Question 1

Macroeconomics is concerned with

Accepted Answer

A)  individual business firms. 
B)  specific markets. 
C)  individual consumers. 
D)  a nation's economy. 
A)  individual business firms. 
B)  specific markets. 
C)  individual consumers. 
D)  a nation's economy.

Question 2

The "paired observation" of (12, 6) means

Accepted Answer

A)  x = 12, y = 6. 
B)  x = 6, y = 12. 
C)  x = any multiple of 12, y = any multiple of 6. 
D)  the origin is at 12 and 6. 
A)  x = 12, y = 6. 
B)  x = 6, y = 12. 
C)  x = any multiple of 12, y = any multiple of 6. 
D)  the origin is at 12 and 6.

Question 3

In economics, all the items that people would consume if they had unlimited income are known as

Accepted Answer

A)  wants. 
B)  aggregates. 
C)  outputs. 
D)  needs. 
A)  wants. 
B)  aggregates. 
C)  outputs. 
D)  needs.

Question 4

Positive economics

Accepted Answer

A)  always gives an optimistic spin to economic news. 
B)  is concerned with the economic policies that should be implemented. 
C)  is objective. 
D)  was not used by nineteenth century economists. 
A)  always gives an optimistic spin to economic news. 
B)  is concerned with the economic policies that should be implemented. 
C)  is objective. 
D)  was not used by nineteenth century economists.

Question 5

Economics can be described as the study of how people use ________ resources to satisfy ________ wants.

Accepted Answer

A)  unlimited; unlimited 
B)  unlimited; limited 
C)  limited; unlimited 
D)  limited; limited 
A)  unlimited; unlimited 
B)  unlimited; limited 
C)  limited; unlimited 
D)  limited; limited

Question 6

Microeconomics is defined as that part of economic analysis that

Accepted Answer

A)  studies the behavior of the economy as a whole. 
B)  includes the problems of inflation and unemployment. 
C)  studies individual decision making by households and firms. 
D)  concerns aggregate production and consumption. 
A)  studies the behavior of the economy as a whole. 
B)  includes the problems of inflation and unemployment. 
C)  studies individual decision making by households and firms. 
D)  concerns aggregate production and consumption.

Question 7

Normative economic analysis tends to

Accepted Answer

A)  generate testable hypotheses. 
B)  include the way someone thinks things should be or ought to be. 
C)  involve descriptive statements. 
D)  lead to empirical testing of data. 
A)  generate testable hypotheses. 
B)  include the way someone thinks things should be or ought to be. 
C)  involve descriptive statements. 
D)  lead to empirical testing of data.

Question 8

The ceteris paribus assumption means

Accepted Answer

A)  favors are returned in kind. 
B)  this is the proof of the matter. 
C)  from many, one. 
D)  other things are equal. 
A)  favors are returned in kind. 
B)  this is the proof of the matter. 
C)  from many, one. 
D)  other things are equal.

Question 9

Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

Accepted Answer

A)  incentives 
B)  resources 
C)  rationality 
D)  aggregates 
A)  incentives 
B)  resources 
C)  rationality 
D)  aggregates

Question 10

A microeconomist would study all of the following issues EXCEPT

Accepted Answer

A)  the impact of a change in consumer income on the sales of corn. 
B)  the impact of a snowstorm on the sales of snow shovels. 
C)  the most efficient means for General Motors to produce an automobile. 
D)  the effect of a change in income taxes on the nation's rate of unemployment. 
A)  the impact of a change in consumer income on the sales of corn. 
B)  the impact of a snowstorm on the sales of snow shovels. 
C)  the most efficient means for General Motors to produce an automobile. 
D)  the effect of a change in income taxes on the nation's rate of unemployment.

Question 11

Macroeconomics might study which of the following?

Accepted Answer

A)  the causes of domestic unemployment 
B)  decision making undertaken by firms 
C)  decision making undertaken by households 
D)  determinants of the prices of rare goods (e.g., diamonds) 
A)  the causes of domestic unemployment 
B)  decision making undertaken by firms 
C)  decision making undertaken by households 
D)  determinants of the prices of rare goods (e.g., diamonds)

Question 12

Which of the following is a positive statement?

Accepted Answer

A)  An unemployment rate of 5.8 percent is too high. 
B)  The unemployment rate is 5.8 percent. 
C)  The unemployment rate should be below 5.8 percent. 
D)  The unemployment rate should never be above 5.8 percent. 
A)  An unemployment rate of 5.8 percent is too high. 
B)  The unemployment rate is 5.8 percent. 
C)  The unemployment rate should be below 5.8 percent. 
D)  The unemployment rate should never be above 5.8 percent.

Question 13

The difference between positive statements and normative statements is that

Accepted Answer

A)  a positive statement involves a value judgment and a normative statement is a statement of fact. 
B)  a positive statement is a statement of fact and a normative statement involves value judgments. 
C)  value judgments are made in normative statements but assumed in positive statements. 
D)  normative statements are provable while positive statements are not. 
A)  a positive statement involves a value judgment and a normative statement is a statement of fact. 
B)  a positive statement is a statement of fact and a normative statement involves value judgments. 
C)  value judgments are made in normative statements but assumed in positive statements. 
D)  normative statements are provable while positive statements are not.

Question 14

Which of the following is a microeconomic topic?

Accepted Answer

A)  the increase in the amount of imports from China to the United States 
B)  the rate at which the cost of living has increased in Canada 
C)  the marketing strategy of the Apple Computer company 
D)  the increase in the employment level of the United States in the past year 
A)  the increase in the amount of imports from China to the United States 
B)  the rate at which the cost of living has increased in Canada 
C)  the marketing strategy of the Apple Computer company 
D)  the increase in the employment level of the United States in the past year

Question 15

It is assumed in economics that people make decisions based upon

Accepted Answer

A)  altruism. 
B)  rational self-interest. 
C)  tradition. 
D)  perfect information about every aspect of the world. 
A)  altruism. 
B)  rational self-interest. 
C)  tradition. 
D)  perfect information about every aspect of the world.

Question 16

Which of the following is NOT a characteristic or focus of microeconomics?

Accepted Answer

A)  individual consumers. 
B)  analysis of aggregate economic variables 
C)  firm behavior 
D)  individual markets 
A)  individual consumers. 
B)  analysis of aggregate economic variables 
C)  firm behavior 
D)  individual markets

Question 17

Economics is an empirical science, which means that economists

Accepted Answer

A)  must use laboratory experiments to test their theories. 
B)  evaluate a model or theory by whether its assumptions are consistent with the real world. 
C)  try to prove their models are true by referring to logic. 
D)  look for evidence to determine whether the model is useful or not. 
A)  must use laboratory experiments to test their theories. 
B)  evaluate a model or theory by whether its assumptions are consistent with the real world. 
C)  try to prove their models are true by referring to logic. 
D)  look for evidence to determine whether the model is useful or not.

Question 18

In a market system, the what, how and for whom questions in economics are determined by

Accepted Answer

A)  those who are not in the market. 
B)  buyers and sellers together. 
C)  the central authority. 
D)  no one. 
A)  those who are not in the market. 
B)  buyers and sellers together. 
C)  the central authority. 
D)  no one.

Question 19

A characteristic of a good model is that

Accepted Answer

A)  its predictions can be tested using real-world data. 
B)  it is useful for making irrefutable predictions. 
C)  it applies to all situations. 
D)  it predicts perfectly. 
A)  its predictions can be tested using real-world data. 
B)  it is useful for making irrefutable predictions. 
C)  it applies to all situations. 
D)  it predicts perfectly.

Question 20

Central planning is a key characteristic of which economic system?

Accepted Answer

A)  free market 
B)  price system 
C)  command and control 
D)  mixed economic system 
A)  free market 
B)  price system 
C)  command and control 
D)  mixed economic system

Exam 1: The Nature of Economics

Macroeconomics is concerned with

The "paired observation" of (12, 6) means

In economics, all the items that people would consume if they had unlimited income are known as

Positive economics

Economics can be described as the study of how people use ________ resources to satisfy ________ wants.

Microeconomics is defined as that part of economic analysis that

Normative economic analysis tends to

The ceteris paribus assumption means

Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

A microeconomist would study all of the following issues EXCEPT

Macroeconomics might study which of the following?

Which of the following is a positive statement?

The difference between positive statements and normative statements is that

Which of the following is a microeconomic topic?

It is assumed in economics that people make decisions based upon

Which of the following is NOT a characteristic or focus of microeconomics?

Economics is an empirical science, which means that economists

In a market system, the what, how and for whom questions in economics are determined by

A characteristic of a good model is that

Central planning is a key characteristic of which economic system?

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

Economics can be described as the study of how people use resources to satisfy wants.