Question 1

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. A

Question 2

When economists assume that people act rationally, it means they:

Accepted Answer

A) make decisions based on complete and accurate information. 
B) make decisions that will not be regretted later on. 
C) make decisions based on what they believe is best for themselves using available information. 
D) make decisions based solely on what is best for society. 
E) commit no errors in judgment. 
A) make decisions based on complete and accurate information. 
B) make decisions that will not be regretted later on. 
C) make decisions based on what they believe is best for themselves using available information. 
D) make decisions based solely on what is best for society. 
E) commit no errors in judgment. C

Question 3

Which of the following best illustrates the fallacy of composition?

Accepted Answer

A) If the price of a product rises, the quantity supplied will decline. 
B) The average wage rate tends to increase at approximately the same rate as inflation; hence, wage increases must cause inflation. 
C) Resources are scarce; therefore, there is no such thing as a free lunch. 
D) If I talk loudly at a party, I have a better chance of being heard by my listeners. If everyone at the party talks loudly, everyone can be heard more clearly. 
A) If the price of a product rises, the quantity supplied will decline. 
B) The average wage rate tends to increase at approximately the same rate as inflation; hence, wage increases must cause inflation. 
C) Resources are scarce; therefore, there is no such thing as a free lunch. 
D) If I talk loudly at a party, I have a better chance of being heard by my listeners. If everyone at the party talks loudly, everyone can be heard more clearly. D

Question 4

Market failure occurs when:

Accepted Answer

A) the stock markets tumble due to heavy selling. 
B) the economy fails to allocate resources efficiently on its own. 
C) demand shows signs of slowing down. 
D) a country cannot produce a good or service at a lower opportunity cost than others. 
A) the stock markets tumble due to heavy selling. 
B) the economy fails to allocate resources efficiently on its own. 
C) demand shows signs of slowing down. 
D) a country cannot produce a good or service at a lower opportunity cost than others.

Question 5

A market economy depends on market mechanisms to:

Accepted Answer

A) determine the most efficient way of using resources. 
B) determine how large the government's budget deficit should be. 
C) decide how much government regulation there should be. 
D) provide everyone with a minimum level of income. 
E) do all of the outcomes listed. 
A) determine the most efficient way of using resources. 
B) determine how large the government's budget deficit should be. 
C) decide how much government regulation there should be. 
D) provide everyone with a minimum level of income. 
E) do all of the outcomes listed.

Question 6

An economic hypothesis is tested:

Accepted Answer

A) by assessing the realism of its assumptions. 
B) by comparing the hypothesis's predictions to real-world data. 
C) most frequently by using a controlled experiment. 
D) by assessing the level of descriptive detail. 
E) by none of the above. Economic hypotheses are theoretical and therefore cannot be tested. 
A) by assessing the realism of its assumptions. 
B) by comparing the hypothesis's predictions to real-world data. 
C) most frequently by using a controlled experiment. 
D) by assessing the level of descriptive detail. 
E) by none of the above. Economic hypotheses are theoretical and therefore cannot be tested.

Question 7

In markets, information about the relative value of resources is communicated through:

Accepted Answer

A) government agencies. 
B) planning committees. 
C) prices. 
D) unions. 
E) cartels. 
A) government agencies. 
B) planning committees. 
C) prices. 
D) unions. 
E) cartels.

Question 8

Which of the following is true?

Accepted Answer

A) Positive analysis involves what is or what is likely to happen. 
B) Normative analysis involves judgments about what should or ought to be the case. 
C) Both statements about positive and normative analysis are true. 
D) Neither statement about positive and normative analysis is. 
A) Positive analysis involves what is or what is likely to happen. 
B) Normative analysis involves judgments about what should or ought to be the case. 
C) Both statements about positive and normative analysis are true. 
D) Neither statement about positive and normative analysis is.

Question 9

If U.S.consumers bought more gasoline in 2008 (when prices averaged $3.22 per gallon) than they did in 1970 (when prices averaged $0.30 per gallon), does that mean that people buy more gasoline at higher prices?

Accepted Answer

A) No, because 1970 prices are ancient history compared to 2001 prices. 
B) No, because there is too little information provided about inflation, consumer income and other variables to make an appropriate comparison. 
C) Yes, because gas is a necessity that is in short supply. Consumers are always willing to buy more gasoline-even at higher prices. 
D) Yes, because gasoline is a luxury good that consumers willingly purchase - even at higher prices. 
A) No, because 1970 prices are ancient history compared to 2001 prices. 
B) No, because there is too little information provided about inflation, consumer income and other variables to make an appropriate comparison. 
C) Yes, because gas is a necessity that is in short supply. Consumers are always willing to buy more gasoline-even at higher prices. 
D) Yes, because gasoline is a luxury good that consumers willingly purchase - even at higher prices.

Question 10

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 11

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. 
E) how unlimited wants can be used to satisfy unlimited 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. 
E) how unlimited wants can be used to satisfy unlimited resources.

Question 12

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

Accepted Answer

A) an increase in the price of a pizza 
B) a decrease in the production of VCRs by a consumer electronics company 
C) an increase in the wage rate paid to automobile workers 
D) a decrease in the unemployment rate 
E) the entry of new firms into the software industry 
A) an increase in the price of a pizza 
B) a decrease in the production of VCRs by a consumer electronics company 
C) an increase in the wage rate paid to automobile workers 
D) a decrease in the unemployment rate 
E) the entry of new firms into the software industry

Question 13

Which of the following is not an example of a resource?

Accepted Answer

A) a forest 
B) a river 
C) a John Deere tractor 
D) the chef at the city's best café 
E) all of the answers are resources 
A) a forest 
B) a river 
C) a John Deere tractor 
D) the chef at the city's best café 
E) all of the answers are resources

Question 14

Which of the following is a positive statement?

Accepted Answer

A) The average high temperature in Miami, Florida in February is lower than the average high temperature in Chicago, Illinois. 
B) An increase in cigarette smoking will lead to a decrease in the likelihood of getting lung cancer. 
C) 30 minutes of exercise three or more times per week will decrease the occurrence of heart disease. 
D) all of the answers are positive statements 
A) The average high temperature in Miami, Florida in February is lower than the average high temperature in Chicago, Illinois. 
B) An increase in cigarette smoking will lead to a decrease in the likelihood of getting lung cancer. 
C) 30 minutes of exercise three or more times per week will decrease the occurrence of heart disease. 
D) all of the answers are positive statements

Question 15

Which of the following goods would be considered scarce?

Accepted Answer

A) iPods 
B) crude oil 
C) tax preparation services 
D) all of the answers are correct 
A) iPods 
B) crude oil 
C) tax preparation services 
D) all of the answers are correct

Question 16

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. 
E) unlimited resources in order to best satisfy our limited 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. 
E) unlimited resources in order to best satisfy our limited desires.

Question 17

Economic choices or tradeoffs are the result of:

Accepted Answer

A) basic human greed. 
B) scarcity. 
C) poverty. 
D) private ownership of resources. 
E) the fallacy of composition. 
A) basic human greed. 
B) scarcity. 
C) poverty. 
D) private ownership of resources. 
E) the fallacy of composition.

Question 18

Which of the following would be categorized as capital resources for a college or university?

Accepted Answer

A) water, trees, and the acreage a campus rests on 
B) white boards, overhead projectors, and the expertise of professors 
C) exams, fuel oil (which heats the buildings), and electricity 
D) the work effort of registrars, clerical assistants, and teaching assistants 
A) water, trees, and the acreage a campus rests on 
B) white boards, overhead projectors, and the expertise of professors 
C) exams, fuel oil (which heats the buildings), and electricity 
D) the work effort of registrars, clerical assistants, and teaching assistants

Question 19

Figure 1-A  
-Refer to Figure 1-A.In the circular flow diagram, goods and services:

Accepted Answer

A) flow in a clockwise direction. 
B) flow in a counterclockwise direction. 
C) are sold by businesses in the factor market. 
D) flow in a clockwise direction AND are sold by businesses in the factor market 
E) flow in a counterclockwise direction AND are sold by businesses in the factor market. 
A) flow in a clockwise direction. 
B) flow in a counterclockwise direction. 
C) are sold by businesses in the factor market. 
D) flow in a clockwise direction AND are sold by businesses in the factor market 
E) flow in a counterclockwise direction AND are sold by businesses in the factor market.

Question 20

Ten-year-old Josh observes that people who play football are larger than normal and tells his mom that he's going to play football because it will make him big and strong.Josh is:

Accepted Answer

A) committing the fallacy of composition. 
B) violating the ceteris paribus assumption. 
C) mistaking correlation for causation. 
D) committing the fallacy of decomposition. 
A) committing the fallacy of composition. 
B) violating the ceteris paribus assumption. 
C) mistaking correlation for causation. 
D) committing the fallacy of decomposition.

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

When economists assume that people act rationally, it means they:

Which of the following best illustrates the fallacy of composition?

Market failure occurs when:

A market economy depends on market mechanisms to:

An economic hypothesis is tested:

In markets, information about the relative value of resources is communicated through:

Which of the following is true?

If U.S.consumers bought more gasoline in 2008 (when prices averaged $3.22 per gallon) than they did in 1970 (when prices averaged $0.30 per gallon), does that mean that people buy more gasoline at higher prices?

Which of the following is false?

Fundamentally, economics is concerned with:

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

Which of the following is not an example of a resource?

Which of the following is a positive statement?

Which of the following goods would be considered scarce?

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

Economic choices or tradeoffs are the result of:

Which of the following would be categorized as capital resources for a college or university?

Figure 1-A -Refer to Figure 1-A.In the circular flow diagram, goods and services:

Ten-year-old Josh observes that people who play football are larger than normal and tells his mom that he's going to play football because it will make him big and strong.Josh is:

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

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Exam 1: The Role and Method of Economics

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

When economists assume that people act rationally, it means they:

Which of the following best illustrates the fallacy of composition?

Market failure occurs when:

A market economy depends on market mechanisms to:

An economic hypothesis is tested:

In markets, information about the relative value of resources is communicated through:

Which of the following is true?

If U.S.consumers bought more gasoline in 2008 (when prices averaged $3.22 per gallon) than they did in 1970 (when prices averaged $0.30 per gallon), does that mean that people buy more gasoline at higher prices?

Which of the following is false?

Fundamentally, economics is concerned with:

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

Which of the following is not an example of a resource?

Which of the following is a positive statement?

Which of the following goods would be considered scarce?

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

Economic choices or tradeoffs are the result of:

Which of the following would be categorized as capital resources for a college or university?

Figure 1-A -Refer to Figure 1-A.In the circular flow diagram, goods and services:

Ten-year-old Josh observes that people who play football are larger than normal and tells his mom that he's going to play football because it will make him big and strong.Josh is:

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters