Question 1

The basic difference between macroeconomics and microeconomics is that:

Accepted Answer

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

Question 2

Prices communicate information about relative availability of products.For example, a decrease in the price of corn signals to consumers and producers that:

Accepted Answer

A) consumers are buying more corn than before. 
B) corn is relatively more abundant than before. 
C) corn is relatively less abundant than before. 
D) consumers are stocking up on corn because of the predictions of a cold winter. 
A) consumers are buying more corn than before. 
B) corn is relatively more abundant than before. 
C) corn is relatively less abundant than before. 
D) consumers are stocking up on corn because of the predictions of a cold winter.

Question 3

Additions to human capital can be made through:

Accepted Answer

A) increases in pension benefits 
B) monthly deposits into a savings account. 
C) improved education and on-the-job training. 
D) the purchase of tools and equipment by workers. 
A) increases in pension benefits 
B) monthly deposits into a savings account. 
C) improved education and on-the-job training. 
D) the purchase of tools and equipment by workers.

Question 4

Positive incentives do not:

Accepted Answer

A) increase benefits. 
B) result in an increased level of the related activity. 
C) reduce costs. 
D) discourage consumption. 
E) All of the answers are related to positive incentives 
A) increase benefits. 
B) result in an increased level of the related activity. 
C) reduce costs. 
D) discourage consumption. 
E) All of the answers are related to positive incentives

Question 5

An example of a capital resource is:

Accepted Answer

A) stock in a computer software company. 
B) the funds in a CD account at a bank. 
C) a bond issued by a company selling electric generators. 
D) a dump truck. 
E) an employee of a moving company. 
A) stock in a computer software company. 
B) the funds in a CD account at a bank. 
C) a bond issued by a company selling electric generators. 
D) a dump truck. 
E) an employee of a moving company.

Question 6

Which of the following statements are true?

Accepted Answer

A) Scarcity refers to shortages at existing market prices. 
B) As a result of scarcity, individuals must make choices and face trade-offs. 
C) It is impossible to satisfy unlimited human wants with limited resources. 
D) All of the answers are true statements. 
E) The only true statements are "As a result of scarcity, individuals must make choices and face trade-offs" and " "It is impossible to satisfy unlimited human wants with limited resources." 
A) Scarcity refers to shortages at existing market prices. 
B) As a result of scarcity, individuals must make choices and face trade-offs. 
C) It is impossible to satisfy unlimited human wants with limited resources. 
D) All of the answers are true statements. 
E) The only true statements are "As a result of scarcity, individuals must make choices and face trade-offs" and " "It is impossible to satisfy unlimited human wants with limited resources."

Question 7

The real core of the economic problem is to:

Accepted Answer

A) increase the amount of leisure time available to people. 
B) guarantee everyone on the planet a minimum level of food, shelter and clean water. 
C) allocate limited resources among competing uses. 
D) eliminate scarcity. 
A) increase the amount of leisure time available to people. 
B) guarantee everyone on the planet a minimum level of food, shelter and clean water. 
C) allocate limited resources among competing uses. 
D) eliminate scarcity.

Question 8

Which factor best explains the increased level of difficulty in observation and prediction in the social sciences than in physical sciences?

Accepted Answer

A) Abstraction 
B) Fallacy of composition 
C) Scarcity 
D) Self-interest 
E) Human behavior 
A) Abstraction 
B) Fallacy of composition 
C) Scarcity 
D) Self-interest 
E) Human behavior

Question 9

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 word meaning that there is a shortage of goods at the current market price. 
E) 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 word meaning that there is a shortage of goods at the current market price. 
E) a problem that necessitates making choices and tradeoffs.

Question 10

Which of the following topics would be covered in microeconomics?

Accepted Answer

A) The effects of an increase in the supply of lumber on the homebuilding industry. 
B) The unemployment rate. 
C) The effects of interest rates on the overall economy. 
D) The inflation rate. 
A) The effects of an increase in the supply of lumber on the homebuilding industry. 
B) The unemployment rate. 
C) The effects of interest rates on the overall economy. 
D) The inflation rate.

Question 11

Scarcity:

Accepted Answer

A) is only a problem in communist countries. 
B) is a problem in both communist and socialist countries, but not in market economies. 
C) does not exist in wealthy countries. 
D) will never be eradicated because humans develop new wants as productive capabilities improve. 
E) implies that it is a problem in both communist and socialist countries, but not in market economies or wealthy countries. 
A) is only a problem in communist countries. 
B) is a problem in both communist and socialist countries, but not in market economies. 
C) does not exist in wealthy countries. 
D) will never be eradicated because humans develop new wants as productive capabilities improve. 
E) implies that it is a problem in both communist and socialist countries, but not in market economies or wealthy countries.

Question 12

Human capital is:

Accepted Answer

A) the same as labor. 
B) a term describing the tools and equipment owned by households. 
C) a worker's physical effort when working with machines. 
D) the expertise or knowledge possessed by workers. 
E) the money in checking, savings, or CD accounts at banks. 
A) the same as labor. 
B) a term describing the tools and equipment owned by households. 
C) a worker's physical effort when working with machines. 
D) the expertise or knowledge possessed by workers. 
E) the money in checking, savings, or CD accounts at banks.

Question 13

In the simple circular flow model:

Accepted Answer

A) firms are suppliers of resources and demanders of products. 
B) households are suppliers of products and demanders of resources. 
C) households are demanders of products and suppliers of resources. 
D) firms are the suppliers of both resources and products. 
E) households are the suppliers of both resources and products. 
A) firms are suppliers of resources and demanders of products. 
B) households are suppliers of products and demanders of resources. 
C) households are demanders of products and suppliers of resources. 
D) firms are the suppliers of both resources and products. 
E) households are the suppliers of both resources and products.

Question 14

Microeconomics:

Accepted Answer

A) provides an overall view of the economy and how it functions. 
B) explores the behavior of individual consumers and firms when confronted with scarcity. 
C) examines the aggregate behavior of consumers and firms when confronted with scarcity. 
D) is a "positive" science, whereas macroeconomics is a "normative" science. 
E) is concerned with full employment, price stability and economic growth. 
A) provides an overall view of the economy and how it functions. 
B) explores the behavior of individual consumers and firms when confronted with scarcity. 
C) examines the aggregate behavior of consumers and firms when confronted with scarcity. 
D) is a "positive" science, whereas macroeconomics is a "normative" science. 
E) is concerned with full employment, price stability and economic growth.

Question 15

Which of the following is a statement of positive economics?

Accepted Answer

A) The income tax reduces after-tax incomes of the rich. 
B) A reduction in tax rates makes the after-tax distribution of income fairer. 
C) Tax rates ought to be reduced so that people will work more. 
D) All of the above are statements of positive economics. 
E) None of the above is statements of positive economics. 
A) The income tax reduces after-tax incomes of the rich. 
B) A reduction in tax rates makes the after-tax distribution of income fairer. 
C) Tax rates ought to be reduced so that people will work more. 
D) All of the above are statements of positive economics. 
E) None of the above is statements of positive economics.

The basic difference between macroeconomics and microeconomics is that:

Prices communicate information about relative availability of products.For example, a decrease in the price of corn signals to consumers and producers that:

Additions to human capital can be made through:

Positive incentives do not:

An example of a capital resource is:

Which of the following statements are true?

The real core of the economic problem is to:

Which factor best explains the increased level of difficulty in observation and prediction in the social sciences than in physical sciences?

Scarcity is:

Which of the following topics would be covered in microeconomics?

Scarcity:

Human capital is:

In the simple circular flow model:

Microeconomics:

Which of the following is a statement of positive economics?

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

Exam 1: The Role and Method of Economics

The basic difference between macroeconomics and microeconomics is that:

Prices communicate information about relative availability of products.For example, a decrease in the price of corn signals to consumers and producers that:

Additions to human capital can be made through:

Positive incentives do not:

An example of a capital resource is:

Which of the following statements are true?

The real core of the economic problem is to:

Which factor best explains the increased level of difficulty in observation and prediction in the social sciences than in physical sciences?

Scarcity is:

Which of the following topics would be covered in microeconomics?

Scarcity:

Human capital is:

In the simple circular flow model:

Microeconomics:

Which of the following is a statement of positive economics?

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