Question 1

The relative price of gasoline has increased since 2000 because we have paid more dollars for each gallon of gasoline.

Accepted Answer

A) True 
 B)False

Question 2

Studying economics will provide you with tools that are

Accepted Answer

A)  mainly useful for understanding business issues. 
B)  useless in real-world situations. 
C)  mainly useful for financial analysis. 
D)  not useful for studying issues such as crime, discrimination, and who has the right to sue. 
E)  useful for studying issues such as monetary policy, discrimination, and who has the right to sue. 
A)  mainly useful for understanding business issues. 
B)  useless in real-world situations. 
C)  mainly useful for financial analysis. 
D)  not useful for studying issues such as crime, discrimination, and who has the right to sue. 
E)  useful for studying issues such as monetary policy, discrimination, and who has the right to sue.

Question 3

Explain why economics requires historical and philosophical skills in addition to analytical skills.

Accepted Answer

Some questions involve a direc

Question 4

Those who support a laissez faire system

Accepted Answer

A)  argue for a French-style economy. 
B)  argue for a market economy. 
C)  support government intervention. 
D)  argue for a command economy. 
E)  argue for a mixed economy. 
A)  argue for a French-style economy. 
B)  argue for a market economy. 
C)  support government intervention. 
D)  argue for a command economy. 
E)  argue for a mixed economy.

Question 5

Controlled experiments are

Accepted Answer

A)  seldom used in economics because economists do not like to repeat experiments. 
B)  often used because controlling other factors is relatively easy in economics. 
C)  not used as widely in economics as in other disciplines. 
D)  often used in economics. 
E)  performed by the government to collect economic data. 
A)  seldom used in economics because economists do not like to repeat experiments. 
B)  often used because controlling other factors is relatively easy in economics. 
C)  not used as widely in economics as in other disciplines. 
D)  often used in economics. 
E)  performed by the government to collect economic data.

Question 6

To argue that economics is the only science not used objectively is

Accepted Answer

A)  true because only economics engages in politically controversial issues. 
B)  false because other sciences besides economics engage in politically controversial issues. 
C)  true because all other sciences use controlled experiments. 
D)  false because one's reasoning is either correct or incorrect. 
E)  false because none of the other sciences use controlled experiments. 
A)  true because only economics engages in politically controversial issues. 
B)  false because other sciences besides economics engage in politically controversial issues. 
C)  true because all other sciences use controlled experiments. 
D)  false because one's reasoning is either correct or incorrect. 
E)  false because none of the other sciences use controlled experiments.

Question 7

All microeconomic issues are normative in nature.

Accepted Answer

A) True 
 B)False

Question 8

In describing the relationship between X and Y, the ceteris paribus assumption implies that

Accepted Answer

A)  the value of X does not change. 
B)  the value of Y does not change. 
C)  the values of both X and Y do not change. 
D)  all other factors that may affect X and Y are constant. 
E)  nothing in the world can change. 
A)  the value of X does not change. 
B)  the value of Y does not change. 
C)  the values of both X and Y do not change. 
D)  all other factors that may affect X and Y are constant. 
E)  nothing in the world can change.

Question 9

A mixed system is an economy with only private industries.

Accepted Answer

A) True 
 B)False

Question 10

Explain how new models or theories are developed in economics.

Accepted Answer

First, a hypothesis based on this new mo

Question 11

Economics is a study that

Accepted Answer

A)  is never relevant to people's lives. 
B)  cannot be enjoyed if economic models fail to explain the real world. 
C)  exists only to provide employment for economists. 
D)  can be enjoyed independent of its relevance to society. 
E)  can be enjoyed as long as its analysis is scientific. 
A)  is never relevant to people's lives. 
B)  cannot be enjoyed if economic models fail to explain the real world. 
C)  exists only to provide employment for economists. 
D)  can be enjoyed independent of its relevance to society. 
E)  can be enjoyed as long as its analysis is scientific.

Question 12

In order to determine a causation between a change in the price of iPads and the amount of iPads purchased by customers, an economist must show that

Accepted Answer

A)  there is no correlation between the price of iPads and the quantity of iPads purchased. 
B)  the change in the quantity of iPads purchased occurs after the change in the price of iPads. 
C)  the change in the price of iPads occurs along with the change in the quantity of iPads purchased. 
D)  the changes in the price and quantity of iPads purchased always move in the same direction. 
E)  the change in the price of iPads brings about the change in the quantity of iPads purchased. 
A)  there is no correlation between the price of iPads and the quantity of iPads purchased. 
B)  the change in the quantity of iPads purchased occurs after the change in the price of iPads. 
C)  the change in the price of iPads occurs along with the change in the quantity of iPads purchased. 
D)  the changes in the price and quantity of iPads purchased always move in the same direction. 
E)  the change in the price of iPads brings about the change in the quantity of iPads purchased.

Question 13

Explain how economic models are similar to and different from models used in other sciences. What are the consequences of these differences?

Accepted Answer

Acceptable answers will mention that eco

Question 14

Suppose you decide to build a model to explain why some companies earned more profits in the past year than others did.
(A)What data would you collect?
(B)What variable do you believe would supply the major part of the explanation of the variation in profits?
(C)If you graph the data with profits on the vertical axis and your explanatory variable on the horizontal axis, will the relationship be upward sloping or downward sloping?
(D)What does your answer in part (C) imply for whether the data on profits and the data on your explanatory variable are positively or negatively correlated?

Accepted Answer

(A)I would collect data on company profi

Question 15

Knowledge of economics will help you make better decisions about education, employment, and investments.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true?

Accepted Answer

A)  Normative economics deals with what is. 
B)  Normative economics expresses someone's opinion. 
C)  Positive economics is subjective. 
D)  Positive economics deals with what ought to be. 
E)  Normative economics tries to refrain from opinions. 
A)  Normative economics deals with what is. 
B)  Normative economics expresses someone's opinion. 
C)  Positive economics is subjective. 
D)  Positive economics deals with what ought to be. 
E)  Normative economics tries to refrain from opinions.

Question 17

Experimental economics

Accepted Answer

A)  is the dominant method in economics. 
B)  does not exist. 
C)  uses laboratory experiments to analyze economic behavior. 
D)  is the method used when comparing the economic experience of other countries. 
E)  is the method used by the government to collect economic data. 
A)  is the dominant method in economics. 
B)  does not exist. 
C)  uses laboratory experiments to analyze economic behavior. 
D)  is the method used when comparing the economic experience of other countries. 
E)  is the method used by the government to collect economic data.

Question 18

Positive economics is the

Accepted Answer

A)  study of the desirable attributes of economic relationships. 
B)  scientific study of "what is" among economic relationships. 
C)  scientific study of how people behave positively. 
D)  study of how economic policy should improve the welfare of individuals. 
E)  study of how people and institutions should behave. 
A)  study of the desirable attributes of economic relationships. 
B)  scientific study of "what is" among economic relationships. 
C)  scientific study of how people behave positively. 
D)  study of how economic policy should improve the welfare of individuals. 
E)  study of how people and institutions should behave.

Question 19

To see whether the price of gasoline has risen compared to the prices of other goods and services, one would calculate

Accepted Answer

A)  gasoline spending divided by spending on all other goods and services. 
B)  gasoline spending divided by total consumer spending. 
C)  the trend in the price of gasoline. 
D)  the price of gasoline divided by the overall price level. 
E)  the price of gasoline divided by the rate of inflation. 
A)  gasoline spending divided by spending on all other goods and services. 
B)  gasoline spending divided by total consumer spending. 
C)  the trend in the price of gasoline. 
D)  the price of gasoline divided by the overall price level. 
E)  the price of gasoline divided by the rate of inflation.

Question 20

If we observe that an increase in the amount of vehicle miles traveled rises after the price of gasoline rises, then we can conclude that

Accepted Answer

A)  the amount of vehicle miles traveled and the price of gasoline are positively correlated. 
B)  the amount of vehicle miles traveled and the price of gasoline are negatively correlated. 
C)  the amount of vehicle miles traveled causes the price of gasoline to go up. 
D)  the price of gasoline causes the amount of vehicle miles traveled to go up. 
E)  a negative causation occurs between the amount of vehicle miles traveled and the price of gasoline 
A)  the amount of vehicle miles traveled and the price of gasoline are positively correlated. 
B)  the amount of vehicle miles traveled and the price of gasoline are negatively correlated. 
C)  the amount of vehicle miles traveled causes the price of gasoline to go up. 
D)  the price of gasoline causes the amount of vehicle miles traveled to go up. 
E)  a negative causation occurs between the amount of vehicle miles traveled and the price of gasoline

Exam 2: Observing and Explaining the Economy

The relative price of gasoline has increased since 2000 because we have paid more dollars for each gallon of gasoline.

Studying economics will provide you with tools that are

Explain why economics requires historical and philosophical skills in addition to analytical skills.

Those who support a laissez faire system

Controlled experiments are

To argue that economics is the only science not used objectively is

All microeconomic issues are normative in nature.

In describing the relationship between X and Y, the ceteris paribus assumption implies that

A mixed system is an economy with only private industries.

Explain how new models or theories are developed in economics.

Economics is a study that

In order to determine a causation between a change in the price of iPads and the amount of iPads purchased by customers, an economist must show that

Explain how economic models are similar to and different from models used in other sciences. What are the consequences of these differences?

Knowledge of economics will help you make better decisions about education, employment, and investments.

Which of the following statements is true?

Experimental economics

Positive economics is the

To see whether the price of gasoline has risen compared to the prices of other goods and services, one would calculate

If we observe that an increase in the amount of vehicle miles traveled rises after the price of gasoline rises, then we can conclude that

The Central Idea

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Capital and Financial Markets

Economic Growth and Globalization

International Trade

International Finance

Reading, Understanding, and Creating Graphs

the Miracle of Compound Growth

Present Discounted Value

Deriving the Growth Accounting Formula

Filters