Question 1

Which of the following best illustrates the fallacy of composition?

Accepted Answer

A) If Mr. Smith had more money, he could buy more scarce goods; if the Adams family had more money, it could buy additional goods. 
B) If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods. 
C) If other variables are not held constant, economists may not observe the relationship between price and quantity demanded that is expected. 
D) Aggregate consumption may not behave in the same manner as the consumption of a particular individual. 
A) If Mr. Smith had more money, he could buy more scarce goods; if the Adams family had more money, it could buy additional goods. 
B) If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods. 
C) If other variables are not held constant, economists may not observe the relationship between price and quantity demanded that is expected. 
D) Aggregate consumption may not behave in the same manner as the consumption of a particular individual.

Question 2

Which of the following graphs or charts must add up to one hundred percent?

Accepted Answer

A) a labor graph 
B) a pie chart 
C) a time-series graph 
D) a scatter diagram 
A) a labor graph 
B) a pie chart 
C) a time-series graph 
D) a scatter diagram

Question 3

Suppose there are two members of the U.S.Congress who were once economics professors.Why is it important to be able to distinguish their positive from their normative statements about economic policy?

Accepted Answer

A) Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments. 
B) Their positive statements help us understand the good results of a policy change, and their normative statements help us understand the negative results. 
C) We really do not have to worry about them since trained economists never make normative statements. 
D) Economists are always making assumptions, and policy should not be based on assumptions. 
E) Economists are "tricky" by nature, so we need to be able to distinguish truth from political rhetoric. 
A) Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments. 
B) Their positive statements help us understand the good results of a policy change, and their normative statements help us understand the negative results. 
C) We really do not have to worry about them since trained economists never make normative statements. 
D) Economists are always making assumptions, and policy should not be based on assumptions. 
E) Economists are "tricky" by nature, so we need to be able to distinguish truth from political rhetoric.

Question 4

In economics, which of the following is considered "land"?

Accepted Answer

A) A hydroelectric dam. 
B) A 500 acre forest. 
C) bauxite deposits. 
D) underground pools of crude oil. 
E) All of the above except a hydroelectric dam are considered land. 
A) A hydroelectric dam. 
B) A 500 acre forest. 
C) bauxite deposits. 
D) underground pools of crude oil. 
E) All of the above except a hydroelectric dam are considered land.

Question 5

Difficulty in prediction social sciences is the result of analyzing ____ but can be overcome by focusing on ____ groups.

Accepted Answer

A) experiments; small groups 
B) experiments; large groups 
C) human behavior; small groups 
D) human behavior; large groups 
A) experiments; small groups 
B) experiments; large groups 
C) human behavior; small groups 
D) human behavior; large groups

Question 6

Ceteris paribus if the price of cell phones increases we would expect that consumers would want to buy

Accepted Answer

A) fewer cell phones because of the higher price. 
B) more cell phones because of the higher price. 
C) fewer cell phones because of improved technology of other goods. 
D) more cell phones because of improved wireless coverage areas and speed 
A) fewer cell phones because of the higher price. 
B) more cell phones because of the higher price. 
C) fewer cell phones because of improved technology of other goods. 
D) more cell phones because of improved wireless coverage areas and speed

Question 7

Which of the following is an example of a capital resource?

Accepted Answer

A) an unskilled worker 
B) a large coal deposit 
C) a fishing boat 
D) yellow-fin tuna 
A) an unskilled worker 
B) a large coal deposit 
C) a fishing boat 
D) yellow-fin tuna

Question 8

Which of the following would be an example of entrepreneurship?

Accepted Answer

A) The cross training of bank employees 
B) A bank teller 
C) A check encoding machine 
D) The building used as a bank's operations center 
A) The cross training of bank employees 
B) A bank teller 
C) A check encoding machine 
D) The building used as a bank's operations center

Question 9

Scarcity exists for those with

Accepted Answer

A) lower incomes. 
B) average incomes. 
C) higher incomes. 
D) all of the answers are correct. 
E) lower incomes and average incomes only 
A) lower incomes. 
B) average incomes. 
C) higher incomes. 
D) all of the answers are correct. 
E) lower incomes and average incomes only

Question 10

Microeconomic topics do not usually include:

Accepted Answer

A) how wages are determined in the labor market. 
B) the magnitude of national income. 
C) how firms choose output to maximize profits. 
D) how consumers maximize utility subject to a budget constraint. 
E) the monopolization of an industry by a single firm. 
A) how wages are determined in the labor market. 
B) the magnitude of national income. 
C) how firms choose output to maximize profits. 
D) how consumers maximize utility subject to a budget constraint. 
E) the monopolization of an industry by a single firm.

Question 11

Which of the following questions is addressed primarily by macroeconomics?

Accepted Answer

A) The allocation of scarce satellite orbit slots. 
B) Decisions made by a manufacturer of a particular good. 
C) Policies to control the inflation rate. 
D) A consumer's decision to buy more clothing and less food. 
A) The allocation of scarce satellite orbit slots. 
B) Decisions made by a manufacturer of a particular good. 
C) Policies to control the inflation rate. 
D) A consumer's decision to buy more clothing and less food.

Question 12

Macroeconomic topics do not generally include:

Accepted Answer

A) inflation. 
B) aggregate demand. 
C) government spending and taxation. 
D) the production decisions of individual firms. 
E) the measurement of total economic output. 
A) inflation. 
B) aggregate demand. 
C) government spending and taxation. 
D) the production decisions of individual firms. 
E) the measurement of total economic output.

Question 13

Which of the following would reflect self-interested behavior?

Accepted Answer

A) A worker pursuing a higher paying job and better working conditions. 
B) A consumer seeking a higher level of satisfaction with her current income. 
C) Donating a cell phone to a woman's shelter. 
D) Mother Theresa using her Nobel Prize money to care for the poor. 
E) All of the answers would reflect self-interested behavior. 
A) A worker pursuing a higher paying job and better working conditions. 
B) A consumer seeking a higher level of satisfaction with her current income. 
C) Donating a cell phone to a woman's shelter. 
D) Mother Theresa using her Nobel Prize money to care for the poor. 
E) All of the answers would reflect self-interested behavior.

Question 14

Which of the following is not a payment made to households in exchange for the use of factors of production?

Accepted Answer

A) rent 
B) interest 
C) wages 
D) taxes 
A) rent 
B) interest 
C) wages 
D) taxes

Question 15

Microeconomics primarily models:

Accepted Answer

A) the overall economy. 
B) the behavior of firms but not households. 
C) the behavior of households but not firms. 
D) the behavior of both firms and households and how they interact in the marketplace. 
E) how the government balances the federal budget. 
A) the overall economy. 
B) the behavior of firms but not households. 
C) the behavior of households but not firms. 
D) the behavior of both firms and households and how they interact in the marketplace. 
E) how the government balances the federal budget.

Question 16

Which of the following is true?

Accepted Answer

A) As long as human wants exceed available resources, scarcity will exist. 
B) Scarcity ultimately leads to competition for the available goods and services. 
C) Scarcity affects everyone to the same degree. 
D) All of the answers are true. 
E) As long as human wants exceed available resources, scarcity will exist, and scarcity ultimately leads to competition for the available goods and services. 
A) As long as human wants exceed available resources, scarcity will exist. 
B) Scarcity ultimately leads to competition for the available goods and services. 
C) Scarcity affects everyone to the same degree. 
D) All of the answers are true. 
E) As long as human wants exceed available resources, scarcity will exist, and scarcity ultimately leads to competition for the available goods and services.

Question 17

Which of the following is an example of a normative statement?

Accepted Answer

A) Higher unemployment rates are common among young people. 
B) Young people should learn how to prepare their own taxes. 
C) Auto insurance rates are generally lower for younger drivers. 
D) Persons under the age of 30 watch more movies than those over the age of 30. 
E) An individual under the age of 30 will generally have a longer life expectancy than someone over the age of 50. 
A) Higher unemployment rates are common among young people. 
B) Young people should learn how to prepare their own taxes. 
C) Auto insurance rates are generally lower for younger drivers. 
D) Persons under the age of 30 watch more movies than those over the age of 30. 
E) An individual under the age of 30 will generally have a longer life expectancy than someone over the age of 50.

Question 18

Positive 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) affirmative, justifying existing economic policy. 
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) affirmative, justifying existing economic policy.

Question 19

The fallacy of composition is essentially the error of:

Accepted Answer

A) confusing association with causation. 
B) confusing normative economics with positive economics. 
C) generalizing from the individual to the whole. 
D) omitting relevant variables from an economic model. 
E) generalizing from the whole to the individual. 
A) confusing association with causation. 
B) confusing normative economics with positive economics. 
C) generalizing from the individual to the whole. 
D) omitting relevant variables from an economic model. 
E) generalizing from the whole to the individual.

Question 20

The central question in economics is how to:

Accepted Answer

A) regulate the supply of money. 
B) make the best use of scarce resources to satisfy our unlimited wants. 
C) reduce the wants of individuals, businesses and government. 
D) find more resources to satisfy everyone's wants. 
A) regulate the supply of money. 
B) make the best use of scarce resources to satisfy our unlimited wants. 
C) reduce the wants of individuals, businesses and government. 
D) find more resources to satisfy everyone's wants.

Which of the following best illustrates the fallacy of composition?

Which of the following graphs or charts must add up to one hundred percent?

Suppose there are two members of the U.S.Congress who were once economics professors.Why is it important to be able to distinguish their positive from their normative statements about economic policy?

In economics, which of the following is considered "land"?

Difficulty in prediction social sciences is the result of analyzing but can be overcome by focusing on groups.

Ceteris paribus if the price of cell phones increases we would expect that consumers would want to buy

Which of the following is an example of a capital resource?

Which of the following would be an example of entrepreneurship?

Scarcity exists for those with

Microeconomic topics do not usually include:

Which of the following questions is addressed primarily by macroeconomics?

Macroeconomic topics do not generally include:

Which of the following would reflect self-interested behavior?

Which of the following is not a payment made to households in exchange for the use of factors of production?

Microeconomics primarily models:

Which of the following is true?

Which of the following is an example of a normative statement?

Positive statements are:

The fallacy of composition is essentially the error of:

The central question in economics is how to:

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

Which of the following best illustrates the fallacy of composition?

Which of the following graphs or charts must add up to one hundred percent?

Suppose there are two members of the U.S.Congress who were once economics professors.Why is it important to be able to distinguish their positive from their normative statements about economic policy?

In economics, which of the following is considered "land"?

Difficulty in prediction social sciences is the result of analyzing ____ but can be overcome by focusing on ____ groups.

Ceteris paribus if the price of cell phones increases we would expect that consumers would want to buy

Which of the following is an example of a capital resource?

Which of the following would be an example of entrepreneurship?

Scarcity exists for those with

Microeconomic topics do not usually include:

Which of the following questions is addressed primarily by macroeconomics?

Macroeconomic topics do not generally include:

Which of the following would reflect self-interested behavior?

Which of the following is not a payment made to households in exchange for the use of factors of production?

Microeconomics primarily models:

Which of the following is true?

Which of the following is an example of a normative statement?

Positive statements are:

The fallacy of composition is essentially the error of:

The central question in economics is how to:

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

Difficulty in prediction social sciences is the result of analyzing but can be overcome by focusing on groups.