Question 1

An economic system is

Accepted Answer

A)  the universe of all resources. 
B)  a way to create new resources. 
C)  a mechanism to allocate scarce resources. 
D)  an organization that generates profits. 
A)  the universe of all resources. 
B)  a way to create new resources. 
C)  a mechanism to allocate scarce resources. 
D)  an organization that generates profits.

Question 2

Which of the following is an example of an inverse relationship?

Accepted Answer

A)  hours of study and test grade 
B)  calories eliminated from diet and weight loss 
C)  the number of hours working while not studying for a test and test grade 
D)  amount of snowfall and profits of ski resorts 
A)  hours of study and test grade 
B)  calories eliminated from diet and weight loss 
C)  the number of hours working while not studying for a test and test grade 
D)  amount of snowfall and profits of ski resorts

Question 3

Economic models

Accepted Answer

A)  must capture every detail or interrelationship that exists. 
B)  are simplified representations of the real world. 
C)  must use laboratory experiments. 
D)  All of the above are correct. 
A)  must capture every detail or interrelationship that exists. 
B)  are simplified representations of the real world. 
C)  must use laboratory experiments. 
D)  All of the above are correct.

Question 4

In building a model the assumption that allows economists to study only the factors being analyzed is the

Accepted Answer

A)  rationality assumption. 
B)  ceteris paribus assumption. 
C)  the self-interest assumption. 
D)  the scarcity assumption. 
A)  rationality assumption. 
B)  ceteris paribus assumption. 
C)  the self-interest assumption. 
D)  the scarcity assumption.

Question 5

When constructing economic models, economists are more concerned with

Accepted Answer

A)  what people say than what they do. 
B)  what people think than what they need. 
C)  what people do than what they say. 
D)  what people say than how they act. 
A)  what people say than what they do. 
B)  what people think than what they need. 
C)  what people do than what they say. 
D)  what people say than how they act.

Question 6

People respond to incentives

Accepted Answer

A)  by ignoring negative incentives and responding to positive incentives only. 
B)  only when they are irrational. 
C)  as they never intentionally make decisions that would leave them worse off. 
D)  when they have low incomes. 
A)  by ignoring negative incentives and responding to positive incentives only. 
B)  only when they are irrational. 
C)  as they never intentionally make decisions that would leave them worse off. 
D)  when they have low incomes.

Question 7

A simplified representation of the real world that is used to explain economic phenomena is a(n)

Accepted Answer

A)  viewpoint. 
B)  model. 
C)  assumption. 
D)  implication. 
A)  viewpoint. 
B)  model. 
C)  assumption. 
D)  implication.

Question 8

The questions that an economic system attempts to solve include

Accepted Answer

A)  what to produce. 
B)  how to produce items. 
C)  for whom items are produced. 
D)  all of the above. 
A)  what to produce. 
B)  how to produce items. 
C)  for whom items are produced. 
D)  all of the above.

Question 9

Which of the following would provide an incentive to increase the amount of beef consumed?

Accepted Answer

A)  a decrease in the price of beef 
B)  a tax on beef sales 
C)  promotion of chicken consumption 
D)  a ban on beef sales by the Food and Drug Administration 
A)  a decrease in the price of beef 
B)  a tax on beef sales 
C)  promotion of chicken consumption 
D)  a ban on beef sales by the Food and Drug Administration

Question 10

Consider the statement, "The number of beers consumed the night before a test affects the grade." In this statement

Accepted Answer

A)  beer is the dependent variable and test grade is the independent variable. 
B)  beer is the independent variable and test grade is the dependent variable. 
C)  both beer and grade are dependent variables. 
D)  both beer and grade are independent variables. 
A)  beer is the dependent variable and test grade is the independent variable. 
B)  beer is the independent variable and test grade is the dependent variable. 
C)  both beer and grade are dependent variables. 
D)  both beer and grade are independent variables.

Question 11

Macroeconomics deals with

Accepted Answer

A)  aggregates within the economy. 
B)  specific sectors within the economy. 
C)  the retail industry only. 
D)  decisions made by firms. 
A)  aggregates within the economy. 
B)  specific sectors within the economy. 
C)  the retail industry only. 
D)  decisions made by firms.

Question 12

Which of the following statements is a positive economic statement?

Accepted Answer

A)  The number of families living in poverty in the United States is too high. 
B)  One in every five children in the United States is living in poverty. 
C)  Government programs to help the poor are just making problems worse. 
D)  The government should eliminate poverty in the country. 
A)  The number of families living in poverty in the United States is too high. 
B)  One in every five children in the United States is living in poverty. 
C)  Government programs to help the poor are just making problems worse. 
D)  The government should eliminate poverty in the country.

Question 13

If people act as if they systematically pursue their own self-interest, then they will most likely

Accepted Answer

A)  respond irrationally to any incentive. 
B)  respond to a given incentive in a random manner. 
C)  respond predictably to a given incentive. 
D)  not respond to any incentive. 
A)  respond irrationally to any incentive. 
B)  respond to a given incentive in a random manner. 
C)  respond predictably to a given incentive. 
D)  not respond to any incentive.

Question 14

-In the above graphs, an inverse relationship is shown by

Accepted Answer

A)  Graph A. 
B)  Graph B. 
C)  Graph C. 
D)  Graph D. 
A)  Graph A. 
B)  Graph B. 
C)  Graph C. 
D)  Graph D.

Question 15

Which one of the following is an example of a normative statement?

Accepted Answer

A)  Public school teachers are not paid enough. 
B)  The average public school teacher earns less than the average truck driver. 
C)  The average public school teacher earns more than the average truck driver. 
D)  Students in smaller classes perform better on standardized tests. 
A)  Public school teachers are not paid enough. 
B)  The average public school teacher earns less than the average truck driver. 
C)  The average public school teacher earns more than the average truck driver. 
D)  Students in smaller classes perform better on standardized tests.

Question 16

Which of the following is an aggregate?

Accepted Answer

A)  the number of shoes in one man's closet 
B)  the bushels of apples one farmer sells 
C)  the price of a particular textbook 
D)  the total production of all goods and services 
A)  the number of shoes in one man's closet 
B)  the bushels of apples one farmer sells 
C)  the price of a particular textbook 
D)  the total production of all goods and services

Question 17

Some pet owners are using an "invisible fence" to keep their animals from straying. Every time the animal steps over the edge of the property, it gets a mild shock. A social scientist would call the shock

Accepted Answer

A)  a price signal. 
B)  a reward. 
C)  a disincentive. 
D)  a normative incentive. 
A)  a price signal. 
B)  a reward. 
C)  a disincentive. 
D)  a normative incentive.

Question 18

Which of the following statements is an example of positive economic analysis?

Accepted Answer

A)  The inflation rate is too high. 
B)  The government should worry less about inflation and more about unemployment. 
C)  If the government increases the rate of growth of the money supply, the inflation rate will increase, ceteris paribus. 
D)  The elderly live on a fixed income, so the government has an obligation to keep inflation rates low. 
A)  The inflation rate is too high. 
B)  The government should worry less about inflation and more about unemployment. 
C)  If the government increases the rate of growth of the money supply, the inflation rate will increase, ceteris paribus. 
D)  The elderly live on a fixed income, so the government has an obligation to keep inflation rates low.

Question 19

All of the following are examples of macroeconomic problems EXCEPT

Accepted Answer

A)  inflationary pressures caused by an increase in the cost of petroleum. 
B)  unemployment caused by a fall off in the level of residential construction. 
C)  a decline in the rate of overall economic growth. 
D)  consumers deciding to buy more fish and less beef because of concerns about a healthier diet. 
A)  inflationary pressures caused by an increase in the cost of petroleum. 
B)  unemployment caused by a fall off in the level of residential construction. 
C)  a decline in the rate of overall economic growth. 
D)  consumers deciding to buy more fish and less beef because of concerns about a healthier diet.

Question 20

Microeconomics is the study of

Accepted Answer

A)  aggregate measures of the economy. 
B)  economic issues for an entire region. 
C)  federal budget details. 
D)  individual decision making. 
A)  aggregate measures of the economy. 
B)  economic issues for an entire region. 
C)  federal budget details. 
D)  individual decision making.

Exam 1: The Nature of Economics

An economic system is

Which of the following is an example of an inverse relationship?

Economic models

In building a model the assumption that allows economists to study only the factors being analyzed is the

When constructing economic models, economists are more concerned with

People respond to incentives

A simplified representation of the real world that is used to explain economic phenomena is a(n)

The questions that an economic system attempts to solve include

Which of the following would provide an incentive to increase the amount of beef consumed?

Consider the statement, "The number of beers consumed the night before a test affects the grade." In this statement

Macroeconomics deals with

Which of the following statements is a positive economic statement?

If people act as if they systematically pursue their own self-interest, then they will most likely

-In the above graphs, an inverse relationship is shown by

Which one of the following is an example of a normative statement?

Which of the following is an aggregate?

Some pet owners are using an "invisible fence" to keep their animals from straying. Every time the animal steps over the edge of the property, it gets a mild shock. A social scientist would call the shock

Which of the following statements is an example of positive economic analysis?

All of the following are examples of macroeconomic problems EXCEPT

Microeconomics 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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