CH 1: The Nature of Economics (Dynamic Study Module)
Which of the following is a positive economic statement? The government should do something to help the homeless If minimum wage rates rise, then unemployment will rise We should tax the wealthy more and use the money to provide services to the poor Full employment policies should be pursued
If minimum wage rates rise, then unemployment will rise
In what type of economy does the government decide how economic resources will be allocated?
a centrally planned economy
When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?
a market
If the president of Columbia commented that "we should do something to reduce inflation in Columbia," this would be an example of:
a normative statement
In economic terms, a(n) ________ is the total amount of some good or service.
aggregate
Using real world data to test a hypothesis is known as:
an empirical test
_____ deals with the fact that individual choices can be affected by psychological limitations
behavioral economics
The hypothesis that people cannot always make completely rational decisions by examining every possible choice but instead use rules of thumb to guide them is known as:
bounded rationality
Economic models often simplify the real world by holding all things equal and changing one variable to determine the impact of the change. The "all things equal" assumption is also known as:
ceteris paribus
A centrally planned economy is also referred to as a:
command and control economy
According to the rationality assumption, people:
do not intentionally make decisions that would leave them worse off
Understanding economics can help policymakers devise strategies to do all of the following except: increase our standard of living reduce poverty levels encourage business formation eliminate climate change
eliminate climate change
Macroeconomics can be used to understand all of the topics listed below except: how the national economy works how a consumer decides between the purchase of two different cars national unemployment trends what causes economic booms and recessions
how a consumer decides between the purchase of two different cars
Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer?
how do we produce the products?
Economics: is a natural science is concerned with how people respond to incentives is unconcerned with value judgements deals with assumptions and is therefore unrealistic
is concerned with how people respond to incentives
Which of these covers the study of topics such as inflation and unemployment?
macroeconomics
______ is the study of how households and businesses make choices, how they interact in markets, and how government influences their choices.
microeconomics
Which of the following are not essential components of an economic model? normative statements hypotheses variables assumptions
normative statements
Which of these is NOT an essential component of an economic model? normative statements hypotheses assumptions
normative statements
Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority? italy USA north korea france
north korea
One basic underlying principle in economics is that:
people respond to incentives
Macroeconomics is concerned with all of the following except: inflation rates unemployment rates standard of living political party affiliation
political party affiliation
Economics is the study of choice under conditions of:
scarcity
Which of these is a macroeconomic study? the study of how households and businesses interact in the market the study of how fast prices in general are rising the study of how households and businesses make choices
the study of how fast prices in general are rising
Macroeconomics focuses on which of the following topics?
unemployment, inflation, growth, and trade