Question 1

An example of a microeconomic decision is a situation in which

Accepted Answer

A)  the Federal Reserve considers how much to increase the money supply during the coming month in an effort to constrain the rate of inflation. 
B)  Congress and the president seek to reach a compromise on how much to increase government spending in an effort to influence national expenditures. 
C)  a firm evaluates how much to reduce the price of its product in an effort to influence sales and boost its profits. 
D)  the U.S. Treasury contemplates buying foreign currencies in an effort to influence exchange rates with an aim to boosting demand for U.S. goods and services. 
A)  the Federal Reserve considers how much to increase the money supply during the coming month in an effort to constrain the rate of inflation. 
B)  Congress and the president seek to reach a compromise on how much to increase government spending in an effort to influence national expenditures. 
C)  a firm evaluates how much to reduce the price of its product in an effort to influence sales and boost its profits. 
D)  the U.S. Treasury contemplates buying foreign currencies in an effort to influence exchange rates with an aim to boosting demand for U.S. goods and services.

Question 2

Charitable donations to the Red Cross

Accepted Answer

A)  can be explained by the rational ignorance theory. 
B)  can be explained by the rational self-interest theory. 
C)  cannot be explained by the rational self-interest theory. 
D)  prove that there is no scarcity in the United States. 
A)  can be explained by the rational ignorance theory. 
B)  can be explained by the rational self-interest theory. 
C)  cannot be explained by the rational self-interest theory. 
D)  prove that there is no scarcity in the United States.

Question 3

The study of an individual's choice about what type of computer to buy is a subject of

Accepted Answer

A)  macroeconomics. 
B)  microeconomics. 
C)  an aggregate concept. 
D)  not a concern for economic analysis. 
A)  macroeconomics. 
B)  microeconomics. 
C)  an aggregate concept. 
D)  not a concern for economic analysis.

Question 4

When the text refers to rational self-interest, it means

Accepted Answer

A)  your looking out for what is best for you as an individual. 
B)  your focus on your own contributions to society. 
C)  behavior that makes society better off. 
D)  behavior that hurts other people. 
A)  your looking out for what is best for you as an individual. 
B)  your focus on your own contributions to society. 
C)  behavior that makes society better off. 
D)  behavior that hurts other people.

Question 5

When two variables have a direct relationship, the slope is

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  infinity. 
A)  negative. 
B)  positive. 
C)  zero. 
D)  infinity.

Question 6

Economics is a part of the

Accepted Answer

A)  social sciences. 
B)  natural sciences. 
C)  biological sciences. 
D)  organizational sciences. 
A)  social sciences. 
B)  natural sciences. 
C)  biological sciences. 
D)  organizational sciences.

Question 7

In economic analysis, people's resources are

Accepted Answer

A)  limited and their wants are unlimited. 
B)  unlimited and their wants are also unlimited. 
C)  limited and their wants are also limited. 
D)  unlimited and their wants are limited. 
A)  limited and their wants are unlimited. 
B)  unlimited and their wants are also unlimited. 
C)  limited and their wants are also limited. 
D)  unlimited and their wants are limited.

Question 8

All of the following are positive statements EXCEPT

Accepted Answer

A)  the President of the United States in 2016 was Barack Obama. 
B)  California is in the United States. 
C)  migratory birds fly south for the winter. 
D)  a dog is man's best friend. 
A)  the President of the United States in 2016 was Barack Obama. 
B)  California is in the United States. 
C)  migratory birds fly south for the winter. 
D)  a dog is man's best friend.

Question 9

Do economists analyze people's thought processes or do they look at what people actually do?

Accepted Answer

A)  Economists focus only on people's thought processes. 
B)  Economists focus on what people do, not their thought processes. 
C)  An economist's focus is about half-and-half between actions and thought processes. 
D)  Macroeconomists focus on thought processes while microeconomists focus on actions. 
A)  Economists focus only on people's thought processes. 
B)  Economists focus on what people do, not their thought processes. 
C)  An economist's focus is about half-and-half between actions and thought processes. 
D)  Macroeconomists focus on thought processes while microeconomists focus on actions.

Question 10

Which of the following is NOT a focus of the study of economics?

Accepted Answer

A)  how individual preferences are formed 
B)  unemployment 
C)  inflation 
D)  prices in particular markets 
A)  how individual preferences are formed 
B)  unemployment 
C)  inflation 
D)  prices in particular markets

Question 11

Jaime's father gives her a car for her graduation from college, but Jaime wants a smartphone. This implies that

Accepted Answer

A)  Jaime's father is not acting out of self-interest because he knows that she really wants a smartphone. 
B)  Jaime's father is acting out of self-interest because he wants to give her something more expensive. 
C)  Jaime is not acting out of her self-interest by wanting something different from what her father gives her. 
D)  Jaime is not rational by asking for a smartphone instead of a car. 
A)  Jaime's father is not acting out of self-interest because he knows that she really wants a smartphone. 
B)  Jaime's father is acting out of self-interest because he wants to give her something more expensive. 
C)  Jaime is not acting out of her self-interest by wanting something different from what her father gives her. 
D)  Jaime is not rational by asking for a smartphone instead of a car.

Question 12

The rationality assumption states that

Accepted Answer

A)  all actions taken by consumers are based on what is good for society. 
B)  people make decisions regardless of how the outcome will affect them. 
C)  people make decisions to buy only those goods that they need rather than goods that they want. 
D)  people do not intentionally make decisions that would leave them worse off. 
A)  all actions taken by consumers are based on what is good for society. 
B)  people make decisions regardless of how the outcome will affect them. 
C)  people make decisions to buy only those goods that they need rather than goods that they want. 
D)  people do not intentionally make decisions that would leave them worse off.

Question 13

"Ceteris paribus" means

Accepted Answer

A)  "invisible hand." 
B)  "other things equal." 
C)  "making all the necessary changes." 
D)  "at the aggregate level." 
A)  "invisible hand." 
B)  "other things equal." 
C)  "making all the necessary changes." 
D)  "at the aggregate level."

Question 14

Which of the following would most likely NOT be taught in a microeconomics course?

Accepted Answer

A)  changes in prices of automobiles 
B)  the effects of a gas tax on gas purchases 
C)  the effect of an increase in wheat prices on farmers' behavior 
D)  changes in unemployment across the nation 
A)  changes in prices of automobiles 
B)  the effects of a gas tax on gas purchases 
C)  the effect of an increase in wheat prices on farmers' behavior 
D)  changes in unemployment across the nation

Question 15

Explain what economists mean when they apply the rationality assumption.

Accepted Answer

The rationality assumption means that pe

Question 16

The assumption that nothing changes EXCEPT the variables being studied is

Accepted Answer

A)  the ceteris paribus assumption. 
B)  the rationality assumption. 
C)  positive economic analysis. 
D)  normative economic analysis. 
A)  the ceteris paribus assumption. 
B)  the rationality assumption. 
C)  positive economic analysis. 
D)  normative economic analysis.

Question 17

Microeconomics examines the

Accepted Answer

A)  total household expenditures. 
B)  behavior of the economy as a whole. 
C)  aggregate business spending. 
D)  decision making undertaken by individual households. 
A)  total household expenditures. 
B)  behavior of the economy as a whole. 
C)  aggregate business spending. 
D)  decision making undertaken by individual households.

Question 18

Which of the following is a normative economic statement?

Accepted Answer

A)  Few auto mechanics are women. 
B)  Men and women should earn the same salary if they perform the same job. 
C)  Auto mechanics typically earned more than waitresses in the United States in 2017. 
D)  Most wait staff are women. 
A)  Few auto mechanics are women. 
B)  Men and women should earn the same salary if they perform the same job. 
C)  Auto mechanics typically earned more than waitresses in the United States in 2017. 
D)  Most wait staff are women.

Question 19

When people donate money to a charity, they behave

Accepted Answer

A)  rationally if the act gives them satisfaction. 
B)  irrationally because the act does not benefit anyone. 
C)  in an unpredictable manner because the act involves no incentive. 
D)  in a way that only makes themselves worse off. 
A)  rationally if the act gives them satisfaction. 
B)  irrationally because the act does not benefit anyone. 
C)  in an unpredictable manner because the act involves no incentive. 
D)  in a way that only makes themselves worse off.

Question 20

When two variables have an inverse relationship, the slope is

Accepted Answer

A)  negative. 
B)  positive. 
C)  infinity. 
D)  zero. 
A)  negative. 
B)  positive. 
C)  infinity. 
D)  zero.

Exam 1: The Nature of Economics

An example of a microeconomic decision is a situation in which

Charitable donations to the Red Cross

The study of an individual's choice about what type of computer to buy is a subject of

When the text refers to rational self-interest, it means

When two variables have a direct relationship, the slope is

Economics is a part of the

In economic analysis, people's resources are

All of the following are positive statements EXCEPT

Do economists analyze people's thought processes or do they look at what people actually do?

Which of the following is NOT a focus of the study of economics?

Jaime's father gives her a car for her graduation from college, but Jaime wants a smartphone. This implies that

The rationality assumption states that

"Ceteris paribus" means

Which of the following would most likely NOT be taught in a microeconomics course?

Explain what economists mean when they apply the rationality assumption.

The assumption that nothing changes EXCEPT the variables being studied is

Microeconomics examines the

Which of the following is a normative economic statement?

When people donate money to a charity, they behave

When two variables have an inverse relationship, the slope is

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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