motivated by

"No individual should have less than $20,000 income in the United States in 2010" is an example of

The value of a model is determined by

The issues that an economic system attempts to solve include:

Which of these social sciences deals most with models of behavior rather than with thought processes?

A mixed economic system is best described an economy with a mix of

Macroeconomics deals with

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

Economics can be described as the study of how people use resources to satisfy wants.