Question 1

Identify the logic of economics that those who have not studied economics may fail to understand.

Accepted Answer

A) The implicit cost of a commodity is always higher than the explicit cost. 
B) Individual wants are limited by means. 
C) Private goods do not have a social cost. 
D) Public goods are available to us freely. 
E) There are costs to everything. 
A) The implicit cost of a commodity is always higher than the explicit cost. 
B) Individual wants are limited by means. 
C) Private goods do not have a social cost. 
D) Public goods are available to us freely. 
E) There are costs to everything.

Question 2

Which of the following is an example of capital as a factor of production?

Accepted Answer

A) Products such as machinery and equipment that are used in the production process 
B) The financial condition of a privately held corporation 
C) The value of a company's stock on the New York Stock Exchange 
D) A company's outstanding liabilities 
E) A business cash flow 
A) Products such as machinery and equipment that are used in the production process 
B) The financial condition of a privately held corporation 
C) The value of a company's stock on the New York Stock Exchange 
D) A company's outstanding liabilities 
E) A business cash flow

Question 3

"Inflation is a more serious problem than education." This statement is an example of:

Accepted Answer

A) a microeconomic analysis. 
B) bounded rationality. 
C) the fallacy of composition. 
D) a positive statement. 
E) a normative statement. 
A) a microeconomic analysis. 
B) bounded rationality. 
C) the fallacy of composition. 
D) a positive statement. 
E) a normative statement.

Question 4

Economics is the study of how people use:

Accepted Answer

A) their scarce resources to satisfy their basic wants. 
B) their scarce resources to attempt to satisfy their unlimited wants. 
C) the natural resources to satisfy their basic wants. 
D) the natural resources to attempt to satisfy their unlimited wants. 
E) their resources to influence the tastes and preferences of others. 
A) their scarce resources to satisfy their basic wants. 
B) their scarce resources to attempt to satisfy their unlimited wants. 
C) the natural resources to satisfy their basic wants. 
D) the natural resources to attempt to satisfy their unlimited wants. 
E) their resources to influence the tastes and preferences of others.

Question 5

If you agree that government should use a lottery to raise funds for improving education, you are using normative analysis.

Accepted Answer

A) True 
 B)False

Question 6

People earn an income by selling their resources or by using them.Owners of land receive _____, while the owners of capital receive _____.

Accepted Answer

A) rent;profit 
B) wage;profit 
C) profit;rent 
D) rent;interest 
E) interest;profit 
A) rent;profit 
B) wage;profit 
C) profit;rent 
D) rent;interest 
E) interest;profit

Question 7

Which of the following is a normative statement?

Accepted Answer

A) Higher prices for cigarettes discourage people from buying cigarettes. 
B) The Federal Reserve should lower interest rates to help boost residential construction. 
C) High demand for cars drove up fuel prices. 
D) Government expenditure on public health and sanitation declined over the years. 
E) The U.S.experienced a high rate of unemployment in 2009. 
A) Higher prices for cigarettes discourage people from buying cigarettes. 
B) The Federal Reserve should lower interest rates to help boost residential construction. 
C) High demand for cars drove up fuel prices. 
D) Government expenditure on public health and sanitation declined over the years. 
E) The U.S.experienced a high rate of unemployment in 2009.

Question 8

Only poor countries have to make choices because of limited resources.

Accepted Answer

A) True 
 B)False

Question 9

Both microeconomic and macroeconomic theories:

Accepted Answer

A) clearly state the public policies that should be undertaken to avoid or solve a particular problem under consideration. 
B) deal with the aggregate. 
C) deal with what ought to be as opposed to what is. 
D) are forms of positive economics. 
E) deal with individual entities in an economy. 
A) clearly state the public policies that should be undertaken to avoid or solve a particular problem under consideration. 
B) deal with the aggregate. 
C) deal with what ought to be as opposed to what is. 
D) are forms of positive economics. 
E) deal with individual entities in an economy.

Question 10

When an individual is behaving according to "rational self-interest, " he/she:

Accepted Answer

A) is behaving out of greed. 
B) will always choose the path of least resistance. 
C) will always buy the cheapest product. 
D) is making choices that provide the greatest amount of satisfaction. 
E) is making a lot of money. 
A) is behaving out of greed. 
B) will always choose the path of least resistance. 
C) will always buy the cheapest product. 
D) is making choices that provide the greatest amount of satisfaction. 
E) is making a lot of money.

Question 11

Which of the following is not physical capital, as economists use the term?

Accepted Answer

A) An office building 
B) Machinery on an assembly line 
C) An industrial robot 
D) Cash paid for raw materials 
E) A computer used by a business 
A) An office building 
B) Machinery on an assembly line 
C) An industrial robot 
D) Cash paid for raw materials 
E) A computer used by a business

Question 12

The heart of the economic problem is to:

Accepted Answer

A) provide for full employment. 
B) stimulate GDP growth. 
C) improve the standard of living of people. 
D) allocate limited resources among unlimited uses. 
E) increase leisure. 
A) provide for full employment. 
B) stimulate GDP growth. 
C) improve the standard of living of people. 
D) allocate limited resources among unlimited uses. 
E) increase leisure.

Question 13

Some economists have noted that throughout recent U.S.history, as the occurrence of sun spots has increased, so has the rate of overall inflation.If any of these economist based this observation on a short-term forecast of inflation, he/she would be:

Accepted Answer

A) confusing the problems of scarcity and abundance. 
B) committing the fallacy of composition. 
C) committing the error of interpreting association as causation. 
D) using normative analysis. 
E) committing the fallacy of double counting. 
A) confusing the problems of scarcity and abundance. 
B) committing the fallacy of composition. 
C) committing the error of interpreting association as causation. 
D) using normative analysis. 
E) committing the fallacy of double counting.

Question 14

"If I stand up at a baseball game, I can see better;therefore, everyone should stand up to see better." This statement illustrates:

Accepted Answer

A) the fallacy of composition. 
B) interpreting association as causation. 
C) the scientific method. 
D) positive economics. 
E) normative economics. 
A) the fallacy of composition. 
B) interpreting association as causation. 
C) the scientific method. 
D) positive economics. 
E) normative economics.

Question 15

Producers use inputs, or resources, to produce their goods.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following can be categorized as financial capital?

Accepted Answer

A) Offices and warehouses 
B) Stocks and bonds 
C) Machinery 
D) Land 
E) Equipment 
A) Offices and warehouses 
B) Stocks and bonds 
C) Machinery 
D) Land 
E) Equipment

Question 17

Purified bottled water is an example of a free good.

Accepted Answer

A) True 
 B)False

Question 18

According to the text, human beings are self-interested, not selfish.This means:

Accepted Answer

A) people are never selfish. 
B) people never act in a spiteful or belligerent manner. 
C) people never act in a fit of rage. 
D) people contribute to charities and otherwise help others. 
E) people care only about themselves and their families. 
A) people are never selfish. 
B) people never act in a spiteful or belligerent manner. 
C) people never act in a fit of rage. 
D) people contribute to charities and otherwise help others. 
E) people care only about themselves and their families.

Question 19

People are compelled to make a choice because of the lack of time and money to buy everything they want.

Accepted Answer

A) True 
 B)False

Question 20

A positive (nonzero)price for a good means the good is in surplus.

Accepted Answer

A) True 
 B)False

Exam 1: Economics: The World Around You

Identify the logic of economics that those who have not studied economics may fail to understand.

Which of the following is an example of capital as a factor of production?

"Inflation is a more serious problem than education." This statement is an example of:

Economics is the study of how people use:

If you agree that government should use a lottery to raise funds for improving education, you are using normative analysis.

People earn an income by selling their resources or by using them.Owners of land receive _____, while the owners of capital receive _____.

Which of the following is a normative statement?

Only poor countries have to make choices because of limited resources.

Both microeconomic and macroeconomic theories:

When an individual is behaving according to "rational self-interest, " he/she:

Which of the following is not physical capital, as economists use the term?

The heart of the economic problem is to:

Some economists have noted that throughout recent U.S.history, as the occurrence of sun spots has increased, so has the rate of overall inflation.If any of these economist based this observation on a short-term forecast of inflation, he/she would be:

"If I stand up at a baseball game, I can see better;therefore, everyone should stand up to see better." This statement illustrates:

Producers use inputs, or resources, to produce their goods.

Which of the following can be categorized as financial capital?

Purified bottled water is an example of a free good.

According to the text, human beings are self-interested, not selfish.This means:

People are compelled to make a choice because of the lack of time and money to buy everything they want.

A positive (nonzero)price for a good means the good is in surplus.

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

People earn an income by selling their resources or by using them.Owners of land receive _, while the owners of capital receive _.