Economics Chapter 1 Quiz

Which of the following is true of incentives?

Different people are motivated by different incentives.

Which of the following best describes how economists test the empirical predictions of economic models?

Economists collect and analyze real-world observations of people's actions to discern if those actions accord with theories' predictions.

Which of the following statements about economic models is true?

Every model is based on a set of assumptions.

Which of the following is NOT one of the basic questions that an economic system attempts to answer?

How to identify what people need?

Which of the following statements is an example of positive economic analysis?

If the government increases the rate of growth of the money supply, the inflation rate will increase, ceteris paribus.

Which of the following is a true statement about the economic assumption of rationality?

Individuals generally act as though they are rational.

Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they give her blisters. From the economistʹs perspective, was Sara behaving rationally when she bought those shoes?

Yes, Sara didn't but those shoes when they were out of fashion.

Which of the following would likely be studied in a macroeconomics course?

all of these.

The impact of higher taxes would be examined by

both a macro-economist and a micro-economist.

Which of the following is a microeconomic concern?

consumer behavior in the smartphone market.

What type of economics would most typically deal with aggregates?

macroeconomics.

Because models are used to explain economic behavior,

models can be either simple or complex so long as it explains economic behavior.

When two variables have an inverse relationship, the slope is

negative.

The rationality assumption says that

people do not intentionally make decisions that would leave them worse off.

It has been noted that when the price of a good increases, people purchase less of the good. This is an example of

positive economic analysis.

"If event A occurs then event B will follow" is a

positive statement.

In economics

resources are limited but wants are unlimited.

Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using

the ceteris paribus assumption.

An economic model should capture

the essential relationships that help to analyze the problem.

Consider the statement, " The number of hours you slept the night before a test affects your test grade." In this statement,

the number of hours slept is the independent variable and test grade is the dependent variable.

High gasoline prices give people all of the following incentives EXCEPT

to take vacations that require driving more miles.

A politician says that the government should tax behavior they want less of and subsidize behavior they want more of. This is an example of

using incentives to alter behavior.

Normative economic analysis involves

value judgments and opinions.

The President's statement that "to encourage economic growth, taxes should be cut"

would be an example of a normative statement.