Question 1

Step one in the scientific method is

Accepted Answer

A) formulate a hypothesis 
B) reflect an opinion 
C) specify assumptions 
D) identify the question and define relevant variables 
E) test the hypothesis 
A) formulate a hypothesis 
B) reflect an opinion 
C) specify assumptions 
D) identify the question and define relevant variables 
E) test the hypothesis

Question 2

In economics,capital is defined as

Accepted Answer

A) natural resources,such as water,oil,and iron ore 
B) the natural,unskilled abilities of people 
C) human creations used in the production process 
D) money and other financial assets 
E) the willingness of business owners to take risks 
A) natural resources,such as water,oil,and iron ore 
B) the natural,unskilled abilities of people 
C) human creations used in the production process 
D) money and other financial assets 
E) the willingness of business owners to take risks

Question 3

A rational decision maker will engage in more of an activity only if the marginal benefit ot the additional activity

Accepted Answer

A) is positive 
B) is at its maximum level 
C) is greater than or equal to the expected marginal cost 
D) is less than the expected marginal cost 
E) exactly equals the expected marginal cost 
A) is positive 
B) is at its maximum level 
C) is greater than or equal to the expected marginal cost 
D) is less than the expected marginal cost 
E) exactly equals the expected marginal cost

Question 4

Economists believe that individuals respond in a predictable way to changes in costs and benefits.The term that best describes this belief is

Accepted Answer

A) opportunity cost 
B) demand 
C) supply 
D) scarcity 
E) rational behavior 
A) opportunity cost 
B) demand 
C) supply 
D) scarcity 
E) rational behavior

Question 5

Most real economic choices involve small (or marginal)changes,rather than all-or-nothing decisions.

Accepted Answer

A) True 
 B)False

Question 6

You tell your friend that the stock market does well when we have Republican presidents so you are going to vote republican in the next presidential election.Because she is such a good friend she gently points out to you that you

Accepted Answer

A) are correct only when the economy is in a recession 
B) have mistakenly inferred causation from observed correlation 
C) have ignored secondary effects 
D) have committed the fallacy of composition 
E) are correct only when the United States enjoys economic growth 
A) are correct only when the economy is in a recession 
B) have mistakenly inferred causation from observed correlation 
C) have ignored secondary effects 
D) have committed the fallacy of composition 
E) are correct only when the United States enjoys economic growth

Question 7

Which of the following is a service?

Accepted Answer

A) anything that is scarce and that satisfies unlimited human wants 
B) a thing for which people pay money 
C) an intangible activity that satisfies human wants 
D) any output produced by a service-sector industry,such as fast food 
E) something less desirable than a good 
A) anything that is scarce and that satisfies unlimited human wants 
B) a thing for which people pay money 
C) an intangible activity that satisfies human wants 
D) any output produced by a service-sector industry,such as fast food 
E) something less desirable than a good

Question 8

A hypothesis is

Accepted Answer

A) an assumption about behavior 
B) a prediction of what will occur given certain assumptions 
C) a prediction of what will occur regardless of assumptions 
D) a forecast of future events 
E) useful only if the assumptions are realistic 
A) an assumption about behavior 
B) a prediction of what will occur given certain assumptions 
C) a prediction of what will occur regardless of assumptions 
D) a forecast of future events 
E) useful only if the assumptions are realistic

Question 9

The expression "There's no such thing as a free lunch" means that

Accepted Answer

A) services may be free,but goods are never free 
B) even if it has a price of zero,a good or service has a cost 
C) charitable organizations should not serve free lunches to the poor 
D) poor people are really the ones who pay for their allegedly free lunches 
E) someone has to pay the market price for a good or service 
A) services may be free,but goods are never free 
B) even if it has a price of zero,a good or service has a cost 
C) charitable organizations should not serve free lunches to the poor 
D) poor people are really the ones who pay for their allegedly free lunches 
E) someone has to pay the market price for a good or service

Question 10

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

Accepted Answer

A) If the money supply falls,interest rates will rise. 
B) Teenage unemployment would be lower if there were no minimum wage. 
C) The quantity of shirts sold increases as the price of shirts decreases. 
D) The federal government's total spending should be reduced. 
E) If interest rates go up,then construction activity will fall. 
A) If the money supply falls,interest rates will rise. 
B) Teenage unemployment would be lower if there were no minimum wage. 
C) The quantity of shirts sold increases as the price of shirts decreases. 
D) The federal government's total spending should be reduced. 
E) If interest rates go up,then construction activity will fall.

Question 11

The difference between a good and a service is that

Accepted Answer

A) a good helps satisfy unlimited wants; a service does not 
B) a service helps satisfy unlimited wants; a good does not 
C) a services is available in unlimited quantities; a good is not 
D) a good is available in unlimited quantities; a service is not 
E) a good is tangible; a service is not 
A) a good helps satisfy unlimited wants; a service does not 
B) a service helps satisfy unlimited wants; a good does not 
C) a services is available in unlimited quantities; a good is not 
D) a good is available in unlimited quantities; a service is not 
E) a good is tangible; a service is not

Question 12

In economics,the term "marginal" usually refers to

Accepted Answer

A) a small change in an economic variable 
B) a low-quality product or resource 
C) an unimportant and irrelevant economic variable 
D) an all-or-nothing economic decision 
E) a footnote or minor point 
A) a small change in an economic variable 
B) a low-quality product or resource 
C) an unimportant and irrelevant economic variable 
D) an all-or-nothing economic decision 
E) a footnote or minor point

Question 13

Economists believe that

Accepted Answer

A) people who choose to promote the interests of others cannot be acting rationally in their own self-interest 
B) people show concern only for those whom they know personally 
C) charitable donations would disappear if tax deductions for charitable giving were eliminated 
D) the notion of self-interest rules out concern for others 
E) concern for the welfare of others is consistent with the concept of self-interest 
A) people who choose to promote the interests of others cannot be acting rationally in their own self-interest 
B) people show concern only for those whom they know personally 
C) charitable donations would disappear if tax deductions for charitable giving were eliminated 
D) the notion of self-interest rules out concern for others 
E) concern for the welfare of others is consistent with the concept of self-interest

Question 14

An increase in the price of gasoline will cause a reduction in the amount purchased is an example of

Accepted Answer

A) a normative statement 
B) an unprovable statement 
C) a theorectical statement 
D) a positive statement 
E) an assumption 
A) a normative statement 
B) an unprovable statement 
C) a theorectical statement 
D) a positive statement 
E) an assumption

Question 15

Economics employs a scientific methodology.In part,this means that

Accepted Answer

A) all economic laws have been proven true by laboratory tests 
B) there is a single economic theory accepted by all economists 
C) economic hypotheses are tested to determine their validity 
D) personal values never enter into economic policy recommendations 
E) assumptions are not necessary in economic science 
A) all economic laws have been proven true by laboratory tests 
B) there is a single economic theory accepted by all economists 
C) economic hypotheses are tested to determine their validity 
D) personal values never enter into economic policy recommendations 
E) assumptions are not necessary in economic science

Question 16

Economic information

Accepted Answer

A) is usually scarce and costly to acquire 
B) is usually available free to any decision maker 
C) is usually not required for rational decision making 
D) must be complete before any decision is made 
E) is usually useful only to governments 
A) is usually scarce and costly to acquire 
B) is usually available free to any decision maker 
C) is usually not required for rational decision making 
D) must be complete before any decision is made 
E) is usually useful only to governments

Question 17

Most economists consider a theory a good one if it predicts well.

Accepted Answer

A) True 
 B)False

Question 18

The labor market is an example of a

Accepted Answer

A) government market 
B) classified market 
C) communication market 
D) resource market 
E) product market 
A) government market 
B) classified market 
C) communication market 
D) resource market 
E) product market

Question 19

Someone who commits the fallacy of composition is likely to assume that

Accepted Answer

A) the simplest model is the best predictor 
B) event B,which follows event A,was caused by event A 
C) event B,which follows event A,was not necessarily caused by event A 
D) what is true for the individual is also true for the group 
E) what is true for the individual is not necessarily true for the group 
A) the simplest model is the best predictor 
B) event B,which follows event A,was caused by event A 
C) event B,which follows event A,was not necessarily caused by event A 
D) what is true for the individual is also true for the group 
E) what is true for the individual is not necessarily true for the group

Question 20

Goods and services are scarce because

Accepted Answer

A) people are greedy 
B) they are produced using scarce resources 
C) firms keep production low in order to earn higher profits 
D) they are produced by firms that seeks profits 
E) government wants to maintain its power over the economy 
A) people are greedy 
B) they are produced using scarce resources 
C) firms keep production low in order to earn higher profits 
D) they are produced by firms that seeks profits 
E) government wants to maintain its power over the economy

Exam 1: The Art and Science of Economic Analysis

Step one in the scientific method is

In economics,capital is defined as

A rational decision maker will engage in more of an activity only if the marginal benefit ot the additional activity

Economists believe that individuals respond in a predictable way to changes in costs and benefits.The term that best describes this belief is

Most real economic choices involve small (or marginal)changes,rather than all-or-nothing decisions.

You tell your friend that the stock market does well when we have Republican presidents so you are going to vote republican in the next presidential election.Because she is such a good friend she gently points out to you that you

Which of the following is a service?

A hypothesis is

The expression "There's no such thing as a free lunch" means that

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

The difference between a good and a service is that

In economics,the term "marginal" usually refers to

Economists believe that

An increase in the price of gasoline will cause a reduction in the amount purchased is an example of

Economics employs a scientific methodology.In part,this means that

Economic information

Most economists consider a theory a good one if it predicts well.

The labor market is an example of a

Someone who commits the fallacy of composition is likely to assume that

Goods and services are scarce because

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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