Question 1

When a presidential candidate with a Ph.D.in economics makes a statement about what should be done to balance the budget, he or she is making a:

Accepted Answer

A) normative statement. 
B) positive statement. 
C) microeconomic statement. 
D) statement that is objective. 
E) statement of fact. 
A) normative statement. 
B) positive statement. 
C) microeconomic statement. 
D) statement that is objective. 
E) statement of fact.

Question 2

Tim has noticed that every time women's hemlines rise, stock market prices rise.He is therefore poised to invest in stocks the next time the local fashion editor predicts that shorter skirts will be in for the next season.Tim's error is called:

Accepted Answer

A) ceteris paribus. 
B) the fallacy of composition. 
C) the interpretation of association as causation. 
D) the scientific method. 
E) selfish behavior. 
A) ceteris paribus. 
B) the fallacy of composition. 
C) the interpretation of association as causation. 
D) the scientific method. 
E) selfish behavior.

Question 3

Which of the following categories of educated workforce in the U.S. , aged between 25 and 64, usually receive the highest income?

Accepted Answer

A) College graduates 
B) Individuals with professional degrees 
C) Individuals with a master degree 
D) College drop-outs 
E) High school students 
A) College graduates 
B) Individuals with professional degrees 
C) Individuals with a master degree 
D) College drop-outs 
E) High school students

Question 4

Which of the following is a free good?

Accepted Answer

A) Toll free roads 
B) Purified water 
C) Flora and fauna at a national park 
D) Air 
E) Congested roads 
A) Toll free roads 
B) Purified water 
C) Flora and fauna at a national park 
D) Air 
E) Congested roads

Question 5

Approximately how many American adults hold a college degree?

Accepted Answer

A) 70 percent 
B) 10 percent 
C) 30 percent 
D) 45 percent 
E) 50 percent 
A) 70 percent 
B) 10 percent 
C) 30 percent 
D) 45 percent 
E) 50 percent

Question 6

If two variables change, then it must mean that the change in one variable is caused by a change in the other variable.

Accepted Answer

A) True 
 B)False

Question 7

A good or service is said to be scarce when:

Accepted Answer

A) its price is too low. 
B) it is offered only to high income earners. 
C) no one wishes to purchase it. 
D) it cannot be transported easily. 
E) at a price of zero, there will not be enough to satisfy everyone's desire for it. 
A) its price is too low. 
B) it is offered only to high income earners. 
C) no one wishes to purchase it. 
D) it cannot be transported easily. 
E) at a price of zero, there will not be enough to satisfy everyone's desire for it.

Question 8

Individuals acting with rational self-interest:

Accepted Answer

A) always choose the same options as other rational individuals. 
B) never do voluntary work. 
C) always try to attain satisfaction at the expense of others. 
D) choose options that give them the greatest amount of satisfaction. 
E) are selfish. 
A) always choose the same options as other rational individuals. 
B) never do voluntary work. 
C) always try to attain satisfaction at the expense of others. 
D) choose options that give them the greatest amount of satisfaction. 
E) are selfish.

Question 9

Macroeconomics is concerned primarily with:

Accepted Answer

A) the operation of a particular firm. 
B) the labor market. 
C) individual consumer behavior. 
D) aggregate sectors of the economy such as the consumer sector or the business sector. 
E) a detailed examination of how price and output decisions are made in specific markets. 
A) the operation of a particular firm. 
B) the labor market. 
C) individual consumer behavior. 
D) aggregate sectors of the economy such as the consumer sector or the business sector. 
E) a detailed examination of how price and output decisions are made in specific markets.

Question 10

Which of the following is not an example of rational self-interest, as defined by economists?

Accepted Answer

A) A person risking his or her life to save someone else. 
B) A wealthy widow leaving a million dollars in her will to her cat. 
C) A farmer turning down an offer for his land that would make him independently wealthy. 
D) A collector paying $4 million for a particular painting, when other paintings by the same painter were available at a lower price. 
E) An individual paying a high price for an electronic widget at a store instead of buying it at the adjacent store offering the same widget at a lower price. 
A) A person risking his or her life to save someone else. 
B) A wealthy widow leaving a million dollars in her will to her cat. 
C) A farmer turning down an offer for his land that would make him independently wealthy. 
D) A collector paying $4 million for a particular painting, when other paintings by the same painter were available at a lower price. 
E) An individual paying a high price for an electronic widget at a store instead of buying it at the adjacent store offering the same widget at a lower price.

Question 11

Scarcity impels an individual to make choices.

Accepted Answer

A) True 
 B)False

Question 12

People who choose to do voluntary work:

Accepted Answer

A) are not acting with rational self-interest. 
B) find it more satisfying than the alternatives. 
C) are not concerned with their own satisfaction. 
D) never consider the alternative options. 
E) are beyond the scope of economics. 
A) are not acting with rational self-interest. 
B) find it more satisfying than the alternatives. 
C) are not concerned with their own satisfaction. 
D) never consider the alternative options. 
E) are beyond the scope of economics.

Question 13

Economics is the study of how people cope with:

Accepted Answer

A) limited human wants. 
B) scarcity. 
C) unlimited resources. 
D) greed. 
E) limited time and unlimited income. 
A) limited human wants. 
B) scarcity. 
C) unlimited resources. 
D) greed. 
E) limited time and unlimited income.

Question 14

Which of the following is true of microeconomics?

Accepted Answer

A) It is often a focal point of debates in a presidential campaign. 
B) It is the study of the behavior of individual firms and individual consumers. 
C) It is often focused on the tradeoff between the rate of inflation and the unemployment rate. 
D) It is based on theories that help us understand the relationship between the money supply and interest rates. 
E) It is the study of the economy in aggregate. 
A) It is often a focal point of debates in a presidential campaign. 
B) It is the study of the behavior of individual firms and individual consumers. 
C) It is often focused on the tradeoff between the rate of inflation and the unemployment rate. 
D) It is based on theories that help us understand the relationship between the money supply and interest rates. 
E) It is the study of the economy in aggregate.

Question 15

Which of the following phrases correctly describes at least one of the factors of production?

Accepted Answer

A) Natural resources, such as minerals, timber, and water, as well as land itself 
B) The physical and intellectual services of technological advances 
C) Buildings and warehouses, but not factories 
D) Inventories 
E) Automobiles 
A) Natural resources, such as minerals, timber, and water, as well as land itself 
B) The physical and intellectual services of technological advances 
C) Buildings and warehouses, but not factories 
D) Inventories 
E) Automobiles

Question 16

It has been generally observed, the rich have limited wants while the poor have unlimited wants.

Accepted Answer

A) True 
 B)False

Question 17

The study of inflation and unemployment in East Timor is in the realm of microeconomics.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following defines an economic good?

Accepted Answer

A) Anything that is provided by the government 
B) Anything that is provided by the nonprofit institutions 
C) Anything with a price on it 
D) Anything that has a very high demand in the market 
E) Anything that has a very high supply in the market 
A) Anything that is provided by the government 
B) Anything that is provided by the nonprofit institutions 
C) Anything with a price on it 
D) Anything that has a very high demand in the market 
E) Anything that has a very high supply in the market

Question 19

Goods used to produce other goods are called:

Accepted Answer

A) valuables. 
B) final goods. 
C) inputs. 
D) intermediaries. 
E) externalities. 
A) valuables. 
B) final goods. 
C) inputs. 
D) intermediaries. 
E) externalities.

Question 20

In economics, money is capital because it can be used to buy resources to produce goods.

Accepted Answer

A) True 
 B)False

Exam 1: Economics: The World Around You

When a presidential candidate with a Ph.D.in economics makes a statement about what should be done to balance the budget, he or she is making a:

Tim has noticed that every time women's hemlines rise, stock market prices rise.He is therefore poised to invest in stocks the next time the local fashion editor predicts that shorter skirts will be in for the next season.Tim's error is called:

Which of the following categories of educated workforce in the U.S. , aged between 25 and 64, usually receive the highest income?

Which of the following is a free good?

Approximately how many American adults hold a college degree?

If two variables change, then it must mean that the change in one variable is caused by a change in the other variable.

A good or service is said to be scarce when:

Individuals acting with rational self-interest:

Macroeconomics is concerned primarily with:

Which of the following is not an example of rational self-interest, as defined by economists?

Scarcity impels an individual to make choices.

People who choose to do voluntary work:

Economics is the study of how people cope with:

Which of the following is true of microeconomics?

Which of the following phrases correctly describes at least one of the factors of production?

It has been generally observed, the rich have limited wants while the poor have unlimited wants.

The study of inflation and unemployment in East Timor is in the realm of microeconomics.

Which of the following defines an economic good?

Goods used to produce other goods are called:

In economics, money is capital because it can be used to buy resources to produce goods.

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters