Question 1

Which of the following is a positive statement?

Accepted Answer

A) ​Increased money supply growth will lead to a higher rate of inflation. 
B) ​There are more millionaires in Uganda than in the United States. 
C) ​People watch more TV during finals week than during the rest of the term. 
D) ​All of the above are positive statements. 
A) ​Increased money supply growth will lead to a higher rate of inflation. 
B) ​There are more millionaires in Uganda than in the United States. 
C) ​People watch more TV during finals week than during the rest of the term. 
D) ​All of the above are positive statements.

Question 2

Economists assume that most people

Accepted Answer

A) ​act purposefully. 
B) ​make decision with some expected outcome in mind. 
C) ​make choices that are not random and chaotic. 
D) ​all of the above. 
A) ​act purposefully. 
B) ​make decision with some expected outcome in mind. 
C) ​make choices that are not random and chaotic. 
D) ​all of the above.

Question 3

Normative statements are:

Accepted Answer

A) ​prescriptive, making claims about how the world ought to be. 
B) ​descriptive, making claims about how the world is. 
C) ​optimistic, putting the best possible interpretation on things. 
D) ​statements that establish production goals for the economy. 
A) ​prescriptive, making claims about how the world ought to be. 
B) ​descriptive, making claims about how the world is. 
C) ​optimistic, putting the best possible interpretation on things. 
D) ​statements that establish production goals for the economy.

Question 4

Which of the following statements are true?

Accepted Answer

A) ​Wealthy people face scarcity. 
B) ​As a result of scarcity, individuals must make choices and face trade-offs. 
C) ​It is impossible to satisfy unlimited human wants with limited resources. 
D) ​All of the above are true statements. 
A) ​Wealthy people face scarcity. 
B) ​As a result of scarcity, individuals must make choices and face trade-offs. 
C) ​It is impossible to satisfy unlimited human wants with limited resources. 
D) ​All of the above are true statements.

Question 5

Which of the following best illustrates the fallacy of composition?

Accepted Answer

A) ​If the price of a product rises, the quantity supplied will decline. 
B) ​The average wage rate tends to increase at approximately the same rate as inflation; hence, wage increases must cause inflation. 
C) ​Resources are scarce; therefore, there is no such thing as a free lunch. 
D) ​If I talk loudly at a party, I have a better chance of being heard by my listeners.If everyone at the party talks loudly, everyone can be heard more clearly. 
A) ​If the price of a product rises, the quantity supplied will decline. 
B) ​The average wage rate tends to increase at approximately the same rate as inflation; hence, wage increases must cause inflation. 
C) ​Resources are scarce; therefore, there is no such thing as a free lunch. 
D) ​If I talk loudly at a party, I have a better chance of being heard by my listeners.If everyone at the party talks loudly, everyone can be heard more clearly.

Question 6

Which of the following is most likely a topic of discussion in a microeconomics course?

Accepted Answer

A) ​a decrease in the share of national income paid to the government in taxes 
B) ​an increase in the price of lumber used to construct houses 
C) ​an increase in the rate of inflation 
D) ​an increase in the number of jobless individuals filing unemployment claims 
A) ​a decrease in the share of national income paid to the government in taxes 
B) ​an increase in the price of lumber used to construct houses 
C) ​an increase in the rate of inflation 
D) ​an increase in the number of jobless individuals filing unemployment claims

Question 7

Economics is a social science that primarily explores how:

Accepted Answer

A) ​businesses market products under competitive conditions. 
B) ​stock and bond prices fluctuate when there are changes in demand or supply. 
C) ​the government allocates its budget among competing political interests. 
D) ​goods and services are consumed, produced and distributed in a world with limited resources. 
A) ​businesses market products under competitive conditions. 
B) ​stock and bond prices fluctuate when there are changes in demand or supply. 
C) ​the government allocates its budget among competing political interests. 
D) ​goods and services are consumed, produced and distributed in a world with limited resources.

Question 8

Economics can be divided into two main branches of study:

Accepted Answer

A) ​capitalism and communism. 
B) ​capitalism and socialism. 
C) ​demand and supply. 
D) ​microeconomics and macroeconomics. 
A) ​capitalism and communism. 
B) ​capitalism and socialism. 
C) ​demand and supply. 
D) ​microeconomics and macroeconomics.

Question 9

Economics is primarily the study of:

Accepted Answer

A) ​human greed. 
B) ​how firms compete for profits in the marketplace. 
C) ​how limited resources are allocated to satisfy unlimited wants. 
D) ​how successful investors make money in the stock market. 
A) ​human greed. 
B) ​how firms compete for profits in the marketplace. 
C) ​how limited resources are allocated to satisfy unlimited wants. 
D) ​how successful investors make money in the stock market.

Question 10

What is the difference between dependent and independent variables?

Accepted Answer

A variable is a quantity that can take o

Question 11

Microeconomics:

Accepted Answer

A) ​provides an overall view of the economy and how it functions. 
B) ​explores the behavior of individual consumers and firms when confronted with scarcity. 
C) ​examines the aggregate behavior of consumers and firms when confronted with scarcity. 
D) ​is a "positive" science, whereas macroeconomics is a "normative" science. 
A) ​provides an overall view of the economy and how it functions. 
B) ​explores the behavior of individual consumers and firms when confronted with scarcity. 
C) ​examines the aggregate behavior of consumers and firms when confronted with scarcity. 
D) ​is a "positive" science, whereas macroeconomics is a "normative" science.

Question 12

Since resources are abundant, we do not have to make choices about their use.

Accepted Answer

A) True 
 B)False

Question 13

A normative statement is descriptive-it describes what happens and why it happens.

Accepted Answer

A) True 
 B)False

Question 14

It is possible to completely eliminate scarcity.

Accepted Answer

A) True 
 B)False

Question 15

Adam Smith

Accepted Answer

A) ​is considered the founder of modern economics 
B) ​wrote An Inquiry into the Nature and Causes of the Wealth of Nations 
C) ​did not believe the wealth of nations came from an accumulation of gold and silver. 
D) ​All of the above 
A) ​is considered the founder of modern economics 
B) ​wrote An Inquiry into the Nature and Causes of the Wealth of Nations 
C) ​did not believe the wealth of nations came from an accumulation of gold and silver. 
D) ​All of the above

Question 16

How do we measure the slope of a linear curve?

Accepted Answer

A straight-line curve is called a linear

Question 17

By the study of "scarcity," an economist means how we best utilize our:

Accepted Answer

A) ​limited resources in order to promote full employment and price stability. 
B) ​unlimited desires in order to best use our unlimited resources. 
C) ​unlimited resources to best satisfy our unlimited desires. 
D) ​limited resources in order to best satisfy our unlimited desires. 
A) ​limited resources in order to promote full employment and price stability. 
B) ​unlimited desires in order to best use our unlimited resources. 
C) ​unlimited resources to best satisfy our unlimited desires. 
D) ​limited resources in order to best satisfy our unlimited desires.

Question 18

A hypothesis is:

Accepted Answer

A) ​a normative economic statement. 
B) ​a testable proposition. 
C) ​a statement that cannot be evaluated using real-world data. 
D) ​a model with no connection to the real world. 
A) ​a normative economic statement. 
B) ​a testable proposition. 
C) ​a statement that cannot be evaluated using real-world data. 
D) ​a model with no connection to the real world.

Question 19

Economics is concerned with:

Accepted Answer

A) ​the choices people must make because resources are scarce. 
B) ​human decision makers and the factors that influence their choices. 
C) ​the allocation of limited resources to satisfy unlimited wants. 
D) ​all of the above. 
A) ​the choices people must make because resources are scarce. 
B) ​human decision makers and the factors that influence their choices. 
C) ​the allocation of limited resources to satisfy unlimited wants. 
D) ​all of the above.

Question 20

"Ceteris paribus" is a Latin expression that means "holding everything else constant."

Accepted Answer

A) True 
 B)False

Exam 1: The Role and Method of Economics

Which of the following is a positive statement?

Economists assume that most people

Normative statements are:

Which of the following statements are true?

Which of the following best illustrates the fallacy of composition?

Which of the following is most likely a topic of discussion in a microeconomics course?

Economics is a social science that primarily explores how:

Economics can be divided into two main branches of study:

Economics is primarily the study of:

What is the difference between dependent and independent variables?

Microeconomics:

Since resources are abundant, we do not have to make choices about their use.

A normative statement is descriptive-it describes what happens and why it happens.

It is possible to completely eliminate scarcity.

Adam Smith

How do we measure the slope of a linear curve?

By the study of "scarcity," an economist means how we best utilize our:

A hypothesis is:

Economics is concerned with:

"Ceteris paribus" is a Latin expression that means "holding everything else constant."

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

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