Question 1

Normative statements are:

Accepted Answer

A) prescriptive, making claims about how the world ought to be. 
B) descriptive, making claims about how the world is. 
C) optimistic, putting the best possible interpretation on things. 
D) statements that establish production goals for the economy. 
A) prescriptive, making claims about how the world ought to be. 
B) descriptive, making claims about how the world is. 
C) optimistic, putting the best possible interpretation on things. 
D) statements that establish production goals for the economy.

Question 2

Which of the following is not a factor of production?

Accepted Answer

A) cash 
B) entrepreneurship 
C) land 
D) labor 
A) cash 
B) entrepreneurship 
C) land 
D) labor

Question 3

Land as a factor of production can include all of the following except:

Accepted Answer

A) trees. 
B) a flock of sheep. 
C) a sawmill. 
D) a water body. 
E) a limestone deposit. 
A) trees. 
B) a flock of sheep. 
C) a sawmill. 
D) a water body. 
E) a limestone deposit.

Question 4

From an economists' perspective, which of the following observations is not true?

Accepted Answer

A) Self-interest is purely monetary in nature. 
B) Self-interest can include benevolence. 
C) Self-interest is a good predictor of human behavior in most situations. 
D) Self-interest is not the same as selfishness. 
A) Self-interest is purely monetary in nature. 
B) Self-interest can include benevolence. 
C) Self-interest is a good predictor of human behavior in most situations. 
D) Self-interest is not the same as selfishness.

Question 5

A person behaving rationally will attempt to:

Accepted Answer

A) always avoid illegal actions. 
B) explain or rationalize a decision. 
C) refrain from normative analysis. 
D) consider the future consequences of her/his behavior. 
E) refrain from positive economic analysis. 
A) always avoid illegal actions. 
B) explain or rationalize a decision. 
C) refrain from normative analysis. 
D) consider the future consequences of her/his behavior. 
E) refrain from positive economic analysis.

Question 6

What would not be held constant in testing a theory that if a student studies harder, he will get a better grade?

Accepted Answer

A) The course being taken. 
B) The ability and effort of the other students in the class. 
C) The grading scale in the course. 
D) The number of hours the student spends studying. 
E) All of the variables given would be held constant in testing such a theory. 
A) The course being taken. 
B) The ability and effort of the other students in the class. 
C) The grading scale in the course. 
D) The number of hours the student spends studying. 
E) All of the variables given would be held constant in testing such a theory.

Question 7

A hypothesis is:

Accepted Answer

A) a normative economic statement. 
B) a testable proposition. 
C) a statement that cannot be evaluated using real-world data. 
D) a model with no connection to the real world. 
A) a normative economic statement. 
B) a testable proposition. 
C) a statement that cannot be evaluated using real-world data. 
D) a model with no connection to the real world.

Question 8

When economists use the term "ceteris paribus," they mean that:

Accepted Answer

A) the causal relationship between two economic variables cannot be determined. 
B) the analysis is true for the individual but not for the economy as a whole. 
C) all other variables except the ones specified are assumed to be constant. 
D) their conclusions are based on normative rather than positive economic analysis. 
A) the causal relationship between two economic variables cannot be determined. 
B) the analysis is true for the individual but not for the economy as a whole. 
C) all other variables except the ones specified are assumed to be constant. 
D) their conclusions are based on normative rather than positive economic analysis.

Question 9

Negative incentives:

Accepted Answer

A) increase benefits or reduce costs. 
B) increase behaviors. 
C) decrease benefits or increase costs. 
D) include both cash subsidies and taxes. 
A) increase benefits or reduce costs. 
B) increase behaviors. 
C) decrease benefits or increase costs. 
D) include both cash subsidies and taxes.

Question 10

Economics can be divided into two main branches of study:

Accepted Answer

A) capitalism and communism. 
B) capitalism and socialism. 
C) demand and supply. 
D) microeconomics and macroeconomics. 
E) fiscal policy and monetary policy. 
A) capitalism and communism. 
B) capitalism and socialism. 
C) demand and supply. 
D) microeconomics and macroeconomics. 
E) fiscal policy and monetary policy.

Question 11

"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) a refutable statement. 
E) both positive economics and a refutable statement. 
A) the fallacy of composition. 
B) positive economics. 
C) normative economics. 
D) a refutable statement. 
E) both positive economics and a refutable statement.

Question 12

Raylene works at an accounting firm.She is considered what type of resource?

Accepted Answer

A) an entrepreneur 
B) management 
C) capital 
D) labor 
A) an entrepreneur 
B) management 
C) capital 
D) labor

Question 13

A theory asserts that manufacturers are less willing to sell units of output as the price of a good decreases.However, as the price of computers fell throughout the 1990s, more computers were sold.Which of the following best explains the apparent conflict between theory and data?

Accepted Answer

A) The theory must be invalid. 
B) The theory rests on assumptions that are too simplistic. 
C) It is likely that variables other than the price and quantity of computers sold were changing. 
D) All variables other than the price and quantity of computers sold were unchanged. 
A) The theory must be invalid. 
B) The theory rests on assumptions that are too simplistic. 
C) It is likely that variables other than the price and quantity of computers sold were changing. 
D) All variables other than the price and quantity of computers sold were unchanged.

Question 14

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 trade-offs 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 trade-offs are involved in most policy questions. 
D) Economists are often unable to identify the critical questions involved in policy issues.

Question 15

Which of the following is not an example of the use of the problem solving perspective provided by economics?

Accepted Answer

A) An investor considers the tax consequences of selling stocks in order to buy bonds (which she believes offer a better return). 
B) A rancher recognizes that raising more cattle this year will damage his pasture and limit next year's herd size. 
C) The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember. 
D) An economics student contemplates the other subjects that she should be studying before deciding to study economics this evening. 
A) An investor considers the tax consequences of selling stocks in order to buy bonds (which she believes offer a better return). 
B) A rancher recognizes that raising more cattle this year will damage his pasture and limit next year's herd size. 
C) The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember. 
D) An economics student contemplates the other subjects that she should be studying before deciding to study economics this evening.

Question 16

When economists speak of markets, they primarily mean:

Accepted Answer

A) places where production of goods and services take place. 
B) those locations where stocks and bonds of corporations take place. 
C) mechanisms that coordinate actions of buyers and sellers. 
D) the trillions of dollars that change hands in the foreign exchange markets. 
A) places where production of goods and services take place. 
B) those locations where stocks and bonds of corporations take place. 
C) mechanisms that coordinate actions of buyers and sellers. 
D) the trillions of dollars that change hands in the foreign exchange markets.

Question 17

Which of the following is true of resources?

Accepted Answer

A) Their availability is unlimited. 
B) They are the inputs used to produce goods and services. 
C) Increasing the amount of resources available could eliminate scarcity. 
D) They are inputs used to produce goods and services and increasing the amount of resources available could eliminate scarcity. 
A) Their availability is unlimited. 
B) They are the inputs used to produce goods and services. 
C) Increasing the amount of resources available could eliminate scarcity. 
D) They are inputs used to produce goods and services and increasing the amount of resources available could eliminate scarcity.

Question 18

Understanding economics would be helpful to which of the following individuals?

Accepted Answer

A) a college student planning her next semester courses 
B) an engineer building a superhighway 
C) a fashion designer selecting fabric for a new spring collection 
D) a restaurant owner deciding whether to expand his establishment's hours of operation 
E) All of the students listed. 
A) a college student planning her next semester courses 
B) an engineer building a superhighway 
C) a fashion designer selecting fabric for a new spring collection 
D) a restaurant owner deciding whether to expand his establishment's hours of operation 
E) All of the students listed.

Question 19

An economic theory:

Accepted Answer

A) should be as detailed as possible in order to model the complexity of an economy. 
B) is an abstraction from reality. 
C) is only useful if it rests on realistic assumptions. 
D) is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy. 
A) should be as detailed as possible in order to model the complexity of an economy. 
B) is an abstraction from reality. 
C) is only useful if it rests on realistic assumptions. 
D) is unrealistic and therefore of dubious usefulness in explaining what occurs in a complex economy.

Question 20

Which of the following would be primarily determined in factor markets?

Accepted Answer

A) The number of computers produced. 
B) The wage rates for high school teachers. 
C) The price of automobiles. 
D) Interest rates. 
A) The number of computers produced. 
B) The wage rates for high school teachers. 
C) The price of automobiles. 
D) Interest rates.

Normative statements are:

Which of the following is not a factor of production?

Land as a factor of production can include all of the following except:

From an economists' perspective, which of the following observations is not true?

A person behaving rationally will attempt to:

What would not be held constant in testing a theory that if a student studies harder, he will get a better grade?

A hypothesis is:

When economists use the term "ceteris paribus," they mean that:

Negative incentives:

Economics can be divided into two main branches of study:

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

Raylene works at an accounting firm.She is considered what type of resource?

A theory asserts that manufacturers are less willing to sell units of output as the price of a good decreases.However, as the price of computers fell throughout the 1990s, more computers were sold.Which of the following best explains the apparent conflict between theory and data?

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?

Which of the following is not an example of the use of the problem solving perspective provided by economics?

When economists speak of markets, they primarily mean:

Which of the following is true of resources?

Understanding economics would be helpful to which of the following individuals?

An economic theory:

Which of the following would be primarily determined in factor markets?

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

Normative statements are:

Which of the following is not a factor of production?

Land as a factor of production can include all of the following except:

From an economists' perspective, which of the following observations is not true?

A person behaving rationally will attempt to:

What would not be held constant in testing a theory that if a student studies harder, he will get a better grade?

A hypothesis is:

When economists use the term "ceteris paribus," they mean that:

Negative incentives:

Economics can be divided into two main branches of study:

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

Raylene works at an accounting firm.She is considered what type of resource?

A theory asserts that manufacturers are less willing to sell units of output as the price of a good decreases.However, as the price of computers fell throughout the 1990s, more computers were sold.Which of the following best explains the apparent conflict between theory and data?

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?

Which of the following is not an example of the use of the problem solving perspective provided by economics?

When economists speak of markets, they primarily mean:

Which of the following is true of resources?

Understanding economics would be helpful to which of the following individuals?

An economic theory:

Which of the following would be primarily determined in factor markets?

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