Question 1

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 2

Economics is scientific because

Accepted Answer

A)  economists can conduct controlled experiments. 
B)  it tests hypotheses by appealing to evidence. 
C)  economists use data. 
D)  individual behaviour is predictable. 
E)  economists can conduct laboratory experiments. 
A)  economists can conduct controlled experiments. 
B)  it tests hypotheses by appealing to evidence. 
C)  economists use data. 
D)  individual behaviour is predictable. 
E)  economists can conduct laboratory experiments.

Question 3

The table below shows hypothetical per- minute cell phone charges for "pay- and- talk" service over several years. $$\begin{array}{l}
\begin{array} { | l | l | } 
\hline 2005 & 0.55 \
\hline 2006 & 0.50 \
\hline 2007 & 0.40 \
\hline 2008 & 0.35 \
\hline 2009 & 0.25 \
\hline
\end{array}\
\text { TABLE 2- } 2
\end{array}$$
-Refer to Table 2- 2. Assume that 2005 is used as the base year, with the index number = 100. The value of the index number in 2007 is

Accepted Answer

A)  1.375 
B)  137.5 
C)  0.72 
D)  72.73 
E)  100 
A)  1.375 
B)  137.5 
C)  0.72 
D)  72.73 
E)  100

Question 4

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 5

Index numbers make it possible to compare

Accepted Answer

A)  movements in different variables measured in the same units. 
B)  linear and logarithmic data. 
C)  time- series data with cross- sectional data. 
D)  government data with private- sector data. 
E)  movements in different variables measured in different units. 
A)  movements in different variables measured in the same units. 
B)  linear and logarithmic data. 
C)  time- series data with cross- sectional data. 
D)  government data with private- sector data. 
E)  movements in different variables measured in different units.

Question 6

The table below shows hypothetical tuition costs at a Canadian university. $$\begin{array}{l}
\begin{array} { | l | l | } 
\hline \text { Year } & \text { Tuition } \
\hline 2005 & \$ 5000 \
\hline 2006 & \$ 5050 \
\hline 2007 & \$ 5100 \
\hline 2008 & \$ 5150 \
\hline 2009 & \$ 5200 \
\hline
\end{array}\
\text { TABLE 2- } 1
\end{array}$$
-Refer to Table 2- 1. Assume that 2005 is used as the base year, with the index number = 100. The value of the index number in 2009 is

Accepted Answer

A)  96 
B)  1.04 
C)  0.96 
D)  100 
E)  104 
A)  96 
B)  1.04 
C)  0.96 
D)  100 
E)  104

Question 7

Which of the following is a normative statement?

Accepted Answer

A)  Tuition fees should be waived for low- income students. 
B)  A free- trade agreement between two countries will result in an increase in trade. 
C)  The higher is the level of taxes, the higher are wage demands. 
D)  A reduction in export taxes on petroleum would result in higher wages. 
E)  The higher is the level of taxes, the lower is consumption spending. 
A)  Tuition fees should be waived for low- income students. 
B)  A free- trade agreement between two countries will result in an increase in trade. 
C)  The higher is the level of taxes, the higher are wage demands. 
D)  A reduction in export taxes on petroleum would result in higher wages. 
E)  The higher is the level of taxes, the lower is consumption spending.

Question 8

A positive statement is one that states

Accepted Answer

A)  non- negative numbers. 
B)  what is desirable. 
C)  what is, was, or will be. 
D)  what is and what should be. 
E)  what should be but is not. 
A)  non- negative numbers. 
B)  what is desirable. 
C)  what is, was, or will be. 
D)  what is and what should be. 
E)  what should be but is not.

Question 9

Suppose an individual wheat farmer's income is influenced by the region's average daily temperature. When examining the determinants of individual farmer income, the average daily temperature is a(n) variable.

Accepted Answer

A)  flow 
B)  induced 
C)  dependent 
D)  endogenous 
E)  exogenous 
A)  flow 
B)  induced 
C)  dependent 
D)  endogenous 
E)  exogenous

Question 10

The table below shows hypothetical per- minute cell phone charges for "pay- and- talk" service over several years. $$\begin{array}{l}
\begin{array} { | l | l | } 
\hline 2005 & 0.55 \
\hline 2006 & 0.50 \
\hline 2007 & 0.40 \
\hline 2008 & 0.35 \
\hline 2009 & 0.25 \
\hline
\end{array}\
\text { TABLE 2- } 2
\end{array}$$
-Refer to Table 2- 2. Assume that 2005 is used as the base year, with the index number = 100. The value of the index number in 2008 is calculated as follows:

Accepted Answer

A)  (0.55/0.35) × 100 = 157.14 
B)  (0.35/0.55) × 100 = 63.64 
C)  0.35/0.55 = 0.64 
D)  0.35 × 100 = 35 
E)  0.55/0.35 = 1.57 
A)  (0.55/0.35) × 100 = 157.14 
B)  (0.35/0.55) × 100 = 63.64 
C)  0.35/0.55 = 0.64 
D)  0.35 × 100 = 35 
E)  0.55/0.35 = 1.57

Question 11

An assertion about the desirability of reducing unemployment by lowering payroll taxes is most likely

Accepted Answer

A)  a normative statement. 
B)  a hypothesis. 
C)  a testable proposition. 
D)  a theory. 
E)  a positive statement. 
A)  a normative statement. 
B)  a hypothesis. 
C)  a testable proposition. 
D)  a theory. 
E)  a positive statement.

Question 12

An index number expresses the value of a variable in any given period

Accepted Answer

A)  as an absolute compared to the base period. 
B)  as a percentage of its value in the base period. 
C)  as a proportional weighted average. 
D)  as an average of its value in the base period. 
E)  as a weighted average. 
A)  as an absolute compared to the base period. 
B)  as a percentage of its value in the base period. 
C)  as a proportional weighted average. 
D)  as an average of its value in the base period. 
E)  as a weighted average.

Question 13

Which of the following is a normative statement?

Accepted Answer

A)  Reducing unemployment is more important than reducing inflation. 
B)  Queen Elizabeth II is the wealthiest woman in the world. 
C)  The sun rises in the west and sets in the east. 
D)  A government deficit will reduce unemployment and cause an increase in prices. 
E)  An increase in the price of lumber is followed by a decrease in the construction of new houses. 
A)  Reducing unemployment is more important than reducing inflation. 
B)  Queen Elizabeth II is the wealthiest woman in the world. 
C)  The sun rises in the west and sets in the east. 
D)  A government deficit will reduce unemployment and cause an increase in prices. 
E)  An increase in the price of lumber is followed by a decrease in the construction of new houses.

Question 14

FIGURE 2- 4
-Refer to Figure 2- 4. This non- linear function shows that over the range shown,

Accepted Answer

A)  as the yield per acre increases, the amount of fertilizer required per acre is diminishing. 
B)  as the yield per acre increases, the amount of fertilizer required per acre is increasing. 
C)  as more fertilizer is applied, the marginal response in yield is increasing 
D)  as more fertilizer is applied, the marginal change in yield is diminishing. 
E)  as more fertilizer is applied, the total yield per acre is diminishing. 
A)  as the yield per acre increases, the amount of fertilizer required per acre is diminishing. 
B)  as the yield per acre increases, the amount of fertilizer required per acre is increasing. 
C)  as more fertilizer is applied, the marginal response in yield is increasing 
D)  as more fertilizer is applied, the marginal change in yield is diminishing. 
E)  as more fertilizer is applied, the total yield per acre is diminishing.

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

Which of the following statements is NOT correct?

Accepted Answer

A)  Exposing them to empirical evidence can best test positive statements. 
B)  Economic statements cannot be tested because human decisions involve free will. 
C)  Economists test their theories by confronting the predictions of their theories with the evidence drawn from the real world. 
D)  Economic predictions will be fulfilled when their underlying hypotheses conform to actual human behaviour. 
E)  Normative statements cannot be tested by the scientific method. 
A)  Exposing them to empirical evidence can best test positive statements. 
B)  Economic statements cannot be tested because human decisions involve free will. 
C)  Economists test their theories by confronting the predictions of their theories with the evidence drawn from the real world. 
D)  Economic predictions will be fulfilled when their underlying hypotheses conform to actual human behaviour. 
E)  Normative statements cannot be tested by the scientific method.

Question 17

The table below shows hypothetical per- minute cell phone charges for "pay- and- talk" service over several years. $$\begin{array}{l}
\begin{array} { | l | l | } 
\hline 2005 & 0.55 \
\hline 2006 & 0.50 \
\hline 2007 & 0.40 \
\hline 2008 & 0.35 \
\hline 2009 & 0.25 \
\hline
\end{array}\
\text { TABLE 2- } 2
\end{array}$$
-Refer to Table 2- 2. Assume that 2005 is used as the base year, with the index number = 100. The value of the index number in 2009 is

Accepted Answer

A)  0.45 
B)  25.0 
C)  2.5 
D)  45.45 
E)  0.25 
A)  0.45 
B)  25.0 
C)  2.5 
D)  45.45 
E)  0.25

Question 18

FIGURE 2- 3
-Refer to Figure 2- 3. The slope of curve B is

Accepted Answer

A)  negative from Y1 to Y2 and positive between Y2 and Y3. 
B)  undefined at X2. 
C)  always negative but variable. 
D)  zero at X2. 
E)  always positive but variable. 
A)  negative from Y1 to Y2 and positive between Y2 and Y3. 
B)  undefined at X2. 
C)  always negative but variable. 
D)  zero at X2. 
E)  always positive but variable.

Question 19

A scatter diagram

Accepted Answer

A)  plots a series of observations, showing the relationship between two variables. 
B)  relates cross- sectional data only. 
C)  is a graph of a theoretical relationship between two variables. 
D)  relates time series data only. 
E)  shows the dependence of one variable on another. 
A)  plots a series of observations, showing the relationship between two variables. 
B)  relates cross- sectional data only. 
C)  is a graph of a theoretical relationship between two variables. 
D)  relates time series data only. 
E)  shows the dependence of one variable on another.

Question 20

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.

An index number is used to

Economics is scientific because

The assumptions of a theory

Index numbers make it possible to compare

The table below shows hypothetical tuition costs at a Canadian university. Year Tuition 2005 \ 5000 2006 \ 5050 2007 \ 5100 2008 \ 5150 2009 \ 5200 TABLE 2- 1 -Refer to Table 2- 1. Assume that 2005 is used as the base year, with the index number = 100. The value of the index number in 2009 is

Which of the following is a normative statement?

A positive statement is one that states

Suppose an individual wheat farmer's income is influenced by the region's average daily temperature. When examining the determinants of individual farmer income, the average daily temperature is a(n) variable.

An assertion about the desirability of reducing unemployment by lowering payroll taxes is most likely

An index number expresses the value of a variable in any given period

Which of the following is a normative statement?

FIGURE 2- 4 -Refer to Figure 2- 4. This non- linear function shows that over the range shown,

Using the scientific method to approach an economic issue involves

Which of the following statements is NOT correct?

FIGURE 2- 3 -Refer to Figure 2- 3. The slope of curve B is

A scatter diagram

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

Economic Issues and Concepts

Demand, Supply, and Price

Elasticity

Markets in Action

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, Cartels, and Price Discrimination

Imperfect Competition

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Gains From International Trade

Trade Policy

Filters

Exam 2: Economic Theories, Data, and Graphs

An index number is used to

Economics is scientific because

The assumptions of a theory

Index numbers make it possible to compare

The table below shows hypothetical tuition costs at a Canadian university. Year Tuition 2005 \ 5000 2006 \ 5050 2007 \ 5100 2008 \ 5150 2009 \ 5200 TABLE 2- 1 -Refer to Table 2- 1. Assume that 2005 is used as the base year, with the index number = 100. The value of the index number in 2009 is

Which of the following is a normative statement?

A positive statement is one that states

Suppose an individual wheat farmer's income is influenced by the region's average daily temperature. When examining the determinants of individual farmer income, the average daily temperature is a(n) variable.

An assertion about the desirability of reducing unemployment by lowering payroll taxes is most likely

An index number expresses the value of a variable in any given period

Which of the following is a normative statement?

FIGURE 2- 4 -Refer to Figure 2- 4. This non- linear function shows that over the range shown,

Using the scientific method to approach an economic issue involves

Which of the following statements is NOT correct?

FIGURE 2- 3 -Refer to Figure 2- 3. The slope of curve B is

A scatter diagram

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

Economic Issues and Concepts

Demand, Supply, and Price

Elasticity

Markets in Action

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly, Cartels, and Price Discrimination

Imperfect Competition

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Gains From International Trade

Trade Policy

Filters