Question 1

What is the difference between a hypothesis and a theory?

Accepted Answer

A hypothesis about behavior is the first

Question 2

"When one basketball team spends a large sum of money acquiring better players,it is better off.If all teams do the same thing,all of them are better off." These statements demonstrate:

Accepted Answer

A)  the fallacy of composition. 
B)  confusing association with causation. 
C)  a misunderstanding of the direction of causality. 
D)  the ceteris paribus condition. 
A)  the fallacy of composition. 
B)  confusing association with causation. 
C)  a misunderstanding of the direction of causality. 
D)  the ceteris paribus condition.

Question 3

When economists disagree,it is often over what type of issues?

Accepted Answer

Economists generally disagree

Question 4

A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices,ceteris paribus.However,when the average price of cars increased throughout the 1990s,more cars were purchased.Which of the following best explains the apparent conflict between theory and data?

Accepted Answer

A)  The ceteris paribus assumption is valid. 
B)  It is likely that variables other than the price and quantity of cars demanded were changing. 
C)  The theory is valid. However, the price and quantity data gathered by researchers was clearly measured incorrectly. 
D)  The theory must be invalid. 
A)  The ceteris paribus assumption is valid. 
B)  It is likely that variables other than the price and quantity of cars demanded were changing. 
C)  The theory is valid. However, the price and quantity data gathered by researchers was clearly measured incorrectly. 
D)  The theory must be invalid.

Question 5

Suppose there are two members of the U.S.Congress who were once economics professors.Why is it important to be able to distinguish their positive from their normative statements about economic policy?

Accepted Answer

A)  Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments. 
B)  Their positive statements help us understand the good results of a policy change, and their normative statements help us understand the negative results. 
C)  We really do not have to worry about them since trained economists never make normative statements. 
D)  Economists are always making assumptions, and policy should not be based on assumptions. 
A)  Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments. 
B)  Their positive statements help us understand the good results of a policy change, and their normative statements help us understand the negative results. 
C)  We really do not have to worry about them since trained economists never make normative statements. 
D)  Economists are always making assumptions, and policy should not be based on assumptions.

Question 6

Measuring the rate of inflation is primarily a concern of:

Accepted Answer

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

Question 7

The fallacy of composition states that even if something is true for an individual,it is not necessarily true for many individuals as a group.

Accepted Answer

A) True 
 B)False

Question 8

A good economic theory should capture as many details about real-world behavior as possible.

Accepted Answer

A) True 
 B)False

Question 9

Why is abstraction important in developing economic theories?

Accepted Answer

Economic theories cannot realistically i

Question 10

Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much."

Accepted Answer

A)  Both statements are normative. 
B)  Both statements are positive. 
C)  Bill's statement is normative, and Bob's statement is positive. 
D)  Bill's statement is positive, and Bob's statement is normative. 
A)  Both statements are normative. 
B)  Both statements are positive. 
C)  Bill's statement is normative, and Bob's statement is positive. 
D)  Bill's statement is positive, and Bob's statement is normative.

Question 11

Economists presume that when making a decision,individuals consider both the current action and the future consequences of that action.

Accepted Answer

A) True 
 B)False

Question 12

An economic study concludes that an investment tax credit would increase business investment next year.This is an example of:

Accepted Answer

A)  normative analysis. 
B)  positive analysis. 
C)  negative economic analysis. 
D)  the fallacy of composition. 
A)  normative analysis. 
B)  positive analysis. 
C)  negative economic analysis. 
D)  the fallacy of composition.

Question 13

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime.Less crime will reduce the number of police officers cities will hire." This quotation:

Accepted Answer

A)  contains positive statements only. 
B)  contains normative statements only. 
C)  contains both normative and positive statements. 
D)  contains neither normative nor positive statements. 
A)  contains positive statements only. 
B)  contains normative statements only. 
C)  contains both normative and positive statements. 
D)  contains neither normative nor positive statements.

Question 14

Which of the following is a positive statement?

Accepted Answer

A)  The average high temperature in Miami, Florida in February is lower than the average high temperature in Chicago, Illinois. 
B)  An increase in cigarette smoking will lead to a decrease in the likelihood of getting lung cancer. 
C)  30 minutes of exercise three or more times per week will decrease the occurrence of heart disease. 
D)  all of the above 
A)  The average high temperature in Miami, Florida in February is lower than the average high temperature in Chicago, Illinois. 
B)  An increase in cigarette smoking will lead to a decrease in the likelihood of getting lung cancer. 
C)  30 minutes of exercise three or more times per week will decrease the occurrence of heart disease. 
D)  all of the above

Question 15

Most disagreements among economists stem from normative issues.

Accepted Answer

A) True 
 B)False

Question 16

If we choose more work we sacrifice leisure.

Accepted Answer

A) True 
 B)False

Question 17

Economics is concerned with:

Accepted Answer

A)  the choices people must make because resources are scarce. 
B)  human decision makers and the factors that influence their choices. 
C)  the allocation of limited resources to satisfy virtually unlimited desires. 
D)  all of the above. 
A)  the choices people must make because resources are scarce. 
B)  human decision makers and the factors that influence their choices. 
C)  the allocation of limited resources to satisfy virtually unlimited desires. 
D)  all of the above.

Question 18

Scarcity would cease to exist as an economic problem if:

Accepted Answer

A)  we learned to cooperate and not compete with each other. 
B)  there were new discoveries of an abundance of natural resources. 
C)  output per worker increased. 
D)  none of the above. 
A)  we learned to cooperate and not compete with each other. 
B)  there were new discoveries of an abundance of natural resources. 
C)  output per worker increased. 
D)  none of the above.

Question 19

Which of the following statements are true?

Accepted Answer

A)  Wealthy people face scarcity. 
B)  As a result of scarcity, individuals must make choices and face trade-offs. 
C)  It is impossible to satisfy unlimited human wants with limited resources. 
D)  All of the above are true statements. 
A)  Wealthy people face scarcity. 
B)  As a result of scarcity, individuals must make choices and face trade-offs. 
C)  It is impossible to satisfy unlimited human wants with limited resources. 
D)  All of the above are true statements.

Question 20

Why is prediction in social sciences like economics more difficult than in physical sciences?

Accepted Answer

The major reason for the difference is t

Exam 1: The Role and Method of Economics

What is the difference between a hypothesis and a theory?

"When one basketball team spends a large sum of money acquiring better players,it is better off.If all teams do the same thing,all of them are better off." These statements demonstrate:

When economists disagree,it is often over what type of issues?

Suppose there are two members of the U.S.Congress who were once economics professors.Why is it important to be able to distinguish their positive from their normative statements about economic policy?

Measuring the rate of inflation is primarily a concern of:

The fallacy of composition states that even if something is true for an individual,it is not necessarily true for many individuals as a group.

A good economic theory should capture as many details about real-world behavior as possible.

Why is abstraction important in developing economic theories?

Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much."

Economists presume that when making a decision,individuals consider both the current action and the future consequences of that action.

An economic study concludes that an investment tax credit would increase business investment next year.This is an example of:

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime.Less crime will reduce the number of police officers cities will hire." This quotation:

Which of the following is a positive statement?

Most disagreements among economists stem from normative issues.

If we choose more work we sacrifice leisure.

Economics is concerned with:

Scarcity would cease to exist as an economic problem if:

Which of the following statements are true?

Why is prediction in social sciences like economics more difficult than in physical sciences?

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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