Question 1

The basic difference between macroeconomics and microeconomics is:

Accepted Answer

A)  microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. 
B)  microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. 
C)  microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. 
D)  microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment. 
A)  microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. 
B)  microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. 
C)  microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. 
D)  microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

Question 2

Which of the following is an example of a relationship with a negative slope?

Accepted Answer

A)  spending increases as incomes rise 
B)  more items purchased when prices drop 
C)  more items sold when quality improves 
D)  less items purchased when quality decreases 
A)  spending increases as incomes rise 
B)  more items purchased when prices drop 
C)  more items sold when quality improves 
D)  less items purchased when quality decreases

Question 3

When economists use the term "ceteris paribus," they mean that:

Accepted Answer

A)  the causal relationship between two economic variables cannot be determined. 
B)  the analysis is true for the individual but not for the economy as a whole. 
C)  all other variables except the ones specified are assumed to be constant. 
D)  their conclusions are based on normative rather than positive economic analysis. 
A)  the causal relationship between two economic variables cannot be determined. 
B)  the analysis is true for the individual but not for the economy as a whole. 
C)  all other variables except the ones specified are assumed to be constant. 
D)  their conclusions are based on normative rather than positive economic analysis.

Question 4

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Accepted Answer

A) True 
 B)False

Question 5

Microeconomic topics do not usually include:

Accepted Answer

A)  how wages are determined in the labor market. 
B)  the magnitude of national income. 
C)  how firms choose output to maximize profits. 
D)  how consumers maximize utility subject to a budget constraint. 
A)  how wages are determined in the labor market. 
B)  the magnitude of national income. 
C)  how firms choose output to maximize profits. 
D)  how consumers maximize utility subject to a budget constraint.

Question 6

Which of the following graphs or charts must add up to one hundred percent?

Accepted Answer

A)  a labor graph 
B)  a pie chart 
C)  a time-series graph 
D)  a scatter diagram 
A)  a labor graph 
B)  a pie chart 
C)  a time-series graph 
D)  a scatter diagram

Question 7

Scarcity is:

Accepted Answer

A)  only a problem in modern industrialized economies. 
B)  only a problem in impoverished economies. 
C)  only a problem in centrally planned economies. 
D)  a problem that necessitates making choices and tradeoffs. 
A)  only a problem in modern industrialized economies. 
B)  only a problem in impoverished economies. 
C)  only a problem in centrally planned economies. 
D)  a problem that necessitates making choices and tradeoffs.

Question 8

Economics is the study of choices we make among our many wants and desires.

Accepted Answer

A) True 
 B)False

Question 9

Graphs are useful because of the way they:

Accepted Answer

A)  facilitate interpretation and analysis of data. 
B)  clarify interpretation and analysis of ideas. 
C)  permit a person to more easily see relationships. 
D)  do all of the above. 
A)  facilitate interpretation and analysis of data. 
B)  clarify interpretation and analysis of ideas. 
C)  permit a person to more easily see relationships. 
D)  do all of the above.

Question 10

Exhibit 1-1   Exhibit 1-1 demonstrates that:

Accepted Answer

A)  price and quantity purchased are positively related. 
B)  there is an inverse relationship between price and quantity purchased. 
C)  as the price increases, the quantity purchased increases. 
D)  price and quantity purchased share a direct relationship. 
A)  price and quantity purchased are positively related. 
B)  there is an inverse relationship between price and quantity purchased. 
C)  as the price increases, the quantity purchased increases. 
D)  price and quantity purchased share a direct relationship.

Question 11

Identify the error in judgment in each of the following statements:
I."If you leave a concert during the encore,you will avoid traffic and get home more rapidly; therefore everyone should leave during the encore."
II."Whenever I wear my lucky baseball cap to an exam,I receive an "A." My baseball cap must induce the teacher to give me good grades."

Accepted Answer

Statement I is an example of t

Question 12

Economics:

Accepted Answer

A)  is a natural science like biology and chemistry. 
B)  is a science built on survey data and declared preferences (what people say they are going to do) not on revealed preferences (how people actually behave). 
C)  is a science concerned with reaching generalizations about human behavior, not unlike sociology or psychology. 
D)  is concerned with predicting business conditions in the future, not with the current state of the stock market. 
A)  is a natural science like biology and chemistry. 
B)  is a science built on survey data and declared preferences (what people say they are going to do) not on revealed preferences (how people actually behave). 
C)  is a science concerned with reaching generalizations about human behavior, not unlike sociology or psychology. 
D)  is concerned with predicting business conditions in the future, not with the current state of the stock market.

Question 13

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a normative statement?

Accepted Answer

A)  An increase in taxes will cause higher unemployment. 
B)  An increase in tariffs will increase the domestic prices paid by consumers. 
C)  Income should be redistributed from the top 2% of wage earners to the lower income brackets. 
D)  Running government budget deficits leads to higher market interest rates. 
A)  An increase in taxes will cause higher unemployment. 
B)  An increase in tariffs will increase the domestic prices paid by consumers. 
C)  Income should be redistributed from the top 2% of wage earners to the lower income brackets. 
D)  Running government budget deficits leads to higher market interest rates.

Question 15

The basic difference between macroeconomics and microeconomics is that:

Accepted Answer

A)  microeconomics looks at aggregate markets while macroeconomics is concerned with individual markets. 
B)  macroeconomics is concerned with policy decisions while microeconomics applies only to theory. 
C)  microeconomics is concerned with individual markets while macroeconomics is concerned with aggregate markets. 
D)  macroeconomics is concerned with positive economics while microeconomics is concerned with normative economics. 
A)  microeconomics looks at aggregate markets while macroeconomics is concerned with individual markets. 
B)  macroeconomics is concerned with policy decisions while microeconomics applies only to theory. 
C)  microeconomics is concerned with individual markets while macroeconomics is concerned with aggregate markets. 
D)  macroeconomics is concerned with positive economics while microeconomics is concerned with normative economics.

Question 16

Which of the following best illustrates the fallacy of composition?

Accepted Answer

A)  If I have more money, I will be better off; therefore if we all had more money, we all would be better off. 
B)  If I buy more gas each week, my gas consumption increases; therefore, if all gas consumers buy more gas each week, total gas consumption will increase. 
C)  If I spend more time studying, I will learn more; therefore, if all students spend more time studying, they will learn more. 
D)  If women's hemlines are higher this year, the Dow Jones Industrials average will fall. 
A)  If I have more money, I will be better off; therefore if we all had more money, we all would be better off. 
B)  If I buy more gas each week, my gas consumption increases; therefore, if all gas consumers buy more gas each week, total gas consumption will increase. 
C)  If I spend more time studying, I will learn more; therefore, if all students spend more time studying, they will learn more. 
D)  If women's hemlines are higher this year, the Dow Jones Industrials average will fall.

Question 17

In economic terms,religious and spiritual services are treated as:

Accepted Answer

A)  goods that people desire. 
B)  resources or inputs. 
C)  marginal benefits. 
D)  priceless commodities. 
A)  goods that people desire. 
B)  resources or inputs. 
C)  marginal benefits. 
D)  priceless commodities.

Question 18

Which of the following is most likely an example of correlation but not an example of causation?

Accepted Answer

A)  In the U.S., more pizza is consumed on Super Bowl Sunday than any other day of the year. consumed 
B)  The cost of advertising during the first half of the Super Bowl is greater than the cost of advertising in the second half. 
C)  Each time I eat a chili dog and drink a beer before a game, my teams wins. 
D)  Generally speaking winning football team tend to average more rushing yards than losing football teams. 
A)  In the U.S., more pizza is consumed on Super Bowl Sunday than any other day of the year. consumed 
B)  The cost of advertising during the first half of the Super Bowl is greater than the cost of advertising in the second half. 
C)  Each time I eat a chili dog and drink a beer before a game, my teams wins. 
D)  Generally speaking winning football team tend to average more rushing yards than losing football teams.

Question 19

Which of the following is a positive statement?

Accepted Answer

A)  Increased money supply growth will lead to a higher rate of inflation. 
B)  There are more millionaires in Uganda than in the United States. 
C)  People watch more TV during finals week than during the rest of the term. 
D)  All of the above are positive statements. 
A)  Increased money supply growth will lead to a higher rate of inflation. 
B)  There are more millionaires in Uganda than in the United States. 
C)  People watch more TV during finals week than during the rest of the term. 
D)  All of the above are positive statements.

Question 20

Scarcity forces us to choose,and choices are costly because we must give up other opportunities that we value

Accepted Answer

A) True 
 B)False

Exam 1: The Role and Method of Economics

The basic difference between macroeconomics and microeconomics is:

Which of the following is an example of a relationship with a negative slope?

When economists use the term "ceteris paribus," they mean that:

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Microeconomic topics do not usually include:

Which of the following graphs or charts must add up to one hundred percent?

Scarcity is:

Economics is the study of choices we make among our many wants and desires.

Graphs are useful because of the way they:

Exhibit 1-1 Exhibit 1-1 demonstrates that:

Economics:

Microeconomics explores the allocation of scarce resources from the perspective of small economic units such as consumers and firms.

Which of the following is a normative statement?

The basic difference between macroeconomics and microeconomics is that:

Which of the following best illustrates the fallacy of composition?

In economic terms,religious and spiritual services are treated as:

Which of the following is most likely an example of correlation but not an example of causation?

Which of the following is a positive statement?

Scarcity forces us to choose,and choices are costly because we must give up other opportunities that we value

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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