Question 1

Land resource includes farming land, forestry and fishery but does not include the atmosphere, the sun, the moon and other planets.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a statement of positive economics?

Accepted Answer

A)  Government should spend more on education. 
B)  Creating jobs is the most serious problem facing the Australian economy. 
C)  Raising taxes provides additional revenue to finance health care. 
D)  If taxes are over 50 per cent of national income, job creation falls. 
A)  Government should spend more on education. 
B)  Creating jobs is the most serious problem facing the Australian economy. 
C)  Raising taxes provides additional revenue to finance health care. 
D)  If taxes are over 50 per cent of national income, job creation falls.

Question 3

A positive economic statement does not have to be verifiable.

Accepted Answer

A) True 
 B)False

Question 4

To abstract from reality in an economic model means that:

Accepted Answer

A)  only essential aspects of reality are included. 
B)  the economic study surveys only a very limited period of time. 
C)  we include only those elements which do not support our hypothesis. 
D)  the model includes some non-important aspect of the real world. 
A)  only essential aspects of reality are included. 
B)  the economic study surveys only a very limited period of time. 
C)  we include only those elements which do not support our hypothesis. 
D)  the model includes some non-important aspect of the real world.

Question 5

An economics textbook is an example of:

Accepted Answer

A)  capital. 
B)  labour. 
C)  a natural resource. 
D)  entrepreneurship. 
A)  capital. 
B)  labour. 
C)  a natural resource. 
D)  entrepreneurship.

Question 6

Scarcity is a problem:

Accepted Answer

A)  that only poor people face. 
B)  because human wants are limited while resources are unlimited. 
C)  because human wants are unlimited while resources are limited. 
D)  only in third world countries. 
A)  that only poor people face. 
B)  because human wants are limited while resources are unlimited. 
C)  because human wants are unlimited while resources are limited. 
D)  only in third world countries.

Question 7

The statement: 'John buys more of good X as his income increases, ceteris paribus', means:

Accepted Answer

A)  John's income is being held constant. 
B)  John's purchases of good X are being held constant. 
C)  John's income and purchases of this good are being held constant. 
D)  John's income is the only influence that is being allowed to change. 
A)  John's income is being held constant. 
B)  John's purchases of good X are being held constant. 
C)  John's income and purchases of this good are being held constant. 
D)  John's income is the only influence that is being allowed to change.

Question 8

Ceteris paribus means:

Accepted Answer

A)  allowing everything else changing. 
B)  one-to-one cause-and-effect relationships. 
C)  holding one variable constant. 
D)  in the absence of other influences. 
A)  allowing everything else changing. 
B)  one-to-one cause-and-effect relationships. 
C)  holding one variable constant. 
D)  in the absence of other influences.

Question 9

Labour resources:

Accepted Answer

A)  include only physical activities. 
B)  are only counted as a resource if used in the production of other resources. 
C)  include only skilled labour. 
D)  include both mental and physical human capacities of workers to produce goods
And services. 
E)  include human effort involved in the production of goods but not services. 
A)  include only physical activities. 
B)  are only counted as a resource if used in the production of other resources. 
C)  include only skilled labour. 
D)  include both mental and physical human capacities of workers to produce goods
And services. 
E)  include human effort involved in the production of goods but not services.

Question 10

The three basic categories of resources are land, labour and:

Accepted Answer

A)  money. 
B)  time. 
C)  energy. 
D)  capital. 
A)  money. 
B)  time. 
C)  energy. 
D)  capital.

Question 11

Economists believe that scarcity forces everyone to:

Accepted Answer

A)  satisfy all their wants. 
B)  abandon consumer sovereignty. 
C)  make choices. 
D)  create unlimited resources. 
E)  not reveal their wants. 
A)  satisfy all their wants. 
B)  abandon consumer sovereignty. 
C)  make choices. 
D)  create unlimited resources. 
E)  not reveal their wants.

Question 12

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has:

Accepted Answer

A)  confused association and causation. 
B)  understood the economy very well. 
C)  used normative economics to answer a positive question. 
D)  built an untestable model. 
A)  confused association and causation. 
B)  understood the economy very well. 
C)  used normative economics to answer a positive question. 
D)  built an untestable model.

Question 13

Which of the following goods is not a capital good?

Accepted Answer

A)  An arrow. 
B)  A computer. 
C)  Money. 
D)  A car. 
A)  An arrow. 
B)  A computer. 
C)  Money. 
D)  A car.

Question 14

Economists:

Accepted Answer

A)  always disagree over policy, predictions and applications. 
B)  generally agree on theoretical fundamentals. 
C)  never agree on predictions and theoretical fundamentals. 
D)  always agree on personal values. 
A)  always disagree over policy, predictions and applications. 
B)  generally agree on theoretical fundamentals. 
C)  never agree on predictions and theoretical fundamentals. 
D)  always agree on personal values.

Question 15

Scarcity means that it is impossible to satisfy every desire.

Accepted Answer

A) True 
 B)False

Question 16

A model is defined as a:

Accepted Answer

A)  description of all variables affecting a situation. 
B)  positive analysis of all variables affecting an event. 
C)  simplified description of reality to understand and predict an economic event. 
D)  prediction based on historical evidence. 
A)  description of all variables affecting a situation. 
B)  positive analysis of all variables affecting an event. 
C)  simplified description of reality to understand and predict an economic event. 
D)  prediction based on historical evidence.

Question 17

If the price of textbooks rises and then students purchase fewer of them, then an economic model can show a cause-and-effect relationship only if which of the following conditions hold?

Accepted Answer

A)  Students' incomes fall. 
B)  Tuition decreases. 
C)  The number of students increases. 
D)  Everything else is constant. 
A)  Students' incomes fall. 
B)  Tuition decreases. 
C)  The number of students increases. 
D)  Everything else is constant.

Question 18

Select the normative statement that completes the following sentence: 'If the minimum wage is raised:

Accepted Answer

A)  cost per unit of output will rise'. 
B)  workers will gain their rightful share of total income'. 
C)  the rate of inflation will increase'. 
D)  profits will fall'. 
A)  cost per unit of output will rise'. 
B)  workers will gain their rightful share of total income'. 
C)  the rate of inflation will increase'. 
D)  profits will fall'.

Question 19

The first step is to define the problem, then to develop a model and finally collect data and test the model.

Accepted Answer

A) True 
 B)False

Question 20

The creative ability of individuals to combine and direct resources to produce new products is known as:

Accepted Answer

A)  economising. 
B)  entrepreneurship. 
C)  value judgement. 
D)  product sensitivity. 
A)  economising. 
B)  entrepreneurship. 
C)  value judgement. 
D)  product sensitivity.

Land resource includes farming land, forestry and fishery but does not include the atmosphere, the sun, the moon and other planets.

Which of the following is a statement of positive economics?

A positive economic statement does not have to be verifiable.

To abstract from reality in an economic model means that:

An economics textbook is an example of:

Scarcity is a problem:

The statement: 'John buys more of good X as his income increases, ceteris paribus', means:

Ceteris paribus means:

Labour resources:

The three basic categories of resources are land, labour and:

Economists believe that scarcity forces everyone to:

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has:

Which of the following goods is not a capital good?

Economists:

Scarcity means that it is impossible to satisfy every desire.

A model is defined as a:

If the price of textbooks rises and then students purchase fewer of them, then an economic model can show a cause-and-effect relationship only if which of the following conditions hold?

Select the normative statement that completes the following sentence: 'If the minimum wage is raised:

The first step is to define the problem, then to develop a model and finally collect data and test the model.

The creative ability of individuals to combine and direct resources to produce new products is known as:

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 1: Thinking Like an Economist

Land resource includes farming land, forestry and fishery but does not include the atmosphere, the sun, the moon and other planets.

Which of the following is a statement of positive economics?

A positive economic statement does not have to be verifiable.

To abstract from reality in an economic model means that:

An economics textbook is an example of:

Scarcity is a problem:

The statement: 'John buys more of good X as his income increases, ceteris paribus', means:

Ceteris paribus means:

Labour resources:

The three basic categories of resources are land, labour and:

Economists believe that scarcity forces everyone to:

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has:

Which of the following goods is not a capital good?

Economists:

Scarcity means that it is impossible to satisfy every desire.

A model is defined as a:

If the price of textbooks rises and then students purchase fewer of them, then an economic model can show a cause-and-effect relationship only if which of the following conditions hold?

Select the normative statement that completes the following sentence: 'If the minimum wage is raised:

The first step is to define the problem, then to develop a model and finally collect data and test the model.

The creative ability of individuals to combine and direct resources to produce new products is known as:

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters