Question 1

Economists assume people behave

Accepted Answer

A)  instinctively. 
B)  rationally. 
C)  irrationally. 
D)  greedily. 
A)  instinctively. 
B)  rationally. 
C)  irrationally. 
D)  greedily.

Question 2

Distinguish between macroeconomics and microeconomics.

Accepted Answer

Macroeconomics is concerned with the beh

Question 3

One reason why economists often use models in their analysis is that

Accepted Answer

A)  a model helps us to understand, explain, and predict economic phenomena in the real world. 
B)  a model accurately pictures every detail of the real world economy. 
C)  a model relates to individual thought processes rather than behavior. 
D)  it is relatively easy to perfectly specify a model. 
A)  a model helps us to understand, explain, and predict economic phenomena in the real world. 
B)  a model accurately pictures every detail of the real world economy. 
C)  a model relates to individual thought processes rather than behavior. 
D)  it is relatively easy to perfectly specify a model.

Question 4

Is inflation a macroeconomic or a microeconomic question? Why?

Accepted Answer

Inflation is a macroeconomic question be

Question 5

Macroeconomics is concerned with

Accepted Answer

A)  individual consumers. 
B)  government decision making concerning farm price supports. 
C)  aggregates. 
D)  the effects on a corporation of a strike by the United Auto Workers. 
A)  individual consumers. 
B)  government decision making concerning farm price supports. 
C)  aggregates. 
D)  the effects on a corporation of a strike by the United Auto Workers.

Question 6

Economists assume that people are motivated by

Accepted Answer

A)  benevolence. 
B)  altruism. 
C)  greed. 
D)  rational self-interest. 
A)  benevolence. 
B)  altruism. 
C)  greed. 
D)  rational self-interest.

Question 7

In economics, ________ are limited but ________ are unlimited.

Accepted Answer

A)  wants; resources 
B)  resources; wants 
C)  money; ideas 
D)  ideas; money 
A)  wants; resources 
B)  resources; wants 
C)  money; ideas 
D)  ideas; money

Question 8

Economics is the study of how people make

Accepted Answer

A)  subjective judgments. 
B)  life easy. 
C)  money. 
D)  choices. 
A)  subjective judgments. 
B)  life easy. 
C)  money. 
D)  choices.

Question 9

Which of the following would likely be considered as a topic of microeconomics?

Accepted Answer

A)  a nation's unemployment rate 
B)  Gross Domestic Product 
C)  the price of apples 
D)  the effects of fiscal policy on the economy 
A)  a nation's unemployment rate 
B)  Gross Domestic Product 
C)  the price of apples 
D)  the effects of fiscal policy on the economy

Question 10

What type of economics would most typically deal with aggregates?

Accepted Answer

A)  macroeconomics 
B)  microeconomics 
C)  normative economics 
D)  financial economics 
A)  macroeconomics 
B)  microeconomics 
C)  normative economics 
D)  financial economics

Question 11

"No individual should have less than $20,000 income in the United States in 2017" is an example of

Accepted Answer

A)  a normative statement. 
B)  a positive statement. 
C)  an illogical and refutable statement. 
D)  a truism. 
A)  a normative statement. 
B)  a positive statement. 
C)  an illogical and refutable statement. 
D)  a truism.

Question 12

Self-interest relates to

Accepted Answer

A)  only monetary objectives. 
B)  both monetary and nonmonetary objectives. 
C)  the ceteris paribus assumption. 
D)  normative economic analysis and not positive economic analysis. 
A)  only monetary objectives. 
B)  both monetary and nonmonetary objectives. 
C)  the ceteris paribus assumption. 
D)  normative economic analysis and not positive economic analysis.

Question 13

A direct relationship occurs when

Accepted Answer

A)  the two variables being compared change in opposite directions, or when one goes up the other goes down. 
B)  a change in one of the variables causes a change in the other variable in any direction. 
C)  the two variables being compared change in the same direction, or when one goes up the other also goes up. 
D)  the two variables have no identifiable relationship with each other. 
A)  the two variables being compared change in opposite directions, or when one goes up the other goes down. 
B)  a change in one of the variables causes a change in the other variable in any direction. 
C)  the two variables being compared change in the same direction, or when one goes up the other also goes up. 
D)  the two variables have no identifiable relationship with each other.

Question 14

Economic models relate to

Accepted Answer

A)  people's choices. 
B)  how people think about something. 
C)  choice. 
D)  the reasons people give for donating to charity. 
A)  people's choices. 
B)  how people think about something. 
C)  choice. 
D)  the reasons people give for donating to charity.

Question 15

Why is economics called an empirical science?

Accepted Answer

A)  because economics has been used to both create and destroy empires 
B)  because economics uses math to evaluate the usefulness of its models 
C)  because economics relies on real-world data to determine the usefulness of a model 
D)  because economics utilizes only assumptions to evaluate how accurate a model is 
A)  because economics has been used to both create and destroy empires 
B)  because economics uses math to evaluate the usefulness of its models 
C)  because economics relies on real-world data to determine the usefulness of a model 
D)  because economics utilizes only assumptions to evaluate how accurate a model is

Question 16

Normative economic statements

Accepted Answer

A)  violate the law of ceteris paribus. 
B)  contain value judgments. 
C)  are usually irrational. 
D)  are easily testable. 
A)  violate the law of ceteris paribus. 
B)  contain value judgments. 
C)  are usually irrational. 
D)  are easily testable.

Question 17

What is the economic way of thinking, and why is it important?

Accepted Answer

The economic way of thinking provides a

Question 18

If two competing models are offered to explain a certain economic phenomenon, the better model is the one

Accepted Answer

A)  that is the newest since newer models are better than old models. 
B)  with the fewest unrealistic assumptions. 
C)  that more often predicts with most accuracy. 
D)  that is not subject to empirical verification. 
A)  that is the newest since newer models are better than old models. 
B)  with the fewest unrealistic assumptions. 
C)  that more often predicts with most accuracy. 
D)  that is not subject to empirical verification.

Question 19

Which of the expressions below best describes the aim of economic theory?

Accepted Answer

A)  to predict how people think about money 
B)  to understand why money motivates some people more than others 
C)  to predict the choices people will make 
D)  to learn what we can do to prevent people from having unrealistic wants 
A)  to predict how people think about money 
B)  to understand why money motivates some people more than others 
C)  to predict the choices people will make 
D)  to learn what we can do to prevent people from having unrealistic wants

Question 20

What is meant by saying that economics is an empirical science?

Accepted Answer

A)  Economic theories will be tested by seeing how well they correspond to people's declared preferences. 
B)  Economic theories cannot be tested because there is no means of measuring economic variables with adequate precision. 
C)  Economic theories cannot be tested because economic variables change too quickly. 
D)  Economic theories will be tested by seeing how well they correspond to real-world phenomena. 
A)  Economic theories will be tested by seeing how well they correspond to people's declared preferences. 
B)  Economic theories cannot be tested because there is no means of measuring economic variables with adequate precision. 
C)  Economic theories cannot be tested because economic variables change too quickly. 
D)  Economic theories will be tested by seeing how well they correspond to real-world phenomena.

Exam 1: The Nature of Economics

Economists assume people behave

Distinguish between macroeconomics and microeconomics.

One reason why economists often use models in their analysis is that

Is inflation a macroeconomic or a microeconomic question? Why?

Macroeconomics is concerned with

Economists assume that people are motivated by

In economics, ________ are limited but ________ are unlimited.

Economics is the study of how people make

Which of the following would likely be considered as a topic of microeconomics?

What type of economics would most typically deal with aggregates?

"No individual should have less than $20,000 income in the United States in 2017" is an example of

Self-interest relates to

A direct relationship occurs when

Economic models relate to

Why is economics called an empirical science?

Normative economic statements

What is the economic way of thinking, and why is it important?

If two competing models are offered to explain a certain economic phenomenon, the better model is the one

Which of the expressions below best describes the aim of economic theory?

What is meant by saying that economics is an empirical science?

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

Filters

In economics, are limited but are unlimited.