Question 1

Which of the following is NOT an investment in human capital?

Accepted Answer

A)   a computer science student learns how to repair a laptop computer
B)   a business student takes a seminar in using a laptop computer
C)   a computer science student takes a course on programming a laptop computer
D)   a student purchases a laptop computer D

Question 2

Macroeconomics is concerned with

Accepted Answer

A)   government decision making concerning farm price supports.
B)   economy-wide variables.
C)   individual consumers.
D)   the effects on Ford Motor of a strike by the United Auto Workers. B

Question 3

If a curve falls and then rises, it shows

Accepted Answer

A)   a constant slope relationship.
B)   a minimum.
C)   a maximum.
D)   a linear relationship. B

Question 4

Which of the following is a normative statement?

Accepted Answer

A)   The main reason why the United States has a trade deficit with China is because Chinaʹs trade practices are unfair.
B)   The United States has a comparative advantage compared to the European Union in the production of wheat.
C)   Both these statements are normative.
D)   Neither of these statements is normative.

Question 5

When an economy produces more houses and fewer typewriters, it is answering the part of one of the two big economic questions.

Accepted Answer

A)   ʺwhereʺ
B)   ʺhowʺ
C)   ʺwhatʺ
D)   ʺfor whomʺ

Question 6

An incentive

Accepted Answer

A)   is the opposite of a tradeoff.
B)   could be a penalty but could not be a reward.
C)   could be either a reward or a penalty.
D)   could be a reward but could not be a penalty.

Question 7

In broad terms the difference between microeconomics and macroeconomics is that

Accepted Answer

A)   macroeconomics studies the effects of government regulation and taxes on the price of individual goods and services whereas microeconomics does not.
B)   microeconomics studies the effects of government taxes on the national unemployment rate.
C)   they use different sets of tools and ideas.
D)   microeconomics studies decisions of individual people and firms and macroeconomics studies the entire national economy.

Question 8

The statement that ʺpeach ice cream is better than chocolate ice creamʺ

Accepted Answer

A)   is a normative statement.
B)   can be tested using the scientific approach.
C)   provides a basis for predicting which type of ice cream will exhibit the most sales.
D)   is a positive statement.

Question 9

What does the slope of the line shown in the above figure equal?

Accepted Answer

The answer of What does the slope of the line...

Question 10

Macroeconomics differs from microeconomics in that:

Accepted Answer

A)   macroeconomics studies the behavior of government while microeconomics looks at private corporations.
B)   macroeconomics studies the decisions of individuals.
C)   macroeconomics focuses on the national economy and the global economy.
D)   microeconomics looks at the economy as a whole.

Question 11

The study of economics

Accepted Answer

A)   deals mainly with microeconomics.
B)   focuses mainly on individual consumers.
C)   recognizes that scarcity does not affect rich nations.
D)   arises from the fact that our wants exceed available resources.

Question 12

In economics, the term ʺlandʺ means

Accepted Answer

A)   land, mineral resources, and natureʹs other bounties.
B)   only land that is used in agricultural production.
C)   land that is devoted to economic pursuits.
D)   land used for agricultural and urban purposes.

Question 13

Which of the following statements are correct?
I. The ʺhighest-valued alternative given up to get somethingʺ is the opportunity cost.
II. Wealthy economies donʹt experience opportunity costs.
III. Scarcity creates opportunity costs.

Accepted Answer

A)   I and II
B)   I and III
C)   I only
D)   I, II, and III

Question 14

-In the above figure, the axis break in the x-axis

Accepted Answer

A)   implies that for the years covered in the figure, the inflation rate was always greater than 1 percent.
B)   misleadingly shows that inflation has changed very little even though the unemployment rate has increased a great deal.
C)   reflects the fact that for the years covered in the figure, the unemployment rate was never less than 3 percent.
D)   shows that there is no relationship between inflation and unemployment.

Question 15

The slope of a line

Accepted Answer

A)   is always a constant.
B)   measures the ratio of the change in the value of the y-axis variable relative to the change in the value of the x-axis variable.
C)   can never equal zero.
D)   measures the value of the y-axis variable relative to the value of the x-axis variable.

Question 16

In part, microeconomics is concerned with the study of

Accepted Answer

A)   national output of goods and services.
B)   the effect government regulation has on the price of a product.
C)   unemployment and economic growth.
D)   the Federal Reserveʹs policies.

Question 17

-The slope of the line shown in the above figure is

Accepted Answer

A)   -3.
B)   -1.
C)   -5.
D)   -1/3.

Question 18

Scarcity can be eliminated through

Accepted Answer

A)   exploration that helps us find new resources.
B)   wise use of our resources.
C)   the use of market mechanisms.
D)   None of the above because scarcity cannot be eliminated.

Question 19

Which of the following is NOT a factor of production?

Accepted Answer

A)   100 shares of Microsoft stock
B)   mineral resources
C)   an apartment building
D)   a university professor

Question 20

Ceteris paribus refers to the idea that if more than two variables are graphed, only one variable must be held constant.

Accepted Answer

A) True 
 B)False

Exam 1: What Is Economics