Question 1

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has:

Accepted Answer

A)  confused association and causation. 
B)  misunderstood the Ceteris paribus assumption. 
C)  used normative economics to answer a positive question. 
D)  built an untestable model. 
A)  confused association and causation. 
B)  misunderstood the Ceteris paribus assumption. 
C)  used normative economics to answer a positive question. 
D)  built an untestable model.

Question 2

Which of the following is a statement of positive economics?

Accepted Answer

A)  I hope unemployment comes down soon. 
B)  President X's way of dealing with unemployment is better than President Y's. 
C)  I think everyone should sacrifice to reduce the deficit. 
D)  If taxes are reduced, unemployment will drop. 
A)  I hope unemployment comes down soon. 
B)  President X's way of dealing with unemployment is better than President Y's. 
C)  I think everyone should sacrifice to reduce the deficit. 
D)  If taxes are reduced, unemployment will drop.

Question 3

Which of the following would not be classified as a capital resource?

Accepted Answer

A)  The Empire State Building. 
B)  A Caterpillar bulldozer. 
C)  A Macintosh computer. 
D)  100 shares of stock in General Motors. 
A)  The Empire State Building. 
B)  A Caterpillar bulldozer. 
C)  A Macintosh computer. 
D)  100 shares of stock in General Motors.

Question 4

Scarcity:

Accepted Answer

A)  is a problem only in the poorer countries of the world. 
B)  can be solved by rapid advances in technology. 
C)  is a problem that exists in every economy. 
D)  is not a problem for the very rich. 
A)  is a problem only in the poorer countries of the world. 
B)  can be solved by rapid advances in technology. 
C)  is a problem that exists in every economy. 
D)  is not a problem for the very rich.

Question 5

Exhibit 1A-6 Straight line  
-In a graphic relationship, shifts in a curve are caused by a change in:

Accepted Answer

A)  the slope of the curve. 
B)  a factor not measured on the axes of the graph. 
C)  one of the factors measured on either axes of the graph. 
D)  any factor, whether measured on the axes of the graph of not. 
A)  the slope of the curve. 
B)  a factor not measured on the axes of the graph. 
C)  one of the factors measured on either axes of the graph. 
D)  any factor, whether measured on the axes of the graph of not.

Question 6

Scarcity:

Accepted Answer

A)  exists because resources are unlimited while human wants are limited. 
B)  means we are unable to have as much as we would like to have. 
C)  will likely be eliminated as technology continues to expand. 
D)  is not an issue addressed in economics. 
A)  exists because resources are unlimited while human wants are limited. 
B)  means we are unable to have as much as we would like to have. 
C)  will likely be eliminated as technology continues to expand. 
D)  is not an issue addressed in economics.

Question 7

"As soon as a mayor announced his/her 'get tough on crime' policy on New Year's day, criminals got scared and the crime rate went down." Suppose that the lower crime rate was actually caused by freezing cold temperatures in January-it was just too cold for anybody to be out robbing other people. Which fundamental hazard of the economic way of thinking did the mayor make?

Accepted Answer

A)  believing that what's good for one person is good for the whole group (the fallacy of composition) 
B)  failing to take into account the benefits of crime (the payoff fallacy) 
C)  believing that association is the same as causation 
D)  failing to understand the difference between positive and normative economics. 
A)  believing that what's good for one person is good for the whole group (the fallacy of composition) 
B)  failing to take into account the benefits of crime (the payoff fallacy) 
C)  believing that association is the same as causation 
D)  failing to understand the difference between positive and normative economics.

Question 8

Exhibit 1A-2 Straight line
​  
-In Exhibit 1A-2, the slope of straight line CD is:

Accepted Answer

A)  3. 
B)  1. 
C)  −1. 
D)  1/2. 
A)  3. 
B)  1. 
C)  −1. 
D)  1/2.

Question 9

Economics, according to its definition, studies how people:

Accepted Answer

A)  earn and spend money. 
B)  invest in the stock and bond markets. 
C)  make choices in the face of scarcity. 
D)  supply goods in response to demand. 
A)  earn and spend money. 
B)  invest in the stock and bond markets. 
C)  make choices in the face of scarcity. 
D)  supply goods in response to demand.

Question 10

Computer programs or software are an example of:

Accepted Answer

A)  land. 
B)  labor. 
C)  capital. 
D)  none of these. 
A)  land. 
B)  labor. 
C)  capital. 
D)  none of these.

Question 11

Exhibit 1A-2 Straight line
​  
-Straight line CD in Exhibit 1A-2 shows that:

Accepted Answer

A)  increasing values for X will increase the value of Y. 
B)  decreasing values for X will decrease the value of Y. 
C)  there is a direct relationship between X and Y. 
D)  all of these. 
A)  increasing values for X will increase the value of Y. 
B)  decreasing values for X will decrease the value of Y. 
C)  there is a direct relationship between X and Y. 
D)  all of these.

Question 12

Scarcity can be eliminated if:

Accepted Answer

A)  people satisfy needs rather than wants. 
B)  sufficient new resources were discovered. 
C)  output of goods and services were increased. 
D)  none of these. 
A)  people satisfy needs rather than wants. 
B)  sufficient new resources were discovered. 
C)  output of goods and services were increased. 
D)  none of these.

Question 13

Economics could be defined as the study of scarcity.

Accepted Answer

A) True 
 B)False

Question 14

A direct relationship exists when:

Accepted Answer

A)  there is no association between two variables. 
B)  one variable increases and there is no change in the other variable. 
C)  one variable increases and the other variable increases. 
D)  one variable increases and the other variable decreases. 
A)  there is no association between two variables. 
B)  one variable increases and there is no change in the other variable. 
C)  one variable increases and the other variable increases. 
D)  one variable increases and the other variable decreases.

Question 15

An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus. The phrase "Ceteris paribus" means that:

Accepted Answer

A)  other relevant factors like consumer incomes must be held constant. 
B)  the gasoline prices must first be adjusted for inflation. 
C)  the theory is widely accepted but cannot be accurately tested. 
D)  consumers' need for gasoline remains the same regardless of the price. 
A)  other relevant factors like consumer incomes must be held constant. 
B)  the gasoline prices must first be adjusted for inflation. 
C)  the theory is widely accepted but cannot be accurately tested. 
D)  consumers' need for gasoline remains the same regardless of the price.

Question 16

Macroeconomics studies economy-wide issues like inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 17

A good economic model should capture as many details about real-world behavior as possible.

Accepted Answer

A) True 
 B)False

Question 18

"An increase in the federal minimum wage causes an increase in unemployment among teenagers" is a:

Accepted Answer

A)  statement of positive economics. 
B)  statement of normative economics. 
C)  testable value judgment. 
D)  fallacy of composition. 
A)  statement of positive economics. 
B)  statement of normative economics. 
C)  testable value judgment. 
D)  fallacy of composition.

Question 19

The statement "A tax cut would be the fairest way to stimulate the economy" is an example of positive economic analysis.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 1A-2 Straight line
​  
-In Exhibit 1A-2, as X increases along the horizontal axis, corresponding to points C-D on the line, the Y values increase. The relationship between the X and Y variables is:

Accepted Answer

A)  direct. 
B)  inverse. 
C)  independent. 
D)  variable. 
A)  direct. 
B)  inverse. 
C)  independent. 
D)  variable.

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has:

Which of the following is a statement of positive economics?

Which of the following would not be classified as a capital resource?

Scarcity:

Exhibit 1A-6 Straight line -In a graphic relationship, shifts in a curve are caused by a change in:

Scarcity:

Exhibit 1A-2 Straight line -In Exhibit 1A-2, the slope of straight line CD is:

Economics, according to its definition, studies how people:

Computer programs or software are an example of:

Exhibit 1A-2 Straight line -Straight line CD in Exhibit 1A-2 shows that:

Scarcity can be eliminated if:

Economics could be defined as the study of scarcity.

A direct relationship exists when:

An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus. The phrase "Ceteris paribus" means that:

Macroeconomics studies economy-wide issues like inflation and unemployment.

A good economic model should capture as many details about real-world behavior as possible.

"An increase in the federal minimum wage causes an increase in unemployment among teenagers" is a:

The statement "A tax cut would be the fairest way to stimulate the economy" is an example of positive economic analysis.

Exhibit 1A-2 Straight line -In Exhibit 1A-2, as X increases along the horizontal axis, corresponding to points C-D on the line, the Y values increase. The relationship between the X and Y variables 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

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has:

Which of the following is a statement of positive economics?

Which of the following would not be classified as a capital resource?

Scarcity:

Exhibit 1A-6 Straight line -In a graphic relationship, shifts in a curve are caused by a change in:

Scarcity:

Exhibit 1A-2 Straight line ​ -In Exhibit 1A-2, the slope of straight line CD is:

Economics, according to its definition, studies how people:

Computer programs or software are an example of:

Exhibit 1A-2 Straight line ​ -Straight line CD in Exhibit 1A-2 shows that:

Scarcity can be eliminated if:

Economics could be defined as the study of scarcity.

A direct relationship exists when:

An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus. The phrase "Ceteris paribus" means that:

Macroeconomics studies economy-wide issues like inflation and unemployment.

A good economic model should capture as many details about real-world behavior as possible.

"An increase in the federal minimum wage causes an increase in unemployment among teenagers" is a:

The statement "A tax cut would be the fairest way to stimulate the economy" is an example of positive economic analysis.

Exhibit 1A-2 Straight line ​ -In Exhibit 1A-2, as X increases along the horizontal axis, corresponding to points C-D on the line, the Y values increase. The relationship between the X and Y variables 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

Exhibit 1A-2 Straight line -In Exhibit 1A-2, the slope of straight line CD is:

Exhibit 1A-2 Straight line -Straight line CD in Exhibit 1A-2 shows that:

Exhibit 1A-2 Straight line -In Exhibit 1A-2, as X increases along the horizontal axis, corresponding to points C-D on the line, the Y values increase. The relationship between the X and Y variables is: