Question 1

Understanding economics would be helpful to which of the following individuals?

Accepted Answer

A)  a college student planning her next semester courses 
B)  a fashion designer selecting fabric for a new spring collection 
C)  a restaurant owner deciding whether to expand his establishment's hours of operation 
D)  All of the above 
A)  a college student planning her next semester courses 
B)  a fashion designer selecting fabric for a new spring collection 
C)  a restaurant owner deciding whether to expand his establishment's hours of operation 
D)  All of the above

Question 2

Which of the following statements most likely lies within the realm of macroeconomics?

Accepted Answer

A)  An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. 
B)  Due to process innovations in computer chip manufacturing, the market supply of computers increased. 
C)  Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. 
D)  Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook. 
A)  An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. 
B)  Due to process innovations in computer chip manufacturing, the market supply of computers increased. 
C)  Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. 
D)  Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.

Question 3

"Ceteris paribus" means:

Accepted Answer

A)  if events A and B occur together, one must cause the other. 
B)  all relevant details are included. 
C)  what is true for the individual must be true for the whole. 
D)  holding other things constant. 
A)  if events A and B occur together, one must cause the other. 
B)  all relevant details are included. 
C)  what is true for the individual must be true for the whole. 
D)  holding other things constant.

Question 4

Economists use the term "ceteris paribus" to indicate that:

Accepted Answer

A)  the analysis is true for the individual but not for the economy as a whole. 
B)  supply and demand are in balance. 
C)  their conclusions are based on normative rather than positive economic analysis. 
D)  other things are assumed to remain constant. 
A)  the analysis is true for the individual but not for the economy as a whole. 
B)  supply and demand are in balance. 
C)  their conclusions are based on normative rather than positive economic analysis. 
D)  other things are assumed to remain constant.

Question 5

Economics is different from a "hard" science like physics because:

Accepted Answer

A)  economists abstract from reality in creating their theories. 
B)  economics is easier to study than physics. 
C)  economists must explain their theories to policy makers who lack formal mathematical training. 
D)  economists cannot easily control all the variables that might influence human behavior. 
A)  economists abstract from reality in creating their theories. 
B)  economics is easier to study than physics. 
C)  economists must explain their theories to policy makers who lack formal mathematical training. 
D)  economists cannot easily control all the variables that might influence human behavior.

Question 6

To an economist,individuals are acting "rationally" if they are striving to do their best to achieve their goals.

Accepted Answer

A) True 
 B)False

Question 7

The central question in economics is how to:

Accepted Answer

A)  regulate the supply of money. 
B)  make the best use of scarce resources to satisfy our unlimited wants. 
C)  reduce the wants of individuals, businesses and government. 
D)  find more resources to satisfy everyone's wants. 
A)  regulate the supply of money. 
B)  make the best use of scarce resources to satisfy our unlimited wants. 
C)  reduce the wants of individuals, businesses and government. 
D)  find more resources to satisfy everyone's wants.

Question 8

Economists use theories to:

Accepted Answer

A)  abstract from the complexities of the world. 
B)  understand economic behavior. 
C)  explain and help predict human behavior. 
D)  do all of the above. 
A)  abstract from the complexities of the world. 
B)  understand economic behavior. 
C)  explain and help predict human behavior. 
D)  do all of the above.

Question 9

Which of the following is false?

Accepted Answer

A)  A positive statement must be testable but need not be true. 
B)  A hypothesis is a normative statement. 
C)  Normative analysis involves subjective, non-testable statements. 
D)  The majority of disagreements in economics stem from normative issues. 
A)  A positive statement must be testable but need not be true. 
B)  A hypothesis is a normative statement. 
C)  Normative analysis involves subjective, non-testable statements. 
D)  The majority of disagreements in economics stem from normative issues.

Question 10

Microeconomics:

Accepted Answer

A)  provides an overall view of the economy and how it functions. 
B)  explores the behavior of individual consumers and firms when confronted with scarcity. 
C)  examines the aggregate behavior of consumers and firms when confronted with scarcity. 
D)  is a "positive" science, whereas macroeconomics is a "normative" science. 
A)  provides an overall view of the economy and how it functions. 
B)  explores the behavior of individual consumers and firms when confronted with scarcity. 
C)  examines the aggregate behavior of consumers and firms when confronted with scarcity. 
D)  is a "positive" science, whereas macroeconomics is a "normative" science.

Question 11

When people make choices they typically know with certainty which choice is best.

Accepted Answer

A) True 
 B)False

Question 12

By the study of "scarcity," an economist means how we best utilize our:

Accepted Answer

A)  limited resources in order to promote full employment and price stability. 
B)  unlimited desires in order to best use our unlimited resources. 
C)  unlimited resources to best satisfy our unlimited desires. 
D)  limited resources in order to best satisfy our unlimited desires. 
A)  limited resources in order to promote full employment and price stability. 
B)  unlimited desires in order to best use our unlimited resources. 
C)  unlimited resources to best satisfy our unlimited desires. 
D)  limited resources in order to best satisfy our unlimited desires.

Question 13

"If the price of wine increases,the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Accepted Answer

Since it is a testable proposi

Question 14

Most students expect that if they spend more time studying,the outcome will be improved grades in the course.This supposes that:

Accepted Answer

A)  a positive relationship exists between studying and grades. 
B)  a negative relationship exists between studying and grades. 
C)  grades are independent variables. 
D)  grades are not dependent variables. 
A)  a positive relationship exists between studying and grades. 
B)  a negative relationship exists between studying and grades. 
C)  grades are independent variables. 
D)  grades are not dependent variables.

Question 15

The best test of an economic theory is:

Accepted Answer

A)  the rigor of its mathematical formulation. 
B)  its ability to explain and predict. 
C)  the accuracy of its assumptions. 
D)  the level of real-world detail it captures. 
A)  the rigor of its mathematical formulation. 
B)  its ability to explain and predict. 
C)  the accuracy of its assumptions. 
D)  the level of real-world detail it captures.

Question 16

Economists need to develop abstractions in order to:

Accepted Answer

A)  avoid analyzing real-world economic interactions, which are too complicated to understand. 
B)  distinguish normative economic behavior from positive economic behavior. 
C)  avoid committing the fallacy of composition. 
D)  understand and explain economic behavior. 
A)  avoid analyzing real-world economic interactions, which are too complicated to understand. 
B)  distinguish normative economic behavior from positive economic behavior. 
C)  avoid committing the fallacy of composition. 
D)  understand and explain economic behavior.

Question 17

Which of the following best illustrates the fallacy of composition?

Accepted Answer

A)  If I stand up at a baseball game I will be able to see the game better; if all fans stood up at a baseball game they would all be able to see the game better. 
B)  If I wore a jacket to a baseball game in October, I would be warmer; if all fans wore jackets they would all be warmer. 
C)  If I purchase fewer concessions at a baseball game, I will save money; if all fans purchase fewer concessions then all can save money. 
D)  If I yell more during a baseball game it will be louder if all fans yell more during the game it will be much louder. 
A)  If I stand up at a baseball game I will be able to see the game better; if all fans stood up at a baseball game they would all be able to see the game better. 
B)  If I wore a jacket to a baseball game in October, I would be warmer; if all fans wore jackets they would all be warmer. 
C)  If I purchase fewer concessions at a baseball game, I will save money; if all fans purchase fewer concessions then all can save money. 
D)  If I yell more during a baseball game it will be louder if all fans yell more during the game it will be much louder.

Question 18

To be a positive economic statement,an assertion must be true.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following are likely to be studied in a microeconomics course?

Accepted Answer

A)  choices made by individual consumers 
B)  the causes of inflation 
C)  how the economy's total output is measured 
D)  how an increase in government spending affects the level of unemployment 
A)  choices made by individual consumers 
B)  the causes of inflation 
C)  how the economy's total output is measured 
D)  how an increase in government spending affects the level of unemployment

Question 20

Which of the following statements is most accurate?

Accepted Answer

A)  If something is rare it is also has to be scarce. 
B)  Scarcity can and will be eliminated in the short run. 
C)  Scarcity can and will be eliminated in the long run. 
D)  Scarcity cannot be eliminated in any time frame. 
A)  If something is rare it is also has to be scarce. 
B)  Scarcity can and will be eliminated in the short run. 
C)  Scarcity can and will be eliminated in the long run. 
D)  Scarcity cannot be eliminated in any time frame.

Exam 1: The Role and Method of Economics

Understanding economics would be helpful to which of the following individuals?

Which of the following statements most likely lies within the realm of macroeconomics?

"Ceteris paribus" means:

Economists use the term "ceteris paribus" to indicate that:

Economics is different from a "hard" science like physics because:

To an economist,individuals are acting "rationally" if they are striving to do their best to achieve their goals.

The central question in economics is how to:

Economists use theories to:

Which of the following is false?

Microeconomics:

When people make choices they typically know with certainty which choice is best.

By the study of "scarcity," an economist means how we best utilize our:

"If the price of wine increases,the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

Most students expect that if they spend more time studying,the outcome will be improved grades in the course.This supposes that:

The best test of an economic theory is:

Economists need to develop abstractions in order to:

Which of the following best illustrates the fallacy of composition?

To be a positive economic statement,an assertion must be true.

Which of the following are likely to be studied in a microeconomics course?

Which of the following statements is most accurate?

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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