Economics test review chapter 1,2,& 4

Which of the following is NOT an illustration of the notion of opportunity cost?

A growing economy can produce more consumer goods and more capital goods at the same time.

The basic purpose of the ceteris paribus assumption is to:

Allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.

Which of the following is NOT a characteristic of pure capitalism?

Altruistic (for the benefit of others) buying and selling motives

Which of the following is associated with macroeconomics?

An empirical investigation of the inflation and unemployment rates in the 1990s.

Economic theories:

Are generalizations based upon a careful observation of facts.

The "after this, because of this" [post hoc] fallacy states that:

Because event A precedes B. A is not necessarily the cause of B.

Which of the following, if any, is correct for a nation which is producing only consumption and capital goods?

CETERIS PARIBUS, the more capital goods a nation produces, the greater will be its future growth.

Which of the following is real capital?

Dump trunk

Economic models

Emphasize basic economic relationships by abstracting from the complexities of the real world

The Fallacy of Composition is essentially the error of:

Generalizing from the particular to the general.

Which of the following best illustrates the Post Hoc, Ergo Propter Hoc Fallacy?

I took the day off work to go to the beach and that's why it rained.

The PPC (with concave curve) illustrates the basic principle:

If all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

The law of increasing opportunities costs states that:

Is society wants to produce more of a particular good, it must sacrifice larger amounts of other goods.

Which of the following is a normative statement?

It is too hot to play tennis today.

Ideally, value judgements [degree of government intervention, etc..] are involved at the:

Level of policy only.

The economizing problem is essentially one of deciding how to make the best use of:

Limited resources to satisfy virtually unlimited wants

Money is not considered to be an economic resource because:

Money, as such, is not productive (place holder)

The inductive method (bottom up)

Moves from facts to generalizations or theory.

Most of the disagreement among economists involves:

Policy economics.

The achieving of full employment is most likely to conflict with the goal of:

Price level stability

The money payments made to owners of land, labor, capital, and entrepreneurial ability are:

Rent, wages, interest, and profits respectively

The PPC were a straight down sloping line, this would suggest that:

Resources are perfectly shiftable (constant cost) between the production of these two goods.

With respect to the basic economic goals of society, i.e., economic growth, full employment, price level stability, economic freedom, distributional equity, and economic security, it can be said that:

Some goals are complementary and others are conflicting

In drawing the PPC we assume:

Technology is fixed, full employment and full production, and fixed quantities of economic resources.

Assume that a change in government policy results in the increased production of both consumer goods and investment goods. It can be concluded that:

The economy was suffering from unemployment and/or the inefficient use of resources before the policy change

Which of the following is a macroeconomic statement?

The gross profits of all american businesses were $500 billion last year.

Which of the following is a microeconomic statement?

The price of corn declined last year.

Which of the following will NOT entail an outward shift of the PPC?

The reduction if unemployment

Economics may best be defined as:

The study of the choices people make in an effort to satisfy their unlimited needs and wants from limited resources.

Which of the following is a positive statement?

The temperature is 100 degrees today.

Which of the following is a correct statement?

Though not quantitatively exact, economic laws are useful because that allow us to predict and therefore control or adjust to events.