Question 1

Additional police officers should be hired to combat crime if and only if

Accepted Answer

A) their salaries can be paid for out of current budgets without raising taxes. 
B) their salaries are paid for by taxes on business owners and not employees. 
C) a city's crime rate is above the national average. 
D) the opportunity costs of employing additional officers are less than the benefits from having them. 
A) their salaries can be paid for out of current budgets without raising taxes. 
B) their salaries are paid for by taxes on business owners and not employees. 
C) a city's crime rate is above the national average. 
D) the opportunity costs of employing additional officers are less than the benefits from having them.

Question 2

One reason why economists use models in carrying out economic analysis is that

Accepted Answer

A) a model accurately pictures every detail of the real world economy. 
B) a model relates to individual thought processes rather than behaviour. 
C) it is relatively easy to perfectly specify a model. 
D) models help us to understand,explain,and predict economic phenomena in the real world. 
A) a model accurately pictures every detail of the real world economy. 
B) a model relates to individual thought processes rather than behaviour. 
C) it is relatively easy to perfectly specify a model. 
D) models help us to understand,explain,and predict economic phenomena in the real world.

Question 3

Normative economic analysis

Accepted Answer

A) generates testable hypotheses. 
B) includes statements about the way someone thinks things should be. 
C) involves descriptive statements about the world. 
D) leads to empirically testable statements. 
A) generates testable hypotheses. 
B) includes statements about the way someone thinks things should be. 
C) involves descriptive statements about the world. 
D) leads to empirically testable statements.

Question 4

Sunk costs are

Accepted Answer

A) costs incurred in the past and that won't change as a result of current decisions. 
B) the same as the marginal costs of a decision. 
C) the same as the marginal benefits resulting from a decision. 
D) costs incurred in the past that will change as a result of a current decision. 
A) costs incurred in the past and that won't change as a result of current decisions. 
B) the same as the marginal costs of a decision. 
C) the same as the marginal benefits resulting from a decision. 
D) costs incurred in the past that will change as a result of a current decision.

Question 5

The y axis on a graph is

Accepted Answer

A) the vertical axis. 
B) the horizontal axis. 
C) the axis on which values of the independent variable normally are recorded. 
D) shows relationship between an independent and a dependent variable. 
A) the vertical axis. 
B) the horizontal axis. 
C) the axis on which values of the independent variable normally are recorded. 
D) shows relationship between an independent and a dependent variable.

Question 6

Macroeconomics often relies on microeconomic analysis because

Accepted Answer

A) microeconomics is older than macroeconomics. 
B) microeconomic theory can be tested and macroeconomic theory cannot. 
C) the effects of macroeconomic subjects such as inflation and unemployment are independent of individual consumers and firms. 
D) all aggregates are made up of individuals and firms. 
A) microeconomics is older than macroeconomics. 
B) microeconomic theory can be tested and macroeconomic theory cannot. 
C) the effects of macroeconomic subjects such as inflation and unemployment are independent of individual consumers and firms. 
D) all aggregates are made up of individuals and firms.

Question 7

Distinguish between scarcity and poverty.

Accepted Answer

Scarcity exists because resources are li

Question 8

Scarcity implies that people must

Accepted Answer

A) be selfish. 
B) make choices. 
C) be unhappy. 
D) not be selfish. 
A) be selfish. 
B) make choices. 
C) be unhappy. 
D) not be selfish.

Question 9

Economists who assume that wants are "unlimited" are

Accepted Answer

A) describing the real world because they have studied individual preferences and found that no matter how much people have,they always want more. 
B) making a simplifying assumption so they can consider what happens when wants are greater than can be satisfied with the resources and technology available. 
C) wrong,because in the real world,people often have all they want of things. 
D) making a normative statement about the world. 
A) describing the real world because they have studied individual preferences and found that no matter how much people have,they always want more. 
B) making a simplifying assumption so they can consider what happens when wants are greater than can be satisfied with the resources and technology available. 
C) wrong,because in the real world,people often have all they want of things. 
D) making a normative statement about the world.

Question 10

A person goes to college to become an engineer.This action is an example of an

Accepted Answer

A) investment in physical capital. 
B) investment in human capital. 
C) increase in entrepreneurship. 
D) increase in labour. 
A) investment in physical capital. 
B) investment in human capital. 
C) increase in entrepreneurship. 
D) increase in labour.

Question 11

In building economic models,economists assume people behave

Accepted Answer

A) instinctively. 
B) rationally. 
C) irrationally. 
D) greedily. 
A) instinctively. 
B) rationally. 
C) irrationally. 
D) greedily.

Question 12

Jonathan is currently working for a clothing company and earning $20 000 per year.In hopes of raising his future income he is considering quitting his job and returning to school to get his degree.He estimates that tuition and textbooks would cost $4 000/year while all other living expenses would be $8 000/year.Jonathan thus calculates his costs for the first year of college to be $12 000.Was he correct?

Accepted Answer

No.Since his living expenses would likel

Question 13

Economics is a part of the

Accepted Answer

A) social sciences. 
B) natural sciences. 
C) biological sciences. 
D) organizational sciences. 
A) social sciences. 
B) natural sciences. 
C) biological sciences. 
D) organizational sciences.

Question 14

Which of the following is a positive economic statement?

Accepted Answer

A) Economic considerations are less important than ethical issues in deciding national policy. 
B) No individual should have to live in poverty. 
C) The rate of unemployment of young people exceeds that of older workers. 
D) Unemployment is a more serious problem than inflation. 
A) Economic considerations are less important than ethical issues in deciding national policy. 
B) No individual should have to live in poverty. 
C) The rate of unemployment of young people exceeds that of older workers. 
D) Unemployment is a more serious problem than inflation.

Question 15

Ceteris paribus means

Accepted Answer

A) making all the necessary changes. 
B) let the buyer beware. 
C) other things constant. 
D) for certain parameters. 
A) making all the necessary changes. 
B) let the buyer beware. 
C) other things constant. 
D) for certain parameters.

Question 16

If competing models are offered to explain a certain economic phenomenon,the best model is the one

Accepted Answer

A) with the fewest unrealistic assumptions. 
B) that is not subject to empirical verification. 
C) that consistently predicts the most accurately. 
D) that is the newest since newer models are better than older. 
A) with the fewest unrealistic assumptions. 
B) that is not subject to empirical verification. 
C) that consistently predicts the most accurately. 
D) that is the newest since newer models are better than older.

Question 17

Which of the following statements about differences between positive and normative economics is TRUE?

Accepted Answer

A) Positive statements are concerned with what people think while normative statements are concerned with what people do. 
B) Positive statements are true while normative statements are false. 
C) Positive statements are concerned with "what is" while normative statements are concerned with what someone thinks should"be. 
D) Positive statements are concerned with "what is" while normative statements are concerned with what will be. 
A) Positive statements are concerned with what people think while normative statements are concerned with what people do. 
B) Positive statements are true while normative statements are false. 
C) Positive statements are concerned with "what is" while normative statements are concerned with what someone thinks should"be. 
D) Positive statements are concerned with "what is" while normative statements are concerned with what will be.

Question 18

According to a survey of consumer opinion,people strongly desire safer cars and say they are willing to pay substantially more for safer cars.Using this information,one auto firm adds numerous safety features to its cars,raising the price by several thousand dollars.Sales drop sharply and the firm loses money.What likely went wrong?

Accepted Answer

The automaker's model of consumer behavi

Question 19

In an economic model,assumptions

Accepted Answer

A) must be applicable to many real-world situations. 
B) must be eliminated before being used to make sure the model is realistic. 
C) are not important in determining the usefulness of the model. 
D) define the set of circumstances in which the model is likely to be applicable. 
A) must be applicable to many real-world situations. 
B) must be eliminated before being used to make sure the model is realistic. 
C) are not important in determining the usefulness of the model. 
D) define the set of circumstances in which the model is likely to be applicable.

Question 20

Which of the following is a normative statement?

Accepted Answer

A) An increase in consumer income will lead to increased sales of beef. 
B) An income tax increase will cause a greater reduction in savings than an increase in the sales tax. 
C) A decrease in the rate of unemployment will lead to upward pressure on consumer prices. 
D) An economy with high unemployment is worse than an economy with high inflation. 
A) An increase in consumer income will lead to increased sales of beef. 
B) An income tax increase will cause a greater reduction in savings than an increase in the sales tax. 
C) A decrease in the rate of unemployment will lead to upward pressure on consumer prices. 
D) An economy with high unemployment is worse than an economy with high inflation.

Additional police officers should be hired to combat crime if and only if

One reason why economists use models in carrying out economic analysis is that

Normative economic analysis

Sunk costs are

The y axis on a graph is

Macroeconomics often relies on microeconomic analysis because

Distinguish between scarcity and poverty.

Scarcity implies that people must

Economists who assume that wants are "unlimited" are

A person goes to college to become an engineer.This action is an example of an

In building economic models,economists assume people behave

Economics is a part of the

Which of the following is a positive economic statement?

Ceteris paribus means

If competing models are offered to explain a certain economic phenomenon,the best model is the one

Which of the following statements about differences between positive and normative economics is TRUE?

In an economic model,assumptions

Which of the following is a normative statement?

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 1: The Nature of Economics

Additional police officers should be hired to combat crime if and only if

One reason why economists use models in carrying out economic analysis is that

Normative economic analysis

Sunk costs are

The y axis on a graph is

Macroeconomics often relies on microeconomic analysis because

Distinguish between scarcity and poverty.

Scarcity implies that people must

Economists who assume that wants are "unlimited" are

A person goes to college to become an engineer.This action is an example of an

In building economic models,economists assume people behave

Economics is a part of the

Which of the following is a positive economic statement?

Ceteris paribus means

If competing models are offered to explain a certain economic phenomenon,the best model is the one

Which of the following statements about differences between positive and normative economics is TRUE?

In an economic model,assumptions

Which of the following is a normative statement?

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters