Exam 1
Ceteris paribus
A Latin phrase that means while certain variables change, "all other things remain unchanged."
Capital
A human-made good used to produce other goods and services
Model
A simplified description of reality used to understand and predict the relationship between variables
Normative economics
An analysis based on value judgement
Positive economics
An analysis limited to statements that are verifiable
Land
Any natural resource provided by nature that is used to produce a good or service
Resources
Basic categories of inputs used to produce goods and services
A conditional statement such as "if event A occurs, then B follows" is an example of normative economics.
False
A nominative economic statement can be proven either true or false.
False
An analysis of IBM'S pricing decisions would be classified as a macroeconomic study.
False
Economic models are of limited use since they cannot be tested empirically with actual data.
False
Factors which determine the price of corn would be studied in macroeconomics.
False
Microeconomics only looks at the behavior of one consumer or one firm in a market, while macroeconomics looks at the behavior of an entire industry or group of consumers.
False
Money is one of our nation's resources (factors or means of production).
False
Policies to determine the price of troll dolls are a concern of Macroeconomics.
False
Scarcity has no importance to understanding economics.
False
The statement "American workers are lazy" is an example of positive economic analysis.
False
Your scarcity problem would disappear if you were rich.
False
Microeconomics
The branch of economics that studies decision making by a single individual, household, firm, industry, or level of government
Macroeconomics
The branch of economics that studies decision making for the economy as a whole
Scarcity
The condition in which human wants are forever greater than the avaliable supply of time, goods, and resources
Entrepreneurship
The creative ability of individuals to seek profits by taking risks and combining resources to produce innovative products
Labor
The mental and physical capacity of workers to produce goods and services
Economics
The study of how society chooses to allocate it's scarce resources to the production of goods and services to satisfy unlimited wants
A positive economic statement must be verifiable.
True
A positive economic statements simple describes what is.
True
Abstracting from reality is an important element of all economic models.
True
Economics could be defined as the study of scarcity.
True
Economics is the study of people making choice faced with the problem of unlimited wants and limited resources.
True
Macroeconomics studies economy wide issues like inflation and unemployment.
True
Microeconomics and macroeconomics use different types of analysis.
True
The Ceteris paribus assumption is important when building economic models.
True
The statement "cutting government spending is the best way to boost consumer confidence" is an example of normative economics.
True
The statement "it is better to suffer a little more unemployment than a little lower price" is an example of normative economic analysis.
True
The statement "it would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.
True
All human wants cannot be satisfied because of the problem of scarcity.
True.