Question 1

Which of the following is a statement of positive economics?

Accepted Answer

A)  Too much government spending is the biggest problem facing the U.S. economy. 
B)  Creating jobs is the most serious problem facing the U.S. economy. 
C)  Raising taxes provides additional revenue that should be used to finance health care. 
D)  If taxes are over 50 percent of national income, job creation falls. 
A)  Too much government spending is the biggest problem facing the U.S. economy. 
B)  Creating jobs is the most serious problem facing the U.S. economy. 
C)  Raising taxes provides additional revenue that should be used to finance health care. 
D)  If taxes are over 50 percent of national income, job creation falls.

Question 2

A model is defined as a:

Accepted Answer

A)  description of all variables affecting a situation. 
B)  positive analysis of all variables affecting an event. 
C)  simplified description of reality to understand and predict an economic event. 
D)  prediction based on historical evidence. 
A)  description of all variables affecting a situation. 
B)  positive analysis of all variables affecting an event. 
C)  simplified description of reality to understand and predict an economic event. 
D)  prediction based on historical evidence.

Question 3

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Accepted Answer

A)  Why do national economies grow? 
B)  What percentage of consumer income is spent on entertainment? 
C)  Why do workers prefer the 4-day workweek? 
D)  How is the electric industry harmed by the passage of new clean air legislation? 
A)  Why do national economies grow? 
B)  What percentage of consumer income is spent on entertainment? 
C)  Why do workers prefer the 4-day workweek? 
D)  How is the electric industry harmed by the passage of new clean air legislation?

Question 4

Which of the following is a normative statement?

Accepted Answer

A)  A decrease in price leads to an increase in quantity consumed. 
B)  Incomes grow more rapidly in high-tax states than low-tax states. 
C)  People would be better off if government expenditures were higher. 
D)  People will buy less butter at $1.50 per pound than they will at $1 per pound. 
A)  A decrease in price leads to an increase in quantity consumed. 
B)  Incomes grow more rapidly in high-tax states than low-tax states. 
C)  People would be better off if government expenditures were higher. 
D)  People will buy less butter at $1.50 per pound than they will at $1 per pound.

Question 5

A normative economic statement is:

Accepted Answer

A)  a statement of fact. 
B)  a statement of opinion which advocates a particular position. 
C)  not acceptable in the economics profession. 
D)  the only acceptable manner to present economic information. 
E)  a statement based upon government-supplied information. 
A)  a statement of fact. 
B)  a statement of opinion which advocates a particular position. 
C)  not acceptable in the economics profession. 
D)  the only acceptable manner to present economic information. 
E)  a statement based upon government-supplied information.

Question 6

Exhibit 1A-3 Straight line  
-In Exhibit 1A-3, the slope for straight line AB is:

Accepted Answer

A)  3. 
B)  1. 
C)  −1. 
D)  −5. 
A)  3. 
B)  1. 
C)  −1. 
D)  −5.

Question 7

Which of the following pairs is the most likely to exhibit a direct relationship?

Accepted Answer

A)  The price of gasoline and the amount of gasoline that people purchase. 
B)  Cholesterol levels and the likelihood of developing heart disease. 
C)  Outdoor temperature and heating oil sales. 
D)  Annual income and weekly pawn shop visits. 
A)  The price of gasoline and the amount of gasoline that people purchase. 
B)  Cholesterol levels and the likelihood of developing heart disease. 
C)  Outdoor temperature and heating oil sales. 
D)  Annual income and weekly pawn shop visits.

Question 8

Which of the following is the best example of a microeconomic topic?

Accepted Answer

A)  The impact that the money supply has on inflation. 
B)  The reasons for increases in the price of soft drinks. 
C)  The effect that federal budget deficits have on the interest rate. 
D)  The tradeoff between inflation and unemployment. 
A)  The impact that the money supply has on inflation. 
B)  The reasons for increases in the price of soft drinks. 
C)  The effect that federal budget deficits have on the interest rate. 
D)  The tradeoff between inflation and unemployment.

Question 9

A downward-sloping line has a negative slope.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 1A-4 Straight line  
-In Exhibit 1A-4, the slope of the straight line A-D is:

Accepted Answer

A)  0. 
B)  1. 
C)  1/2. 
D)  −1. 
A)  0. 
B)  1. 
C)  1/2. 
D)  −1.

Question 11

Measured between two points on a curve, the ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis is the:

Accepted Answer

A)  axis. 
B)  slope. 
C)  dependent curve. 
D)  independent curve. 
A)  axis. 
B)  slope. 
C)  dependent curve. 
D)  independent curve.

Question 12

Which of the following is not an example of a factor of production?

Accepted Answer

A)  A forest. 
B)  A computer program. 
C)  A labor leader. 
D)  Dollars. 
A)  A forest. 
B)  A computer program. 
C)  A labor leader. 
D)  Dollars.

Question 13

Which of the following is a macroeconomic subject?

Accepted Answer

A)  Shipping rates. 
B)  Price of corporate stock. 
C)  Market price of Japanese cars. 
D)  Unemployment rate in the nation. 
A)  Shipping rates. 
B)  Price of corporate stock. 
C)  Market price of Japanese cars. 
D)  Unemployment rate in the nation.

Question 14

Which one of the following is the most accurate definition of economics?

Accepted Answer

A)  Economics is the study of stocks and bonds. 
B)  Economics is the study of how people allocate unlimited resources. 
C)  Economics is the study of how consumers choose to spend their income. 
D)  Economics is the study of how society chooses to allocate scarce resources. 
A)  Economics is the study of stocks and bonds. 
B)  Economics is the study of how people allocate unlimited resources. 
C)  Economics is the study of how consumers choose to spend their income. 
D)  Economics is the study of how society chooses to allocate scarce resources.

Question 15

Scarcity is a(n):

Accepted Answer

A)  problem only in industrialized economies. 
B)  condition measured by the quantity of goods available. 
C)  subjective concept that human wants can never be satisfied. 
D)  problem only in poor economies. 
A)  problem only in industrialized economies. 
B)  condition measured by the quantity of goods available. 
C)  subjective concept that human wants can never be satisfied. 
D)  problem only in poor economies.

Question 16

Which of the following are factors of production? ​

Accepted Answer

A)  ​The outputs generated by the production process transforming land, labor, and capital in to goods and services. 
B)  ​Restricted to the land resources such as natural resources that are unimproved by human economic activity. 
C)  ​Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories). 
D)  ​Just labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services. 
A)  ​The outputs generated by the production process transforming land, labor, and capital in to goods and services. 
B)  ​Restricted to the land resources such as natural resources that are unimproved by human economic activity. 
C)  ​Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories). 
D)  ​Just labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services.

Question 17

A positive economic statement must be verifiable.

Accepted Answer

A) True 
 B)False

Question 18

The creative ability of persons to combine and direct resources to produce new products is known as:

Accepted Answer

A)  economizing. 
B)  entrepreneurship. 
C)  value judgment. 
D)  product sensitivity. 
A)  economizing. 
B)  entrepreneurship. 
C)  value judgment. 
D)  product sensitivity.

Question 19

An analysis of IBM's pricing decisions would be classified as a macroeconomic study.

Accepted Answer

A) True 
 B)False

Question 20

"An increase in the federal minimum wage will provide a living wage for the working poor" is:

Accepted Answer

A)  a statement of positive economics. 
B)  a fallacy of composition. 
C)  a tautology. 
D)  a statement of normative economics. 
A)  a statement of positive economics. 
B)  a fallacy of composition. 
C)  a tautology. 
D)  a statement of normative economics.

Which of the following is a statement of positive economics?

A model is defined as a:

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Which of the following is a normative statement?

A normative economic statement is:

Exhibit 1A-3 Straight line -In Exhibit 1A-3, the slope for straight line AB is:

Which of the following pairs is the most likely to exhibit a direct relationship?

Which of the following is the best example of a microeconomic topic?

A downward-sloping line has a negative slope.

Exhibit 1A-4 Straight line -In Exhibit 1A-4, the slope of the straight line A-D is:

Measured between two points on a curve, the ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis is the:

Which of the following is not an example of a factor of production?

Which of the following is a macroeconomic subject?

Which one of the following is the most accurate definition of economics?

Scarcity is a(n):

Which of the following are factors of production?

A positive economic statement must be verifiable.

The creative ability of persons to combine and direct resources to produce new products is known as:

An analysis of IBM's pricing decisions would be classified as a macroeconomic study.

"An increase in the federal minimum wage will provide a living wage for the working poor" is:

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 1: Introducing the Economic Way of Thinking

Which of the following is a statement of positive economics?

A model is defined as a:

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Which of the following is a normative statement?

A normative economic statement is:

Exhibit 1A-3 Straight line -In Exhibit 1A-3, the slope for straight line AB is:

Which of the following pairs is the most likely to exhibit a direct relationship?

Which of the following is the best example of a microeconomic topic?

A downward-sloping line has a negative slope.

Exhibit 1A-4 Straight line -In Exhibit 1A-4, the slope of the straight line A-D is:

Measured between two points on a curve, the ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis is the:

Which of the following is not an example of a factor of production?

Which of the following is a macroeconomic subject?

Which one of the following is the most accurate definition of economics?

Scarcity is a(n):

Which of the following are factors of production? ​

A positive economic statement must be verifiable.

The creative ability of persons to combine and direct resources to produce new products is known as:

An analysis of IBM's pricing decisions would be classified as a macroeconomic study.

"An increase in the federal minimum wage will provide a living wage for the working poor" is:

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Which of the following are factors of production?