Question 1

Whenever statements embodying values are made, we enter the realm of

Accepted Answer

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

Question 2

If psychological limitations and other complications cause people to be unable to examine and think through every possible choice available to them and rely instead on rules of thumb, then these individuals exhibit

Accepted Answer

A)  completely irrational behavior. 
B)  normative thinking. 
C)  bounded rationality. 
D)  positive thinking. 
A)  completely irrational behavior. 
B)  normative thinking. 
C)  bounded rationality. 
D)  positive thinking.

Question 3

Rational self-interest means

Accepted Answer

A)  always increasing your wealth. 
B)  pursuing what makes you better off. 
C)  pursuing activities that maximize income. 
D)  always pursuing activities that are consistent with your faith. 
A)  always increasing your wealth. 
B)  pursuing what makes you better off. 
C)  pursuing activities that maximize income. 
D)  always pursuing activities that are consistent with your faith.

Question 4

Which of the following is NOT studied in microeconomics?

Accepted Answer

A)  the effect of an increase in gasoline taxes on the purchase of gasoline 
B)  the impact of government spending on the unemployment rate 
C)  the impact of firms' hiring choices on their employees' wages 
D)  the impact of higher fuel prices on the cost of airline tickets 
A)  the effect of an increase in gasoline taxes on the purchase of gasoline 
B)  the impact of government spending on the unemployment rate 
C)  the impact of firms' hiring choices on their employees' wages 
D)  the impact of higher fuel prices on the cost of airline tickets

Question 5

The slope of a nonlinear curve is ________ when the curve is rising, and ________ when the curve is falling.

Accepted Answer

A)  negative, positive 
B)  negative, negative 
C)  positive, negative 
D)  positive, positive 
A)  negative, positive 
B)  negative, negative 
C)  positive, negative 
D)  positive, positive

Question 6

What does it mean to say economics is an empirical science, and how is this related to the question of deciding on the usefulness of a model?

Accepted Answer

Economists examine evidence to test whet

Question 7

Which of the following describes that people cannot examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them?

Accepted Answer

A)  self-interest 
B)  bounded rationality 
C)  ceteris paribus 
D)  normative economics 
A)  self-interest 
B)  bounded rationality 
C)  ceteris paribus 
D)  normative economics

Question 8

Positive economic analysis is supposed to be

Accepted Answer

A)  true. 
B)  free of value judgments. 
C)  just and fair. 
D)  moral and honest. 
A)  true. 
B)  free of value judgments. 
C)  just and fair. 
D)  moral and honest.

Question 9

Assumptions are necessary to

Accepted Answer

A)  make economics a social science. 
B)  define a set of circumstances where a model is most likely to apply. 
C)  define the relationship between wants and resources under all circumstances. 
D)  define the specific cause and effect relationship that is being explained by social sciences. 
A)  make economics a social science. 
B)  define a set of circumstances where a model is most likely to apply. 
C)  define the relationship between wants and resources under all circumstances. 
D)  define the specific cause and effect relationship that is being explained by social sciences.

Question 10

Which of the following is a behavioral implication of bounded rationality?

Accepted Answer

A)  unbounded selfishness 
B)  a rule of thumb 
C)  a rational mistake 
D)  a nervous breakdown 
A)  unbounded selfishness 
B)  a rule of thumb 
C)  a rational mistake 
D)  a nervous breakdown

Question 11

A macroeconomist would study

Accepted Answer

A)  the price changes of smart phones. 
B)  the cost problems at several airlines. 
C)  the economy's unemployment level. 
D)  none of the above. 
A)  the price changes of smart phones. 
B)  the cost problems at several airlines. 
C)  the economy's unemployment level. 
D)  none of the above.

Question 12

Analysis that is limited to making either purely descriptive statements or scientific predictions is

Accepted Answer

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

Question 13

How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms?

Accepted Answer

A)  The butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community. 
B)  The butcher, the brewer, and the baker give us our dinner because they will be sued if they don't do so. 
C)  The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so. 
D)  The butcher, the brewer, and the baker give us our dinner because they view doing so as a public service. 
A)  The butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community. 
B)  The butcher, the brewer, and the baker give us our dinner because they will be sued if they don't do so. 
C)  The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so. 
D)  The butcher, the brewer, and the baker give us our dinner because they view doing so as a public service.

Question 14

Which of the following statements about economic models is TRUE?

Accepted Answer

A)  The best economic models must be most complex. 
B)  A good model does not rely on any assumptions. 
C)  Every model is based on a set of assumptions. 
D)  Economic models are designed to explain what people need. 
A)  The best economic models must be most complex. 
B)  A good model does not rely on any assumptions. 
C)  Every model is based on a set of assumptions. 
D)  Economic models are designed to explain what people need.

Question 15

Which of the following is a microeconomic concern?

Accepted Answer

A)  the rate of economic growth in a small nation of Cuba 
B)  the current unemployment rate in the United Kingdom 
C)  consumer behavior in the smartphone market 
D)  national output of Canada 
A)  the rate of economic growth in a small nation of Cuba 
B)  the current unemployment rate in the United Kingdom 
C)  consumer behavior in the smartphone market 
D)  national output of Canada

Question 16

If the government offers to reduce your property taxes by 10 percent if you install solar heating for your home, this would be an example of

Accepted Answer

A)  a violation of the rational assumption. 
B)  incentives. 
C)  disincentives. 
D)  ceteris paribus. 
A)  a violation of the rational assumption. 
B)  incentives. 
C)  disincentives. 
D)  ceteris paribus.

Question 17

Economics is the study of

Accepted Answer

A)  nonhuman phenomena. 
B)  the determinants of preferences. 
C)  scarce resources and unlimited wants. 
D)  the physical sciences. 
A)  nonhuman phenomena. 
B)  the determinants of preferences. 
C)  scarce resources and unlimited wants. 
D)  the physical sciences.

Question 18

Macroeconomics often relies on microeconomic analysis because

Accepted Answer

A)  microeconomics is older than macroeconomics. 
B)  microeconomic theory can be tested and macroeconomic theory cannot be tested. 
C)  all aggregates are made up of individuals and firms. 
D)  the effects of macroeconomic subjects such as inflation and unemployment are independent of individual consumers and firms. 
A)  microeconomics is older than macroeconomics. 
B)  microeconomic theory can be tested and macroeconomic theory cannot be tested. 
C)  all aggregates are made up of individuals and firms. 
D)  the effects of macroeconomic subjects such as inflation and unemployment are independent of individual consumers and firms.

Question 19

One problem with constructing a perfectly complete realistic economic model is that

Accepted Answer

A)  it would be too simplistic to have any value. 
B)  it would be far too complicated to analyze. 
C)  it would not serve the needs of economists who builds that model. 
D)  None of the above is true. 
A)  it would be too simplistic to have any value. 
B)  it would be far too complicated to analyze. 
C)  it would not serve the needs of economists who builds that model. 
D)  None of the above is true.

Question 20

Which of the following is a macroeconomic concern?

Accepted Answer

A)  the unemployment rate in a specific industry 
B)  the national output of the United States 
C)  wage levels in specific industries 
D)  the operation of an individual firm 
A)  the unemployment rate in a specific industry 
B)  the national output of the United States 
C)  wage levels in specific industries 
D)  the operation of an individual firm

Exam 1: The Nature of Economics

Whenever statements embodying values are made, we enter the realm of

If psychological limitations and other complications cause people to be unable to examine and think through every possible choice available to them and rely instead on rules of thumb, then these individuals exhibit

Rational self-interest means

Which of the following is NOT studied in microeconomics?

The slope of a nonlinear curve is ________ when the curve is rising, and ________ when the curve is falling.

What does it mean to say economics is an empirical science, and how is this related to the question of deciding on the usefulness of a model?

Which of the following describes that people cannot examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them?

Positive economic analysis is supposed to be

Assumptions are necessary to

Which of the following is a behavioral implication of bounded rationality?

A macroeconomist would study

Analysis that is limited to making either purely descriptive statements or scientific predictions is

How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms?

Which of the following statements about economic models is TRUE?

Which of the following is a microeconomic concern?

If the government offers to reduce your property taxes by 10 percent if you install solar heating for your home, this would be an example of

Economics is the study of

Macroeconomics often relies on microeconomic analysis because

One problem with constructing a perfectly complete realistic economic model is that

Which of the following is a macroeconomic concern?

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

The slope of a nonlinear curve is when the curve is rising, and when the curve is falling.