Question 1

Economic theories

Accepted Answer

A) can be used to help explain and predict economic behaviour. 
B) cannot be tested because we cannot do economic "experiments". 
C) must apply to all economies to be true. 
D) are not useful because of the unrealistic assumptions they contain. 
E) cannot help to predict future behaviour. 
A) can be used to help explain and predict economic behaviour. 
B) cannot be tested because we cannot do economic "experiments". 
C) must apply to all economies to be true. 
D) are not useful because of the unrealistic assumptions they contain. 
E) cannot help to predict future behaviour.

Question 2

When an increase in one variable is associated with an increase in a second variable, the two variables are

Accepted Answer

A) inversely proportionally related. 
B) equivalent. 
C) proportionally related. 
D) positively related. 
E) negatively related. 
A) inversely proportionally related. 
B) equivalent. 
C) proportionally related. 
D) positively related. 
E) negatively related.

Question 3

A hypothesis (or a prediction)is a statement about

Accepted Answer

A) how assumptions affect theories. 
B) what will happen in the future. 
C) those things which we believe to be true, but cannot prove. 
D) the relationship between facts explained by the hypothesis. 
E) how two or more variables are related to each other. 
A) how assumptions affect theories. 
B) what will happen in the future. 
C) those things which we believe to be true, but cannot prove. 
D) the relationship between facts explained by the hypothesis. 
E) how two or more variables are related to each other.

Question 4

An index number is used to

Accepted Answer

A) compare the same variable in two different situations. 
B) compare two different variables in two different situations. 
C) designate a specific value for further reference. 
D) compare two different variables in the same situation. 
E) measure the absolute value of a variable. 
A) compare the same variable in two different situations. 
B) compare two different variables in two different situations. 
C) designate a specific value for further reference. 
D) compare two different variables in the same situation. 
E) measure the absolute value of a variable.

Question 5

The scientific approach to economic inquiry involves

Accepted Answer

A) testing the predictions with empirical data. 
B) choosing data that will support the predictions. 
C) using only independent variables. 
D) testing the reality of the assumptions of the model. 
E) using only endogenous variables in economic models. 
A) testing the predictions with empirical data. 
B) choosing data that will support the predictions. 
C) using only independent variables. 
D) testing the reality of the assumptions of the model. 
E) using only endogenous variables in economic models.

Question 6

The use of statistics in economics is

Accepted Answer

A) to test predictions and to estimate the values of variables in economic theories. 
B) to study how the economic system should perform basic economic functions. 
C) to model nature. 
D) for descriptive purposes only. 
E) entirely devoid of ethical judgments. 
A) to test predictions and to estimate the values of variables in economic theories. 
B) to study how the economic system should perform basic economic functions. 
C) to model nature. 
D) for descriptive purposes only. 
E) entirely devoid of ethical judgments.

Question 7

Disagreements over positive statements

Accepted Answer

A) are basically devoid of any emotion. 
B) arise from the failure to distinguish between a positive and a normative statement. 
C) cannot arise because positive statements are facts. 
D) never occur. 
E) are best handled by an appeal to the facts. 
A) are basically devoid of any emotion. 
B) arise from the failure to distinguish between a positive and a normative statement. 
C) cannot arise because positive statements are facts. 
D) never occur. 
E) are best handled by an appeal to the facts.

Question 8

Suppose an economist tells you that the unemployment rate in Canada last year was 7.8 percent. This is an example of a(n) statement.

Accepted Answer

A) autonomous 
B) positive 
C) induced 
D) imputed 
E) normative 
A) autonomous 
B) positive 
C) induced 
D) imputed 
E) normative

Question 9

Consider the following equation: Y = 10 + 5X - X2. This equation is an expression of

Accepted Answer

A) two dependent variables in a functional relation. 
B) two independent variables in a functional relation. 
C) a functional relation in a verbal format. 
D) a functional relation between X and Y. 
E) a functional relation in a schedule format. 
A) two dependent variables in a functional relation. 
B) two independent variables in a functional relation. 
C) a functional relation in a verbal format. 
D) a functional relation between X and Y. 
E) a functional relation in a schedule format.

Question 10

Suppose point A represents co- ordinates (X=10, Y=12)and point B represents co- ordinates (X=5, Y=7). The slope of the straight line joining points A and B is

Accepted Answer

A) 2/3. 
B) - 1. 
C) 3/2. 
D) 1. 
E) 5/6. 
A) 2/3. 
B) - 1. 
C) 3/2. 
D) 1. 
E) 5/6.

Question 11

Choose the answer that best explains why economists build models that abstract from the complexities of reality.

Accepted Answer

A) Because the complexities of reality are unimportant. 
B) Because economists are not interested in reality. 
C) Because this allows economists to conduct controlled experiments to test their theories. 
D) Because they believe they gain a greater understanding of reality. 
E) Because economics deals only in the abstract. 
A) Because the complexities of reality are unimportant. 
B) Because economists are not interested in reality. 
C) Because this allows economists to conduct controlled experiments to test their theories. 
D) Because they believe they gain a greater understanding of reality. 
E) Because economics deals only in the abstract.

Question 12

Suppose we have data for 1000 students for a period of one year. The data show that those students who spend more hours studying have a higher grade point average (GPA). We can say that

Accepted Answer

A) there is a positive correlation between hours of study time and GPA. 
B) more hours spent studying leads to a higher GPA. 
C) if hours of study time increase, then GPA will automatically increase. 
D) there is a causal relationship between hours of study time and GPA. 
E) having a higher GPA leads students to spend more time studying. 
A) there is a positive correlation between hours of study time and GPA. 
B) more hours spent studying leads to a higher GPA. 
C) if hours of study time increase, then GPA will automatically increase. 
D) there is a causal relationship between hours of study time and GPA. 
E) having a higher GPA leads students to spend more time studying.

Question 13

When considering how a family's level of consumption changes in response to changes in its income,

Accepted Answer

A) consumption is the dependent variable and income is the independent variable. 
B) both of the variables are independent. 
C) income is the dependent variable and family consumption is the independent variable. 
D) there is no relationship between the variables. 
E) both of the variables are dependent. 
A) consumption is the dependent variable and income is the independent variable. 
B) both of the variables are independent. 
C) income is the dependent variable and family consumption is the independent variable. 
D) there is no relationship between the variables. 
E) both of the variables are dependent.

Question 14

Suppose a theory predicts that lowering tuition fees at Canadian universities will increase enrollment from low- income households. If empirical evidence consistently rejects this prediction, then we

Accepted Answer

A) should increase tuition fees back to their initial level. 
B) should change the empirical data. 
C) should stop studying economics. 
D) need to amend the theory. 
E) should test the theory again. 
A) should increase tuition fees back to their initial level. 
B) should change the empirical data. 
C) should stop studying economics. 
D) need to amend the theory. 
E) should test the theory again.

Question 15

Using the scientific method to approach an economic issue involves

Accepted Answer

A) finding the correct data to validate the theory. 
B) considering stock and flow variables. 
C) the use of controlled experiments to confirm the evidence presented by the data. 
D) building a theory to explain the issue and then determining if the theory can be refuted by evidence. 
E) formulating normative statements about it. 
A) finding the correct data to validate the theory. 
B) considering stock and flow variables. 
C) the use of controlled experiments to confirm the evidence presented by the data. 
D) building a theory to explain the issue and then determining if the theory can be refuted by evidence. 
E) formulating normative statements about it.

Question 16

The slope of a curve is

Accepted Answer

A) negative if the curve rises to the right. 
B) always positive. 
C) always negative. 
D) always constant. 
E) positive if the curve rises to the right. 
A) negative if the curve rises to the right. 
B) always positive. 
C) always negative. 
D) always constant. 
E) positive if the curve rises to the right.

Question 17

Which of the following statements belongs more properly in the field of normative economics than positive economics?

Accepted Answer

A) Technological change has reduced the cost of cell phone service. 
B) When a drought occurs, the price of vegetables tends to rise. 
C) Canadian governments should provide assistance to the auto industry. 
D) An increase in the minimum wage leads to more unemployment. 
E) The price of one Canadian dollar is $0.85 U.S. 
A) Technological change has reduced the cost of cell phone service. 
B) When a drought occurs, the price of vegetables tends to rise. 
C) Canadian governments should provide assistance to the auto industry. 
D) An increase in the minimum wage leads to more unemployment. 
E) The price of one Canadian dollar is $0.85 U.S.

Question 18

Positive statements

Accepted Answer

A) are seldom employed in social sciences like economics. 
B) have been verified by appeal to factual evidence. 
C) have no place in economics because economics deals only with value judgments. 
D) are falsifiable in principle by appeal to factual evidence. 
E) form the basis of all normative arguments. 
A) are seldom employed in social sciences like economics. 
B) have been verified by appeal to factual evidence. 
C) have no place in economics because economics deals only with value judgments. 
D) are falsifiable in principle by appeal to factual evidence. 
E) form the basis of all normative arguments.

Question 19

The assumptions of a theory

Accepted Answer

A) must be realistic if the theory is to be of any use. 
B) are assumed to be true even when empirical observation rejects the predictions of the theory. 
C) are not necessary for the scientific approach. 
D) are supposed to be as unrealistic as possible. 
E) are indirectly refuted if and when the theory itself is rejected by empirical observation. 
A) must be realistic if the theory is to be of any use. 
B) are assumed to be true even when empirical observation rejects the predictions of the theory. 
C) are not necessary for the scientific approach. 
D) are supposed to be as unrealistic as possible. 
E) are indirectly refuted if and when the theory itself is rejected by empirical observation.

Question 20

Suppose point A represents coordinates (X = 5, Y = 6)and point B represents coordinates (X = 2, Y = 3). Then the slope of the straight line joining points A and B is

Accepted Answer

A) - 1. 
B) 2/3. 
C) 5/6. 
D) 1. 
E) 3/2. 
A) - 1. 
B) 2/3. 
C) 5/6. 
D) 1. 
E) 3/2.

Economic theories

When an increase in one variable is associated with an increase in a second variable, the two variables are

A hypothesis (or a prediction)is a statement about

An index number is used to

The scientific approach to economic inquiry involves

The use of statistics in economics is

Disagreements over positive statements

Suppose an economist tells you that the unemployment rate in Canada last year was 7.8 percent. This is an example of a(n) statement.

Consider the following equation: Y = 10 + 5X - X². This equation is an expression of

Suppose point A represents co- ordinates (X=10, Y=12)and point B represents co- ordinates (X=5, Y=7). The slope of the straight line joining points A and B is

Choose the answer that best explains why economists build models that abstract from the complexities of reality.

Suppose we have data for 1000 students for a period of one year. The data show that those students who spend more hours studying have a higher grade point average (GPA). We can say that

When considering how a family's level of consumption changes in response to changes in its income,

Suppose a theory predicts that lowering tuition fees at Canadian universities will increase enrollment from low- income households. If empirical evidence consistently rejects this prediction, then we

Using the scientific method to approach an economic issue involves

The slope of a curve is

Which of the following statements belongs more properly in the field of normative economics than positive economics?

Positive statements

The assumptions of a theory

Suppose point A represents coordinates (X = 5, Y = 6)and point B represents coordinates (X = 2, Y = 3). Then the slope of the straight line joining points A and B is

Economic Issues and Concepts

Demand, Supply, and Price

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

The Difference Between Short-Run and Long-Run Macroeconomics

Long-Run Economic Growth

Money and Banking

Money, Interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters

Exam 2: Economic Theories, Data, and Graphs

Economic theories

When an increase in one variable is associated with an increase in a second variable, the two variables are

A hypothesis (or a prediction)is a statement about

An index number is used to

The scientific approach to economic inquiry involves

The use of statistics in economics is

Disagreements over positive statements

Suppose an economist tells you that the unemployment rate in Canada last year was 7.8 percent. This is an example of a(n) statement.

Consider the following equation: Y = 10 + 5X - X2. This equation is an expression of

Suppose point A represents co- ordinates (X=10, Y=12)and point B represents co- ordinates (X=5, Y=7). The slope of the straight line joining points A and B is

Choose the answer that best explains why economists build models that abstract from the complexities of reality.

Suppose we have data for 1000 students for a period of one year. The data show that those students who spend more hours studying have a higher grade point average (GPA). We can say that

When considering how a family's level of consumption changes in response to changes in its income,

Suppose a theory predicts that lowering tuition fees at Canadian universities will increase enrollment from low- income households. If empirical evidence consistently rejects this prediction, then we

Using the scientific method to approach an economic issue involves

The slope of a curve is

Which of the following statements belongs more properly in the field of normative economics than positive economics?

Positive statements

The assumptions of a theory

Suppose point A represents coordinates (X = 5, Y = 6)and point B represents coordinates (X = 2, Y = 3). Then the slope of the straight line joining points A and B is

Economic Issues and Concepts

Demand, Supply, and Price

What Macroeconomics Is All About

The Measurement of National Income

The Simplest Short-Run Macro Model

Adding Government and Trade to the Simple Macro Model

Output and Prices in the Short Run

From the Short Run to the Long Run: the Adjustment of Factor Prices

The Difference Between Short-Run and Long-Run Macroeconomics

Long-Run Economic Growth

Money and Banking

Money, Interest Rates, and Economic Activity

Monetary Policy in Canada

Inflation and Disinflation

Unemployment Fluctuations and the Nairu

Government Debt and Deficits

The Gains From International Trade

Trade Policy

Exchange Rates and the Balance of Payments

Filters

Consider the following equation: Y = 10 + 5X - X². This equation is an expression of