Question 1

"Employment fell last month to its lowest level in the last six years" is an example of:

Accepted Answer

A)  the fallacy of composition. 
B)  positive economics. 
C)  normative economics. 
D)  none of the above 
A)  the fallacy of composition. 
B)  positive economics. 
C)  normative economics. 
D)  none of the above

Question 2

The branch of economics that studies the aggregate decisions of all households and all firms is called:

Accepted Answer

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

Question 3

Macroeconomic topics do not generally include:

Accepted Answer

A)  inflation. 
B)  aggregate demand. 
C)  government spending and taxation. 
D)  the production decisions of individual firms. 
A)  inflation. 
B)  aggregate demand. 
C)  government spending and taxation. 
D)  the production decisions of individual firms.

Question 4

Economists believe that most people's actions are rational and purposeful not random and chaotic.

Accepted Answer

A) True 
 B)False

Question 5

Economics is primarily concerned with the study of:

Accepted Answer

A)  problems such as poverty and unemployment. 
B)  limited desires pursuing unlimited resources. 
C)  production and distribution of goods in a world of unlimited resources. 
D)  production and distribution of goods in a world of limited resources. 
A)  problems such as poverty and unemployment. 
B)  limited desires pursuing unlimited resources. 
C)  production and distribution of goods in a world of unlimited resources. 
D)  production and distribution of goods in a world of limited resources.

Question 6

Why are graphs such an important tool in economics?

Accepted Answer

Graphs allow us to express a s

Question 7

Which of the following is most likely a topic of discussion in a microeconomics course?

Accepted Answer

A)  a decrease in the share of national income paid to the government in taxes 
B)  an increase in the price of lumber used to construct houses 
C)  an increase in the rate of inflation 
D)  an increase in the number of jobless individuals filing unemployment claims 
A)  a decrease in the share of national income paid to the government in taxes 
B)  an increase in the price of lumber used to construct houses 
C)  an increase in the rate of inflation 
D)  an increase in the number of jobless individuals filing unemployment claims

Question 8

The branch of economics that focuses on outcomes in highly aggregated markets,such as the markets for labor or consumption goods,is called:

Accepted Answer

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

Question 9

The branch of economics that studies the economy as a whole is:

Accepted Answer

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

Question 10

When President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said,"On the one hand...and on the other hand..." he recognized that the advice of economists is often equivocal.Why is their advice often equivocal?

Accepted Answer

A)  Economists cannot make up their minds on policy matters. 
B)  Economists always disagree with each other on policy issues. 
C)  Economists are aware that tradeoffs are involved in most policy questions. 
D)  Economists are often unable to identify the critical questions involved in policy issues. 
A)  Economists cannot make up their minds on policy matters. 
B)  Economists always disagree with each other on policy issues. 
C)  Economists are aware that tradeoffs are involved in most policy questions. 
D)  Economists are often unable to identify the critical questions involved in policy issues.

Question 11

Economists assume that most individuals act as if they are motivated by self-interest and respond in predictable ways to changing circumstances.

Accepted Answer

A) True 
 B)False

Question 12

Fundamentally,economics is concerned with:

Accepted Answer

A)  how scarce resources are allocated to satisfy limited wants. 
B)  how limited resources are allocated to satisfy scarce wants. 
C)  how limited resources are allocated to satisfy unlimited wants. 
D)  how limited wants can be used to satisfy limited resources. 
A)  how scarce resources are allocated to satisfy limited wants. 
B)  how limited resources are allocated to satisfy scarce wants. 
C)  how limited resources are allocated to satisfy unlimited wants. 
D)  how limited wants can be used to satisfy limited resources.

Question 13

Which of the following represents a normative statement?

Accepted Answer

A)  A decrease in price leads to an increase in quantity demanded. 
B)  The study of economics is more important than the study of history. 
C)  People will buy less butter at $1.50 per pound then they will at $1.00 per pound. 
D)  As an economy develops, the nation's birth rate tends to fall. 
A)  A decrease in price leads to an increase in quantity demanded. 
B)  The study of economics is more important than the study of history. 
C)  People will buy less butter at $1.50 per pound then they will at $1.00 per pound. 
D)  As an economy develops, the nation's birth rate tends to fall.

Question 14

Economics is primarily the study of:

Accepted Answer

A)  how choices are made because of scarcity. 
B)  corporate balance sheets and income statements. 
C)  how to operate a business. 
D)  how to make money in the stock market. 
A)  how choices are made because of scarcity. 
B)  corporate balance sheets and income statements. 
C)  how to operate a business. 
D)  how to make money in the stock market.

Question 15

Why would economists disagree over positive analysis?

Accepted Answer

Economists might disagree over

Question 16

Difficulty in prediction social sciences is the result of analyzing ____ but can be overcome by focusing on ____ groups.

Accepted Answer

A)  experiments; small groups 
B)  experiments; large groups 
C)  human behavior; small groups 
D)  human behavior; large groups 
A)  experiments; small groups 
B)  experiments; large groups 
C)  human behavior; small groups 
D)  human behavior; large groups

Question 17

Which of the following lies primarily within the realm of microeconomics?

Accepted Answer

A)  an empirical analysis of the relationship between the growth of the money supply and the rate of inflation 
B)  an economic model forecasting the impact of a tax increase on consumer spending and national output 
C)  a study of supply and demand conditions in the market for orange juice 
D)  a model forecasting the impact of a change in interest rates on the level of investment in the economy 
A)  an empirical analysis of the relationship between the growth of the money supply and the rate of inflation 
B)  an economic model forecasting the impact of a tax increase on consumer spending and national output 
C)  a study of supply and demand conditions in the market for orange juice 
D)  a model forecasting the impact of a change in interest rates on the level of investment in the economy

Question 18

The ceteris paribus assumption is used in economic analyses in order to:

Accepted Answer

A)  cover special cases. 
B)  include all relevant factors. 
C)  add realism. 
D)  simplify the analysis of a complex world. 
A)  cover special cases. 
B)  include all relevant factors. 
C)  add realism. 
D)  simplify the analysis of a complex world.

Question 19

What is the difference between dependent and independent variables?

Accepted Answer

A variable is a quantity that can take o

Question 20

Explain why economists believe that an individual who commits a crime does so acting in his/her own self-interest.

Accepted Answer

It is expected that the indivi

Exam 1: The Role and Method of Economics

"Employment fell last month to its lowest level in the last six years" is an example of:

The branch of economics that studies the aggregate decisions of all households and all firms is called:

Macroeconomic topics do not generally include:

Economists believe that most people's actions are rational and purposeful not random and chaotic.

Economics is primarily concerned with the study of:

Why are graphs such an important tool in economics?

Which of the following is most likely a topic of discussion in a microeconomics course?

The branch of economics that focuses on outcomes in highly aggregated markets,such as the markets for labor or consumption goods,is called:

The branch of economics that studies the economy as a whole is:

When President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said,"On the one hand...and on the other hand..." he recognized that the advice of economists is often equivocal.Why is their advice often equivocal?

Economists assume that most individuals act as if they are motivated by self-interest and respond in predictable ways to changing circumstances.

Fundamentally,economics is concerned with:

Which of the following represents a normative statement?

Economics is primarily the study of:

Why would economists disagree over positive analysis?

Difficulty in prediction social sciences is the result of analyzing ____ but can be overcome by focusing on ____ groups.

Which of the following lies primarily within the realm of microeconomics?

The ceteris paribus assumption is used in economic analyses in order to:

What is the difference between dependent and independent variables?

Explain why economists believe that an individual who commits a crime does so acting in his/her own self-interest.

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

Filters

Difficulty in prediction social sciences is the result of analyzing but can be overcome by focusing on groups.