Question 1

Microeconomics studies

Accepted Answer

A)  decisions made by individual consumers and firms. 
B)  the changes in economic theory brought about by changes in the nationwide economy. 
C)  how changes in the nation's birth rate affect its labor force. 
D)  how changes in the money supply affect how much households consume. 
A)  decisions made by individual consumers and firms. 
B)  the changes in economic theory brought about by changes in the nationwide economy. 
C)  how changes in the nation's birth rate affect its labor force. 
D)  how changes in the money supply affect how much households consume.

Question 2

Microeconomics is concerned with the study of

Accepted Answer

A)  the effects of inflation. 
B)  the effects of government spending. 
C)  the effects on individual producers of higher wages paid to workers. 
D)  aggregates. 
A)  the effects of inflation. 
B)  the effects of government spending. 
C)  the effects on individual producers of higher wages paid to workers. 
D)  aggregates.

Question 3

Economic resources are

Accepted Answer

A)  all the items that people would purchase if they had limited wants. 
B)  all the unlimited items that people would purchase with limited income. 
C)  items of value that are used to make other things that satisfy people's wants. 
D)  the total planned expenditures throughout the nation. 
A)  all the items that people would purchase if they had limited wants. 
B)  all the unlimited items that people would purchase with limited income. 
C)  items of value that are used to make other things that satisfy people's wants. 
D)  the total planned expenditures throughout the nation.

Question 4

Which of the following would likely be studied in a macroeconomics course?

Accepted Answer

A)  the unemployment rate 
B)  total output in an economy 
C)  the inflation rate 
D)  all of the above 
A)  the unemployment rate 
B)  total output in an economy 
C)  the inflation rate 
D)  all of the above

Question 5

The assumption that "other things are constant" is also known as the

Accepted Answer

A)  ceteris paribus assumption. 
B)  rational self-interest assumption. 
C)  distinguishing characteristic of economics as a science. 
D)  relationships assumption. 
A)  ceteris paribus assumption. 
B)  rational self-interest assumption. 
C)  distinguishing characteristic of economics as a science. 
D)  relationships assumption.

Question 6

Economics is most precisely defined as

Accepted Answer

A)  a study of what people need to survive. 
B)  a study of how culture evolves in different geographic areas. 
C)  the same as the study of finance and management. 
D)  the study of how people make choices. 
A)  a study of what people need to survive. 
B)  a study of how culture evolves in different geographic areas. 
C)  the same as the study of finance and management. 
D)  the study of how people make choices.

Question 7

The slope of a nonlinear curve

Accepted Answer

A)  is constant. 
B)  is always negative. 
C)  changes along the various points of the curve. 
D)  is always equal to 1. 
A)  is constant. 
B)  is always negative. 
C)  changes along the various points of the curve. 
D)  is always equal to 1.

Question 8

Which of the following statements about economic models is TRUE?

Accepted Answer

A)  Economic models are not empirically testable. 
B)  The predictive power of models is not as important as they serve the preferences of economists. 
C)  Economic models are designed so that every detail of the real world can be analyzed. 
D)  Every economic model is based on a set of assumptions. 
A)  Economic models are not empirically testable. 
B)  The predictive power of models is not as important as they serve the preferences of economists. 
C)  Economic models are designed so that every detail of the real world can be analyzed. 
D)  Every economic model is based on a set of assumptions.

Question 9

The primary purpose of economics is to understand how people make

Accepted Answer

A)  money. 
B)  goods and services. 
C)  choices. 
D)  a comfortable living. 
A)  money. 
B)  goods and services. 
C)  choices. 
D)  a comfortable living.

Question 10

Economic models

Accepted Answer

A)  are used to explain how people think. 
B)  are used to explain how people behave. 
C)  are essential representations of the real world. 
D)  are used to explore the thought processes of individuals or groups. 
A)  are used to explain how people think. 
B)  are used to explain how people behave. 
C)  are essential representations of the real world. 
D)  are used to explore the thought processes of individuals or groups.

Question 11

Economists assume people behave rationally, which means that people

Accepted Answer

A)  never make a mistake. 
B)  do not intentionally make decisions that make themselves worse off. 
C)  have the necessary information to always make correct decisions. 
D)  always understand the consequences of their decisions. 
A)  never make a mistake. 
B)  do not intentionally make decisions that make themselves worse off. 
C)  have the necessary information to always make correct decisions. 
D)  always understand the consequences of their decisions.

Question 12

Normative economic analysis involves

Accepted Answer

A)  true statements of facts only. 
B)  testable hypotheses by scientists. 
C)  value judgments and opinions. 
D)  purely descriptive statements. 
A)  true statements of facts only. 
B)  testable hypotheses by scientists. 
C)  value judgments and opinions. 
D)  purely descriptive statements.

Question 13

A relationship between two variables in which one variable increases at the same time as the other decreases is called

Accepted Answer

A)  nonlinear. 
B)  constant. 
C)  negative. 
D)  direct. 
A)  nonlinear. 
B)  constant. 
C)  negative. 
D)  direct.

Question 14

"The government should eliminate income inequality" is an example of

Accepted Answer

A)  a positive statement. 
B)  a realistic argument. 
C)  a factual statement. 
D)  a normative statement. 
A)  a positive statement. 
B)  a realistic argument. 
C)  a factual statement. 
D)  a normative statement.

Question 15

Which of the following statements is TRUE regarding the textbook used in this course?

Accepted Answer

A)  The textbook presents only economic theory, so no value judgments are involved in the text. 
B)  The textbook does not include normative statements. 
C)  The microeconomic section of the book includes only positive analysis while the macroeconomic section includes normative analysis. 
D)  The selection of topics included in the book involves value judgments as well as economic theory. 
A)  The textbook presents only economic theory, so no value judgments are involved in the text. 
B)  The textbook does not include normative statements. 
C)  The microeconomic section of the book includes only positive analysis while the macroeconomic section includes normative analysis. 
D)  The selection of topics included in the book involves value judgments as well as economic theory.

Question 16

In building a model to analyze economic situations, one of the important assumptions is

Accepted Answer

A)  ceteris paribus. 
B)  scarcity. 
C)  conversion abstraction. 
D)  cognitive dissonance. 
A)  ceteris paribus. 
B)  scarcity. 
C)  conversion abstraction. 
D)  cognitive dissonance.

Question 17

Economics is best defined as the

Accepted Answer

A)  study of how people make choices to satisfy their wants. 
B)  study of individual self-interests. 
C)  study of why people do not react to incentives. 
D)  process by which goods are sold in free markets. 
A)  study of how people make choices to satisfy their wants. 
B)  study of individual self-interests. 
C)  study of why people do not react to incentives. 
D)  process by which goods are sold in free markets.

Question 18

Which of the following is a characteristic of economics?

Accepted Answer

A)  allocation of limited resources in an effort to satisfy potentially unlimited wants 
B)  the focus on how people behave not in their own self-interest 
C)  the way society deals with people's needs 
D)  all of the above 
A)  allocation of limited resources in an effort to satisfy potentially unlimited wants 
B)  the focus on how people behave not in their own self-interest 
C)  the way society deals with people's needs 
D)  all of the above

Question 19

"If the United States enters a war with Canada, U.S. export prices will go up." This statement is an example of

Accepted Answer

A)  a positive statement. 
B)  an irrational statement. 
C)  a normative statement. 
D)  a realistic statement. 
A)  a positive statement. 
B)  an irrational statement. 
C)  a normative statement. 
D)  a realistic statement.

Question 20

Economics is the study of

Accepted Answer

A)  how to own as many resources as possible. 
B)  ceteris paribus. 
C)  the way people think rather than the way they act. 
D)  how people allocate their limited resources to satisfy their unlimited wants. 
A)  how to own as many resources as possible. 
B)  ceteris paribus. 
C)  the way people think rather than the way they act. 
D)  how people allocate their limited resources to satisfy their unlimited wants.

Exam 1: The Nature of Economics

Microeconomics studies

Microeconomics is concerned with the study of

Economic resources are

Which of the following would likely be studied in a macroeconomics course?

The assumption that "other things are constant" is also known as the

Economics is most precisely defined as

The slope of a nonlinear curve

Which of the following statements about economic models is TRUE?

The primary purpose of economics is to understand how people make

Economic models

Economists assume people behave rationally, which means that people

Normative economic analysis involves

A relationship between two variables in which one variable increases at the same time as the other decreases is called

"The government should eliminate income inequality" is an example of

Which of the following statements is TRUE regarding the textbook used in this course?

In building a model to analyze economic situations, one of the important assumptions is

Economics is best defined as the

Which of the following is a characteristic of economics?

"If the United States enters a war with Canada, U.S. export prices will go up." This statement is an example of

Economics is the study of

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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