Chapter 1 Nature of Economics
When we say that an individual behaves according to ʺrational self-interest,ʺ we mean that this individual? A) is motivated by greed B) will always buy the most fashionable items available C) will always buy the cheapest products available on the market D) is making choices that they believe will leave him/her better off
D) is making choices that they believe will leave him/her better off
Which one of the following is an example of a normative statement? A) A vacation in Colorado is better than a vacation in Hawaii B) Hotels in Colorado are more expensive than are hotels in Hawaii C) The hotel vacancy rate in Hawaii will increase as airfares to Hawaii increase D) The busiest tourist month in Colorado is July
A) A vacation in Colorado is better than a vacation in Hawaii
Which of the following is a microeconomic concern? A) the rate of economic growth in the United States B) the current unemployment rate in the United States C) consumer behavior D) national output of the United States
C) consumer behavior
When the Board of Governors of the Federal Reserve Bank, chaired by Ben Bernanke, determines the discount rate, it is using? A) fiscal policy B) microeconomic theory C) the Lorenz Curve D) macroeconomic theories
D) macroeconomic theories
In constructing models, economists? A) include all independent variables B) include all available information C) attempt to duplicate the real world D) make simplifying assumptions
D) make simplifying assumptions
The ceteris paribus assumption means? A) favors are returned in kind B) this is the proof of the matter C) from many, one D) other things are equal
D) other things are equal
The term ceteris paribus is an economic assumption that means? A) let the buyer beware B) common sense is reality C) the detail is in the interrelationship D) other things being equal
D) other things being equal
The rationality assumption states that? A) all actions taken by consumers are based on what is good for society B) people make decisions regardless of how the outcome will affect them C) people make decisions to buy only those goods that they need rather than goods that they want D) people do not intentionally make decisions that would leave them worse off
D) people do not intentionally make decisions that would leave them worse off
Microeconomics is concerned primarily with? A) normative issues B) the entire economy C) inflation rates D) smaller units of the economy such as firms and households
D) smaller units of the economy such as firms and households
All of the following are examples of macroeconomic problems EXCEPT? A) inflationary pressures caused by an increase in the cost of petroleum B) unemployment caused by a fall off in the level of residential construction C) a decline in the rate of overall economic growth D) consumers deciding to buy more fish and less beef because of concerns about a healthier diet
consumers deciding to buy more fish and less beef because of concerns about a healthier diet
Which one of the following is an example of a normative statement? A) Public school teachers are not paid enough B) The average public school teacher earns less than the average truck driver C) The average public school teacher earns more than the average truck driver D) Students in smaller classes perform better on standardized tests
A) Public school teachers are not paid enough
What would lead an economist to conclude that Theory A is superior to Theory B? A) Theory A predicts real-world events better than does Theory B B) The assumptions underlying Theory A are more realistic than are the assumptions underlying Theory B C) Theory A explains how people think, whereas Theory B only explains what they do D) Theory A is based on the assumption that an individual typically cannot determine what is in his or her own best interest, whereas Theory B assumes that each person knows what is in his or her own best interest and acts accordingly
A) Theory A predicts real-world events better than does Theory B
Economic analysis is? A) a tool that can aid all decision making B) a tool that can be used in only macroeconomics C) a tool that can be used in only microeconomics D) an unnecessary complication to decision making
A) a tool that can aid all decision making
Deciding whether to go to the beach or to go to school is? A) an economic decision B) a dynamic decision C) a financial decision D) a psychological decision
A) an economic decision
Rational behavior for an economist means that individuals? A) are motivated by self-interest B) never change their minds C) always make positive choices D) are self-sacrificing.
A) are motivated by self-interest
Normative economic statements? A) are statements of ʺwhat ought to be.ʺ B) are statements of ʺwhat is.ʺ C) are statements that may be tested by referring to facts and data. D) do not involve value judgments
A) are statements of ʺwhat ought to be.ʺ
The combination of psychology and economics to determine individual decision making is known as? A) behavioral economics B) pyschomics C) the rule of thumb D) positive analysis
A) behavioral economics
A positive economic statement is one that? A) can be refuted B) is free of the ceteris paribus assumption C) is based on a value judgment D) asserts something about the role of moral behavior in building a strong economy
A) can be refuted
In building a model to analyze economic situations, one of the important assumptions is? A) ceteris paribus B) scarcity C) conversion abstraction D) conflict resolution
A) ceteris paribus
Microeconomics studies? A) decisions made by individual consumers and firms B) the changes in economic theory brought about by real-world events C) how small changes in the unemployment rate can have far-reaching effects D) how small changes in the money supply can have far-reaching effects
A) decisions made by individual consumers and firms
Economics may be referred to as a(n) ________ science, meaning that data is looked at to see whether assertions are correct? A) empirical B) exact C) assumptive D) soft
A) empirical
Which of the following would most likely be part of the study of microeconomics? A) how General Motors makes decisions regarding their production goals B) national income C) the total economic output of our domestic economy D) overall price stability in the United States
A) how General Motors makes decisions regarding their production goals
A theory or a model? A) is a simplified, abstract view of reality B) is based on each economistʹs value judgments C) is a detailed analysis of what ought to be D) captures all aspects of the real world
A) is a simplified, abstract view of reality
What type of economics would most typically deal with aggregates? A) macroeconomics B) microeconomics C) labor economics D) environmental economics
A) macroeconomics
When two variables have an inverse relationship, the slope is? A) negative B) positive C) infinity D) zero
A) negative
In an inverse relationship? A) one variable rises while the other falls B) both variables rise together C) both variables fall together D) the two variables have nothing to do with each other
A) one variable rises while the other falls
Ceteris paribus means? A) other variables are held constant B) almost certainly C) only if everything works just right D) perhaps
A) other variables are held constant
Economics seeks to use only positive analysis to? A) provide a value-free analysis B) seek the best answer C) predict how people should act D) provide normative values
A) provide a value-free analysis
The idea that people will not consciously make decisions that make them worse off is known as? A) rationality assumption B) the decision duality C) Adam Smithʹs doctrine D) incentive assumption
A) rationality assumption
A negative slope? A) represents an inverse relationship, such as beers consumed and test score B) represents a direct relationship, such as snow fall and car accidents C) indicates that there is no relationship between two variables, such as womenʹs wages and likelihood of sunshine D) means that the line crosses below the x-axis
A) represents an inverse relationship, such as beers consumed and test score
Scarcity? A) requires individuals to make choices B) exists only in less developed countries C) affects only people whose income is below the poverty line D) affects only single-parent households.
A) requires individuals to make choices
The basic economic problem is? A) scarcity B) inflation C) unemployment D) unequal distribution of income
A) scarcity
Economic models are used to? A) simplify reality to predict outcomes B) exactly replicate reality C) predict all possible outcomes of a study D) determine the thoughts of individuals
A) simplify reality to predict outcomes
Economics is the study of? A) the allocation of scarce resources to satisfy unlimited wants B) inflation and unemployment in society C) making money D) maximization of profits for a firm.
A) the allocation of scarce resources to satisfy unlimited wants
Macroeconomics might study which of the following? A) the causes of domestic unemployment B) decision making undertaken by firms C) decision making undertaken by households D) determinants of the prices of rare goods (e.g., diamonds)
A) the causes of domestic unemployment
If the slope of a curve is 1/5, we know that? A) the relationship is linear, and the line moves from lower left to upper right B) the relationship is non-linear, and the line moves from lower left to upper right C) the relationship is linear, and the line moves from upper left to lower right D) the relationship is non-linear, and the line moves from upper left to lower right
A) the relationship is linear, and the line moves from lower left to upper right
If a teacher tells a student that those who attend the study session typically score higher on the final exam? A) the student has a positive incentive to attend the study session because she may get a higher grade B) the student has a negative incentive to attend the study session because she will be punished if she does not go C) the student has no greater incentive to attend because there is no guarantee she will get a higher grade on the exam D) a ʺCʺ student will be making an irrational decision if she decides to skip the study session since she has plenty of time to go.
A) the student has a positive incentive to attend the study session because she may get a higher grade
The value of a model is determined by? A) the usefulness of its predictions in the real world B) the extent of the profit earned by applying it C) the realism of its assumptions D) the modelʹs attention to real world details
A) the usefulness of its predictions in the real world
The idea of bounded rationality is used to address all of the following characteristics EXCEPT? A) unbounded selfishness B) unbounded knowledge C) unbounded willpower D) unbounded rationality
A) unbounded selfishness
Economics does NOT concern itself with? A) what people think B) unemployment C) inflation D) price stability
A) what people think
The Presidentʹs statement that ʺto encourage economic growth, taxes should be cut,ʺ? A) would be an example of a normative statement B) would be an example of a positive statement C) would be an example of a microeconomic statement D) would be a statement of mercantilist economic philosophy
A) would be an example of a normative statement
The ʺpaired observationʺ of (-14, -6) means? A) x = -14, y = -6 B) x = -6, y = -14 C) that the distance between the two points will be 8 D) the origin is at -14 and -6
A) x = -14, y = -6
The ʺpaired observationʺ of (14, 6) means? A) x = 14, y = 6 B) x = 6, y = 14 C) x = any multiple of 14, y = any multiple of 6 D) the origin is at 14 and 6
A) x = 14, y = 6
The author of the book An Inquiry into the Nature and Causes of the Wealth of Nations is? A) Thorstein Veblen B) Adam Smith C) Milton Friedman D) Alan Greenspan
B) Adam Smith
Which of the following is a normative economic statement? A) Few auto mechanics are women B) Men and women should earn the same salary if they perform the same job C) Auto mechanics typically earned more than waitresses in the United States in 2004 D) Most waitstaff are women
B) Men and women should earn the same salary if they perform the same job
Which of the following is a normative economic statement? A) If the government increases spending, unemployment will fall B) The government should increase spending during times of economic recession C) If banks create more money, unemployment will decrease D) If the price of gasoline rises, carpooling will increase
B) The government should increase spending during times of economic recession
Which of the following is a positive statement? A) An unemployment rate of 5.8 percent is too high B) The unemployment rate is 5.8 percent C) The unemployment rate should be below 5.8 percent D) The unemployment rate should never be above 5.8 percent
B) The unemployment rate is 5.8 percent
Consider the case of a teacher who tells students that those who miss more than three classes for any reason will automatically receive a lower grade? A) This is an example of a positive incentive for students to attend class B) This is an example of a negative incentive for students to attend class C) The teacher is assuming that students are irrational, and she must force them to attend class D) Students who miss more than three classes are irrational
B) This is an example of a negative incentive for students to attend class
According to economists, when two people make exactly the opposite decision? A) one of them is acting irrationally B) each person evaluates the situation according to his/her individual self-interest C) one of them is acting out of spite D) one of them should compromise
B) each person evaluates the situation according to his/her individual self-interest
The relationship between beers consumed the night before an exam and test grade will be graphed as? A) a line sloping down from upper right to lower left B) a line sloping down from upper left to lower right C) a circle D) a u-shaped curve
B) a line sloping down from upper left to lower right
The impact of an increase in the gasoline tax on SUV sales is? A) a macroeconomics topic because it deals with taxes B) a microeconomics topic because it deals with one industry C) not an economic issue, but rather a political issue D) insignificant
B) a microeconomics topic because it deals with one industry
The headline in the local paper today is ʺCollege tuition next fall will be raised by 3 percent.ʺ This statement is an example of ? A) a normative statement B) a positive statement C) a macroeconomic statement D) ceteris paribus
B) a positive statement
The difference between positive statements and normative statements is that? A) a positive statement involves a value judgment and a normative statement is a statement of fact B) a positive statement is a statement of fact and a normative statement involves value judgments C) value judgments are made in normative statements but assumed in positive statements D) normative statements are provable while positive statements are not
B) a positive statement is a statement of fact and a normative statement involves value judgments
Aggregate measures ar? A) anything to do with economics B) a total measure of a variable across the economy C) used only in microeconomics D) determined by the Bureau of Labor Statistics
B) a total measure of a variable across the economy
Economic models? A) should be designed so as to capture every detail or interrelationship that exists B) are simplified representations of the real world C) must employ the use of laboratory methods D) All of the above are correct
B) are simplified representations of the real world
Consider the statement, ʺThe number of beers consumed the night before a test affects the grade.ʺ In this statement? A) beer is the dependent variable and test grade is the independent variable B) beer is the independent variable and test grade is the dependent variable C) both beer and grade are dependent variables D) both beer and grade are independent variables
B) beer is the independent variable and test grade is the dependent variable
Charitable donations to the Red Cross? A) can be explained by the rational ignorance theory B) can be explained by the rational self-interest theory C) cannot be explained by the rational self-interest theory D) prove that there is no scarcity in the United States
B) can be explained by the rational self-interest theory
In building a model the assumption that allows economists to study only the factors being analyzed is the? A) rationality assumption B) ceteris paribus assumption C) the self-interest assumption D) the scarcity assumption
B) ceteris paribus assumption
Underlying economic theory is the idea that? A) people respond only to negative incentives, not to positive ones B) choices are affected by both positive and negative incentives C) value judgments do not play a role in the economic decisions people make D) money is the only incentive that matters
B) choices are affected by both positive and negative incentives
Assumptions are necessary to? A) make economics a social science B) define a set of circumstances where a model is most likely to apply C) define the relationship between wants and resources under all circumstances D) define the specific cause and effect relationship that is being explained by social sciences
B) define a set of circumstances where a model is most likely to apply
Because resources are scarce relative to wants, the study of economics concerns? A) how money is important to people B) how individuals, businesses, and governments make choices C) how money is used to buy what people want D) None of the above are correct
B) how individuals, businesses, and governments make choices
Scarcity exists in the world because? A) income is unevenly distributed between countries B) human wants are unlimited C) individuals have different innate abilities D) educational attainment varies by country
B) human wants are unlimited
If the government offers to reduce your property taxes by 10 percent if you install solar heating for your home, this would be an example of? A) police power B) incentives C) disincentives D) ceteris paribus
B) incentives
Normative economics? A) is never studied at the undergraduate level B) involves value judgments C) is always objective D) cannot be applied to all economic problems
B) involves value judgments
ʺThe U.S. government should not use my tax dollars to subsidize people on welfare?" A) is a positive economic statement because it simply describes one personʹs opinion B) is a normative economic statement because it involves a value judgment about an economic policy C) is a positive economic statement because it predicts that my tax dollars will go to welfare D) is a normative economic statement because it is a scientific fact
B) is a normative economic statement because it involves a value judgment about an economic policy
Economic theory predicts that people make choices in a manner that? A) makes them well liked by others B) makes them better off C) reflects the fact that resources are unlimited D) shows that they do not respond to monetary incentives
B) makes them better off
Individual decision making by consumers and producers is the focus of? A) macroeconomics B) microeconomics C) aggregate measures D) any economic model
B) microeconomics
The study of how a particular firm might choose to maximize its profits would fall into what type of analysis? A) macroeconomics B) microeconomics C) labor economics D) aggregate economics
B) microeconomics
If a straight line crosses the Y-axis at 5 and crosses the X-axis at 10, we can conclude that the slope of the line is? A) positive B) negative C) zero D) infinity
B) negative
The intersection of the x axis and the y axis is called the? A) ʺmeeting pointʺ B) origin C) ʺzeroʺ point D) corresponding point
B) origin
When two variables have a direct relationship, the slope is? A) negative B) positive C) zero D) infinity
B) positive
Rational self-interest means? A) always increasing your wealth B) pursuing what makes you better off C) pursuing activities that maximize income D) always pursuing activities that are consistent with your faith
B) pursuing what makes you better off
It is assumed in economics that people make decisions based upon? A) altruism B) rational self-interest C) tradition D) governmental persuasion
B) rational self-interest
Which of the following is NOT studied in microeconomics? A) the effect of an increase in gasoline taxes on the purchase of gasoline B) the impact of an increase in the unemployment rate on economic production C) the impact of higher wages on the production of steel in the United States D) the impact of higher fuel prices on the cost of airline tickets
B) the impact of an increase in the unemployment rate on economic production
Which of the following is a macroeconomic concern? A) the unemployment rate in a specific industry B) the national output of the United States C) wage levels in specific industries D) the operation of an individual firm
B) the national output of the United States
All of the following are aspects of macroeconomics EXCEPT? A) the U.S. unemployment rate B) the production decisions of a pharmaceutical firm C) the budget deficit of the United States D) foreign trade
B) the production decisions of a pharmaceutical firm
Why do economists test their hypotheses? A) to see whether people are motivated by self-interest B) to see whether their models predict the choices people will make C) to determine whether government policies have effectively achieved their goals D) to learn what people are thinking when they make the choices they do
B) to see whether their models predict the choices people will make
Ceteris paribus means? A) ʺall variables are independentʺ B) ʺother things being equalʺ C) ʺsome assumptions must be accepted without proofʺ D) ʺsome theories are not rational.ʺ
B) ʺother things being equalʺ
Suppose that on average there are five more car accidents for every extra inch of snowfall in a certain region. If snowfall is graphed on the y axis and car accidents on the x axis, then if we graph this relationship, the slope of the line will be? A) 25 B) 5 C) 1/5 D) 1
C) 1/5
Which one of the following is an example of a normative statement? A) A digital camera costs more than a disposable camera B) Most digital cameras sold in the United States are imported from other countries C) A camera makes a good wedding gift D) More people will buy digital cameras as their prices decline
C) A camera makes a good wedding gift
Which of the following statements about economic models is true? A) A good economic model is complex B) A good model does not rely on any assumptions C) Every model is based on a set of assumptions D) Economic models are designed to explain what people need
C) Every model is based on a set of assumptions
Which of the following is a positive economic statement? A) We should strive to achieve full employment in the United States B) The President of the United States should promote stable prices in the United States C) If the price of eggs increases, the quantity demanded of bacon will fall D) We should try to eliminate poverty in the United States
C) If the price of eggs increases, the quantity demanded of bacon will fall
________ are the things that are used to produce things that satisfy peopleʹs wants. A) Concepts B) Production possibilities curves C) Resources D) Costs
C) Resources
Which of the following is a normative statement? A) The Gross Domestic Product is the dollar value of all goods and services produced in a country in a year B) Fiscal policy is determined by the Congress and the president C) Tax cuts are good for the economy D) Monetary policy is determined by the Federal Reserve System
C) Tax cuts are good for the economy
How could Adam Smithʹs comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms? A) The butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community B) The butcher, the brewer, and the baker give us our dinner because they will be sued if they donʹt do so C) The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so D) The butcher, the brewer, and the baker give us our dinner because they view doing so as a public service
C) The butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so
The slope of a nonlinear curve? A) is constant B) is always negative C) changes along the various points of the curve D) is always equal to 1
C) changes along the various points of the curve
Which of the following is NOT a positive statement? A) The unemployment rate is 5.8 percent B) The inflation rate for 2002 was 2.3 percent C) The national debt is too high D) The federal government budget for 2004 is $2.2 trillion
C) The national debt is too high
Which of the following is a positive statement? A) We need to carefully protect our borders B) Hyperinflation is the most damaging thing that can occur in an economy C) When tax revenues are less than government spending there is a budget deficit D) Foreign aid should be reduced to help our budget deficit
C) When tax revenues are less than government spending there is a budget deficit
An example of a microeconomic decision is a situation in which? A) the Federal Reserve considers how much to increase the money supply during the coming month in an effort to constrain the rate of inflation B) Congress and the president seek to reach a compromise on how much to increase government spending in an effort to influence national expenditures C) a firm evaluates how much to reduce the price of its product in an effort to influence sales and boost its profits D) the U.S. Treasury contemplates buying foreign currencies in an effort to influence exchange rates with an aim to boosting demand for U.S. goods and services.
C) a firm evaluates how much to reduce the price of its product in an effort to influence sales and boost its profits
Positive analysis can be described as? A) the study of whether people respond to positive incentives B) the study of whether people respond to negative incentives C) a value-free approach to inquiry D) a study that is not tested empirically
C) a value-free approach to inquiry
Which of the following is an example of an inverse relationship? A) hours of study and test grade B) calories eliminated from diet and weight loss C) beers consumed while studying and test grade D) amount of snowfall and profits of ski resorts
C) beers consumed while studying and test grade
How does the science of economics deal with the fact that we all have different values? A) by assuming that values donʹt play a role in economic behavior B) by seeking to discover the sources of different value systems C) by using positive analysis D) by surveying the public to see what the most common values are, and then incorporating those as assumptions into their models
C) by using positive analysis
The slope of a line is the? A) change in the values along the x-axis divided by the change in the values along the y-axis B) values on the x-axis divided by the values on the y-axis C) change in the values along the y-axis divided by the change in the values along the x-axis D) values on the y-axis divided by the values on the x-axis
C) change in the values along the y-axis divided by the change in the values along the x-axis
By using the ceteris paribus assumption in conjunction with a model, economists can? A) suspend the rationality assumption B) avoid having their model depend on any additional assumptions C) hold certain factors constant D) be sure that the model will predict correctly
C) hold certain factors constant
A relationship between two variables in which one variable increases at the same time as the other decreases is called? A) nonlinear B) constant C) inverse D) direct
C) inverse
Positive economics? A) always gives an optimistic spin to economic news B) is concerned with the economic policies that should be implemented C) is objective D) was not used by nineteenth century economists
C) is objective
The study of economics can be divided into two areas, which are? A) scarcity and choice B) economic development and growth C) macroeconomics and microeconomics D) personal finance and stock market analysis
C) macroeconomics and microeconomics
The slope of a nonlinear curve is ________ when the curve is rising, and ________ when the curve is falling? A) negative, positive B) negative, negative C) positive, negative D) positive, positive
C) positive, negative
In the definition of economics? A) both resources and wants are limited B) both resources and wants are unlimited C) resources are limited and wants are unlimited D) resources are unlimited and wants are limited
C) resources are limited and wants are unlimited
An incentive is a? A) need B) want C) reward for desired behavior D) resource
C) reward for desired behavior
Economists assume that people are motivated by? A) a desire to please others B) the interests of the community at large C) self-interest D) morally correct behavior
C) self-interest
Which of the following is a microeconomic topic? A) the unemployment rate of the United States economy as a whole B) the rate at which prices increase in Brazil C) the advertising strategy of a particular company D) the increase in the national income of the United States over the past three months
C) the advertising strategy of a particular company
Economics is a study of? A) how to make money in the stock market B) how to run a business successfully C) the allocation of scarce resources D) personal finance.
C) the allocation of scarce resources
Macroeconomics is concerned primarily with? A) the operations of a particular industry B) the issues in the labor market C) the entire economy D) normative issues
C) the entire economy
Assumptions in models tend to make? A) the model predict what the scientist wants the results to be B) the model more complex C) the model more applicable to specific circumstances D) the model always predict the future accurately
C) the model more applicable to specific circumstances
Which of the following would likely be considered as falling into the domain of microeconomics? A) the U.S. unemployment rate B) the Gross Domestic Product C) the price of apples D) the effects of fiscal policy on the U.S. economy
C) the price of apples
The assumption that individuals do NOT intentionally make decisions that would leave them worse off is referred to as? A) the premium assumption B) the law of comparative advantage C) the rationality assumption D) the law of demand
C) the rationality assumption
A direct relationship occurs when? A) the two variables being compared change in opposite directions, or when one goes up the other goes down B) a change in one of the variables causes a change in the other variable in any direction C) the two variables being compared change in the same direction, or when one goes up the other also goes up D) the two variables have no identifiable relationship with each other
C) the two variables being compared change in the same direction, or when one goes up the other also goes up
Which of the following article topics is a macroeconomic subject? A) a proposed merger between two companies B) the level of Christmas sales at a particular department store C) the unemployment rate of the United States economy as a whole D) the advertising strategy of a particular automobile firm
C) the unemployment rate of the United States economy as a whole
Which of the expressions below best describes the aim of economic theory? A) to predict how people think about money B) to understand why money motivates some people more than others C) to predict the choices people will make D) to learn what we can do to prevent people from having unrealistic wants
C) to predict the choices people will make
Economics? A) is a social science B) is concerned with limited resources C) is concerned with unlimited wants D) All of the above are correct
D) All of the above are correct
A five-cent deposit on beer bottles? A) provides a positive incentive because it rewards people for recycling B) provides a negative incentive because it punishes people who do not recycle C) has no impact on recycling D) Both A and B are correct
D) Both A and B are correct
What is meant by saying that economics is an empirical science? A) Economic theories do not need to be tested because they are based on true assumptions B) Economic theories cannot be tested because there is no means of measuring economic variables with adequate precision C) Economic theories cannot be tested because economic variables change too quickly D) Economic theories will be tested by seeing how well they correspond to real-world phenomena
D) Economic theories will be tested by seeing how well they correspond to real-world phenomena
Economics is a? A) cognitive science B) physical science C) natural science D) social science.
D) Social Science
Which one of the following is an example of a positive statement? A) Farmers need some type of government aid B) State governments should provide economic assistance to farmers C) The federal government should provide economic assistance to farmers D) The amount of financial assistance given to farmers is higher this year than it was 10 years ago
D) The amount of financial assistance given to farmers is higher this year than it was 10 years ago
According to economic theory, how do people make decisions? A) They make decisions in the same manner as their parents did B) They make decisions by looking at what others have done in the same situation and then doing the opposite C) They make decisions by looking at what others have done in the same situation and then doing the same D) They make decisions based on their own self-interest
D) They make decisions based on their own self-interest
Based on your understanding of your roommateʹs preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. How do you describe this event in terms of economic theory? A) Your roommate is irrational B) Your roommate does not know what is in his own best interests C) You roommate does not know his own preferences as well as you do D) You constructed a model that made a prediction, and the prediction was refuted
D) You constructed a model that made a prediction, and the prediction was refuted
All of the following are positive statements EXCEPT? A) the President of the United States in 2003 was George W. Bush B) California is in the United States C) migratory birds fly south for the winter D) a dog is manʹs best friend
D) a dog is manʹs best friend
Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT? A) incentives B) resources C) rationality D) aggregates
D) aggregates
If an increase in one variable causes a decrease in another variable there is? A) a direct relationship B) a dependent relationship C) an independent relationship D) an inverse relationship
D) an inverse relationship
Economics is the study of how people make? A) judgments B) investments C) money D) choices
D) choices
A relationship between two variables in which one variable increases at the same time that the other increases is called? A) nonlinear B) constant C) inverse D) direct
D) direct
Ceteris paribus means? A) all men are created equal B) wage parity between men and women is a worthy goal C) there are an infinite number of factors affecting each human decision and they change all the time D) economists isolate one or two factors that change when analyzing human decisions
D) economists isolate one or two factors that change when analyzing human decisions
Economic analysis is used? A) only in economics classrooms B) only by business people C) only by policymakers D) in all decision making
D) in all decision making
Microeconomics is the study of? A) aggregate measures of the economy B) foreign policy economic issues C) federal budget details D) individual decision making
D) individual decision making
All of the following are aspects of microeconomics EXCEPT? A) monopolies B) a firm maximizing profit C) a worker choosing one job over another D) the average level of prices of all goods and services produced in a country in a year
D) the average level of prices of all goods and services produced in a country in a year
Economics is most precisely defined as? A) a study of the mechanics of buying and selling on the stock exchange B) a study of how culture evolves in different geographic areas C) the same as the study of finance and management D) the study of how people make choices
D) the study of how people make choices
Which of the following is an aggregate? A) the number of shoes in one manʹs closet B) the bushels of apples one farmer sells C) the cost of a particular textbook D) the total production of all goods and services
D) the total production of all goods and services
High gasoline prices give people all of the following incentives EXCEPT? A) to drive less B) to carpool C) to buy a hybrid car D) to buy a new SUV
D) to buy a new SUV
Resources are? A) unlimited B) able to be replicated in large quantities C) what people would buy if their income was unlimited D) used to produce goods and services to satisfy peopleʹs wants
D) used to produce goods and services to satisfy peopleʹs wants
