Question 1

The basic difference between macroeconomics and microeconomics is that:

Accepted Answer

A) ​microeconomics looks at aggregate markets while macroeconomics is concerned with individual markets. 
B) ​macroeconomics is concerned with policy decisions while microeconomics applies only to theory. 
C) ​microeconomics is concerned with individual markets while macroeconomics is concerned with aggregate markets. 
D) ​macroeconomics is concerned with positive economics while microeconomics is concerned with normative economics. 
A) ​microeconomics looks at aggregate markets while macroeconomics is concerned with individual markets. 
B) ​macroeconomics is concerned with policy decisions while microeconomics applies only to theory. 
C) ​microeconomics is concerned with individual markets while macroeconomics is concerned with aggregate markets. 
D) ​macroeconomics is concerned with positive economics while microeconomics is concerned with normative economics.

Question 2

Which of the following are likely to be studied in a microeconomics course?

Accepted Answer

A) ​choices made by individual consumers 
B) ​the causes of inflation 
C) ​how the economy's total output is measured 
D) ​how an increase in government spending affects the level of unemployment 
A) ​choices made by individual consumers 
B) ​the causes of inflation 
C) ​how the economy's total output is measured 
D) ​how an increase in government spending affects the level of unemployment

Question 3

Macroeconomic topics do not usually include:

Accepted Answer

A) ​the rate of inflation. 
B) ​the rate of unemployment. 
C) ​economic growth. 
D) ​the profit maximizing decisions of an individual firm. 
A) ​the rate of inflation. 
B) ​the rate of unemployment. 
C) ​economic growth. 
D) ​the profit maximizing decisions of an individual firm.

Question 4

There are some well-respected economists that believe we should substitute a national sales tax for the income tax. Other equally well-respected economists do not agree. What accounts for the difference in opinion?

Accepted Answer

A) ​It might be over their interpretation of fairness. 
B) ​It might be over different modeling. 
C) ​Both (a) and (b). 
D) ​None of the above. 
A) ​It might be over their interpretation of fairness. 
B) ​It might be over different modeling. 
C) ​Both (a) and (b). 
D) ​None of the above.

Question 5

Economics is different from a "hard" science like physics because:

Accepted Answer

A) ​economists abstract from reality in creating their theories. 
B) ​economics is easier to study than physics. 
C) ​economists must explain their theories to policy makers who lack formal mathematical training. 
D) ​economists cannot easily control all the variables that might influence human behavior. 
A) ​economists abstract from reality in creating their theories. 
B) ​economics is easier to study than physics. 
C) ​economists must explain their theories to policy makers who lack formal mathematical training. 
D) ​economists cannot easily control all the variables that might influence human behavior.

Question 6

A person behaving rationally will:

Accepted Answer

A) ​never make mistakes. 
B) ​make decisions that are random and chaotic. 
C) ​have others determine whether their decisions are rational. 
D) ​try to weigh the expected marginal benefits and marginal costs of their decision. 
A) ​never make mistakes. 
B) ​make decisions that are random and chaotic. 
C) ​have others determine whether their decisions are rational. 
D) ​try to weigh the expected marginal benefits and marginal costs of their decision.

Question 7

Many people have heard that the stock market rises when a team from the National Football Conference (NFC) wins the Super Bowl, and falls when a team from the American Football Conference (AFC) is victorious. If you conclude that there is a causal relationship between the outcome of the Super Bowl and stock prices, you probably are:

Accepted Answer

A) ​confusing correlation with causation. 
B) ​committing the fallacy of composition. 
C) ​confusing the direction of causality, since everyone knows that stock prices determine which team wins the Super Bowl. 
D) ​none of the above 
A) ​confusing correlation with causation. 
B) ​committing the fallacy of composition. 
C) ​confusing the direction of causality, since everyone knows that stock prices determine which team wins the Super Bowl. 
D) ​none of the above

Question 8

Which of the following graphs or charts must add up to one hundred percent?

Accepted Answer

A) ​a labor graph 
B) ​a pie chart 
C) ​a time-series graph 
D) ​a scatter diagram 
A) ​a labor graph 
B) ​a pie chart 
C) ​a time-series graph 
D) ​a scatter diagram

Question 9

When President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand... and on the other hand... " he recognized that the advice of economists is often open to more than one interpretation. Why is this?

Accepted Answer

A) ​Economists cannot make up their minds on policy matters. 
B) ​Economists agree with each other on all policy issues. 
C) ​Economists are aware that tradeoffs are involved in most policy questions. 
D) ​Economists are often unable to identify the critical questions involved in policy issues. 
A) ​Economists cannot make up their minds on policy matters. 
B) ​Economists agree with each other on all policy issues. 
C) ​Economists are aware that tradeoffs are involved in most policy questions. 
D) ​Economists are often unable to identify the critical questions involved in policy issues.

Question 10

The ceteris paribus assumption is used in economic analyses in order to:

Accepted Answer

A) ​cover special cases. 
B) ​include all relevant factors. 
C) ​add realism. 
D) ​keep the relationship between the two variables isolated from other events. 
A) ​cover special cases. 
B) ​include all relevant factors. 
C) ​add realism. 
D) ​keep the relationship between the two variables isolated from other events.

Question 11

Economics is the study of choices we make among our many wants and desires.

Accepted Answer

A) True 
 B)False

Question 12

Normative analysis focuses on statements that can be tested against real-world data.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a statement of positive economics?

Accepted Answer

A) ​New tax laws are needed to help the poor. 
B) ​Teenage unemployment should be reduced. 
C) ​We should increase Social Security payments to the elderly. 
D) ​An increase in tax rates will reduce unemployment. 
A) ​New tax laws are needed to help the poor. 
B) ​Teenage unemployment should be reduced. 
C) ​We should increase Social Security payments to the elderly. 
D) ​An increase in tax rates will reduce unemployment.

Question 14

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

Accepted Answer

A) ​contains positive statements only. 
B) ​contains normative statements only. 
C) ​contains both normative and positive statements. 
D) ​contains neither normative nor positive statements. 
A) ​contains positive statements only. 
B) ​contains normative statements only. 
C) ​contains both normative and positive statements. 
D) ​contains neither normative nor positive statements.

The basic difference between macroeconomics and microeconomics is that:

Which of the following are likely to be studied in a microeconomics course?

Macroeconomic topics do not usually include:

There are some well-respected economists that believe we should substitute a national sales tax for the income tax. Other equally well-respected economists do not agree. What accounts for the difference in opinion?

Economics is different from a "hard" science like physics because:

A person behaving rationally will:

Which of the following graphs or charts must add up to one hundred percent?

When President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand... and on the other hand... " he recognized that the advice of economists is often open to more than one interpretation. Why is this?

The ceteris paribus assumption is used in economic analyses in order to:

Economics is the study of choices we make among our many wants and desires.

Normative analysis focuses on statements that can be tested against real-world data.

Which of the following is a statement of positive economics?

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 1: The Role and Method of Economics

The basic difference between macroeconomics and microeconomics is that:

Which of the following are likely to be studied in a microeconomics course?

Macroeconomic topics do not usually include:

There are some well-respected economists that believe we should substitute a national sales tax for the income tax. Other equally well-respected economists do not agree. What accounts for the difference in opinion?

Economics is different from a "hard" science like physics because:

A person behaving rationally will:

Which of the following graphs or charts must add up to one hundred percent?

When President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand... and on the other hand... " he recognized that the advice of economists is often open to more than one interpretation. Why is this?

The ceteris paribus assumption is used in economic analyses in order to:

Economics is the study of choices we make among our many wants and desires.

Normative analysis focuses on statements that can be tested against real-world data.

Which of the following is a statement of positive economics?

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters