Question 1

The best test of an economic theory is:

Accepted Answer

A) the rigor of its mathematical formulation. 
B) its ability to explain and predict. 
C) the accuracy of its assumptions. 
D) the level of real-world detail it captures. 
A) the rigor of its mathematical formulation. 
B) its ability to explain and predict. 
C) the accuracy of its assumptions. 
D) the level of real-world detail it captures.

Question 2

What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

Accepted Answer

A) Scarcity and rarity 
B) Opportunities and pay-offs 
C) Values and information 
D) Legal consequences 
A) Scarcity and rarity 
B) Opportunities and pay-offs 
C) Values and information 
D) Legal consequences

Question 3

Economics is primarily the study of:

Accepted Answer

A) human greed. 
B) how firms compete for profits in the marketplace. 
C) how limited resources are allocated to satisfy unlimited wants. 
D) unemployed resources. 
E) how successful investors make money in the stock market. 
A) human greed. 
B) how firms compete for profits in the marketplace. 
C) how limited resources are allocated to satisfy unlimited wants. 
D) unemployed resources. 
E) how successful investors make money in the stock market.

Question 4

The circular flow of economic activity is a model of the:

Accepted Answer

A) flow of goods, services, and payments between households and firms. 
B) influence of government on business behavior. 
C) role of unions and government in the economy. 
D) interaction among taxes, prices, and profits. 
E) economy's banking system. 
A) flow of goods, services, and payments between households and firms. 
B) influence of government on business behavior. 
C) role of unions and government in the economy. 
D) interaction among taxes, prices, and profits. 
E) economy's banking system.

Question 5

Identify the chain of events in creating a theory:

Accepted Answer

A) gather data, evaluate results, tentatively accept the theory, support or refute the hypothesis. 
B) predict behavior, evaluate the results, formulate a hypothesis. 
C) select a theory, create a hypothesis, evaluate the evidence. 
D) formulate a hypothesis, gather data, evaluate the results, support or refute the hypothesis, tentatively accept theory. 
A) gather data, evaluate results, tentatively accept the theory, support or refute the hypothesis. 
B) predict behavior, evaluate the results, formulate a hypothesis. 
C) select a theory, create a hypothesis, evaluate the evidence. 
D) formulate a hypothesis, gather data, evaluate the results, support or refute the hypothesis, tentatively accept theory.

Question 6

Which of the following is a statement of positive economics?

Accepted Answer

A) Unemployment is a more severe problem in societies than inflation. 
B) Our current unemployment rate is a serious problem. 
C) If the overall unemployment rate is 6 percent, black unemployment rates will exceed 12 percent. 
D) An unemployment rate of 4 percent would be too low. 
A) Unemployment is a more severe problem in societies than inflation. 
B) Our current unemployment rate is a serious problem. 
C) If the overall unemployment rate is 6 percent, black unemployment rates will exceed 12 percent. 
D) An unemployment rate of 4 percent would be too low.

Question 7

Which of the following serve as the language of the market system?

Accepted Answer

A) Monetary and fiscal policies 
B) Volatility 
C) Market prices 
D) Governments 
A) Monetary and fiscal policies 
B) Volatility 
C) Market prices 
D) Governments

Question 8

Economics is a social science that primarily explores how:

Accepted Answer

A) businesses market products under competitive conditions. 
B) stock and bond prices fluctuate when there are changes in demand or supply. 
C) the government allocates its budget among competing political interests. 
D) goods and services are produced and distributed in a world with limited resources. 
E) high employment and low inflation levels can be maintained. 
A) businesses market products under competitive conditions. 
B) stock and bond prices fluctuate when there are changes in demand or supply. 
C) the government allocates its budget among competing political interests. 
D) goods and services are produced and distributed in a world with limited resources. 
E) high employment and low inflation levels can be maintained.

Question 9

A leading game-console manufacturer slashes the price of its flagship product by ten percent.Holding other things such as income and preferences constant, which of the following is the most likely group behavior prediction?

Accepted Answer

A) Price reduction will have no impact on purchase patterns. 
B) Price reduction will be associated with a reduction in quality; thereby reducing sales. 
C) More game consoles will be sold at lower prices. 
D) Group behavior cannot be predicted. 
A) Price reduction will have no impact on purchase patterns. 
B) Price reduction will be associated with a reduction in quality; thereby reducing sales. 
C) More game consoles will be sold at lower prices. 
D) Group behavior cannot be predicted.

Question 10

An example of physical capital is:

Accepted Answer

A) a $100 bill. 
B) a stock certificate. 
C) a chainsaw. 
D) a cheeseburger. 
E) a savings account. 
A) a $100 bill. 
B) a stock certificate. 
C) a chainsaw. 
D) a cheeseburger. 
E) a savings account.

Question 11

"I woke up earlier today to beat other fishermen to the fish and yet I caught the same number of fish at 5 a.m. as I did at noon." Which of the following best explains this occurrence?

Accepted Answer

A) Many other fishermen also believe that they can catch a greater quantity of fish if they arrive earlier at the fishing area. So the area is crowded early in the day. 
B) The fish do not care when they eat, so they are likely to bite on the bait at any time during the day. 
C) The catching of fish is mostly luck, so timing is not important. 
D) The early bird catches the worm. 
A) Many other fishermen also believe that they can catch a greater quantity of fish if they arrive earlier at the fishing area. So the area is crowded early in the day. 
B) The fish do not care when they eat, so they are likely to bite on the bait at any time during the day. 
C) The catching of fish is mostly luck, so timing is not important. 
D) The early bird catches the worm.

Question 12

A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices.However, when the average price of cars increased throughout the 1990s, more cars were purchased.Which of the following best explains the apparent conflict between theory and data?

Accepted Answer

A) The ceteris paribus assumption is valid. 
B) It is likely that variables other than the price and quantity of cars demanded were changing. 
C) The theory is valid. However, the price and quantity data gathered by researchers was clearly measured incorrectly. 
D) The theory must be invalid. 
A) The ceteris paribus assumption is valid. 
B) It is likely that variables other than the price and quantity of cars demanded were changing. 
C) The theory is valid. However, the price and quantity data gathered by researchers was clearly measured incorrectly. 
D) The theory must be invalid.

Question 13

Scarcity is the result of:

Accepted Answer

A) government decision making. 
B) inappropriate normative judgments. 
C) positive economics. 
D) wants that exceed the resources necessary to provide them. 
A) government decision making. 
B) inappropriate normative judgments. 
C) positive economics. 
D) wants that exceed the resources necessary to provide them.

Question 14

Which of the following forces us to choose among alternatives?

Accepted Answer

A) Value 
B) Scarcity 
C) Rarity 
D) Market mechanism 
A) Value 
B) Scarcity 
C) Rarity 
D) Market mechanism

Question 15

The basic difference between macroeconomics and microeconomics is:

Accepted Answer

A) microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. 
B) microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. 
C) microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. 
D) microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment. 
A) microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. 
B) microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. 
C) microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. 
D) microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

Question 16

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

Accepted Answer

A) macroeconomics. 
B) Marxian economics. 
C) positive economics. 
D) normative economics. 
E) microeconomics. 
A) macroeconomics. 
B) Marxian economics. 
C) positive economics. 
D) normative economics. 
E) microeconomics.

Question 17

Which of the following is an example of market failure?

Accepted Answer

A) Overuse of highways that leads to traffic congestion 
B) Reduced levels of vaccinations which increase illness and disease 
C) Substantial foreclosures caused by sub-prime lending 
D) All of the answers are examples of market failure. 
A) Overuse of highways that leads to traffic congestion 
B) Reduced levels of vaccinations which increase illness and disease 
C) Substantial foreclosures caused by sub-prime lending 
D) All of the answers are examples of market failure.

Question 18

Economics is different from a "hard" science like physics because:

Accepted Answer

A) economists abstract from reality in creating their theories. 
B) economics is easier to study than physics. 
C) economists must explain their theories to policy makers who lack formal mathematical training. 
D) economists cannot easily control all the variables that might influence human behavior. 
E) research in economics is primarily conducted in a very "social" way via interviews of consumers and corporate leaders. 
A) economists abstract from reality in creating their theories. 
B) economics is easier to study than physics. 
C) economists must explain their theories to policy makers who lack formal mathematical training. 
D) economists cannot easily control all the variables that might influence human behavior. 
E) research in economics is primarily conducted in a very "social" way via interviews of consumers and corporate leaders.

Question 19

Economics is primarily the study of:

Accepted Answer

A) how choices are made because of scarcity. 
B) corporate balance sheets and income statements. 
C) how to operate a business. 
D) how to make money in the stock market. 
E) how to allocate scarce resources to satisfy unlimited needs. 
A) how choices are made because of scarcity. 
B) corporate balance sheets and income statements. 
C) how to operate a business. 
D) how to make money in the stock market. 
E) how to allocate scarce resources to satisfy unlimited needs.

Question 20

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

Accepted Answer

A) redwood trees 
B) unskilled labor 
C) stocks and bonds 
D) an oil rig 
A) redwood trees 
B) unskilled labor 
C) stocks and bonds 
D) an oil rig

The best test of an economic theory is:

What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

Economics is primarily the study of:

The circular flow of economic activity is a model of the:

Identify the chain of events in creating a theory:

Which of the following is a statement of positive economics?

Which of the following serve as the language of the market system?

Economics is a social science that primarily explores how:

A leading game-console manufacturer slashes the price of its flagship product by ten percent.Holding other things such as income and preferences constant, which of the following is the most likely group behavior prediction?

An example of physical capital is:

"I woke up earlier today to beat other fishermen to the fish and yet I caught the same number of fish at 5 a.m. as I did at noon." Which of the following best explains this occurrence?

A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices.However, when the average price of cars increased throughout the 1990s, more cars were purchased.Which of the following best explains the apparent conflict between theory and data?

Scarcity is the result of:

Which of the following forces us to choose among alternatives?

The basic difference between macroeconomics and microeconomics is:

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

Which of the following is an example of market failure?

Economics is different from a "hard" science like physics because:

Economics is primarily the study of:

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

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 best test of an economic theory is:

What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

Economics is primarily the study of:

The circular flow of economic activity is a model of the:

Identify the chain of events in creating a theory:

Which of the following is a statement of positive economics?

Which of the following serve as the language of the market system?

Economics is a social science that primarily explores how:

A leading game-console manufacturer slashes the price of its flagship product by ten percent.Holding other things such as income and preferences constant, which of the following is the most likely group behavior prediction?

An example of physical capital is:

"I woke up earlier today to beat other fishermen to the fish and yet I caught the same number of fish at 5 a.m. as I did at noon." Which of the following best explains this occurrence?

A theory asserts that consumers will purchase less of a good at higher prices than they will at lower prices.However, when the average price of cars increased throughout the 1990s, more cars were purchased.Which of the following best explains the apparent conflict between theory and data?

Scarcity is the result of:

Which of the following forces us to choose among alternatives?

The basic difference between macroeconomics and microeconomics is:

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

Which of the following is an example of market failure?

Economics is different from a "hard" science like physics because:

Economics is primarily the study of:

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

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