Question 1

The statement "The income tax is unfair to those who work hard to earn their incomes" is an example of positive economic analysis.

Accepted Answer

A) True 
 B)False

Question 2

When an inverse relationship is graphed, the resulting line or curve is:

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  upward-sloping. 
D)  downward-sloping. 
A)  horizontal. 
B)  vertical. 
C)  upward-sloping. 
D)  downward-sloping.

Question 3

A horizontal line has an infinite slope.

Accepted Answer

A) True 
 B)False

Question 4

Which one of the following is a positive economic statement?

Accepted Answer

A)  An increase in the minimum wage will reduce employment for teenagers. 
B)  The minimum wage should be increased. 
C)  Social justice will be served by increasing the minimum wage. 
D)  Thoughtful people oppose an increase in the minimum wage. 
A)  An increase in the minimum wage will reduce employment for teenagers. 
B)  The minimum wage should be increased. 
C)  Social justice will be served by increasing the minimum wage. 
D)  Thoughtful people oppose an increase in the minimum wage.

Question 5

The graph of a direct relationship will have a positive slope.

Accepted Answer

A) True 
 B)False

Question 6

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains have not kept pace with the 3 percent rate of inflation. The Secretary's statement is a (n) ____ economic statement, and the labor head's statement is a (n) ____ economic statement.

Accepted Answer

A)  normative; normative 
B)  normative; positive 
C)  positive; normative 
D)  positive; positive 
E)  proper; improper 
A)  normative; normative 
B)  normative; positive 
C)  positive; normative 
D)  positive; positive 
E)  proper; improper

Question 7

Which of the following is a normative statement?

Accepted Answer

A)  The deduction for state taxes cost the federal government $100 billion per year. 
B)  Taxpayers in North Carolina pay state taxes which are above the national average. 
C)  Twenty-two states use a lottery to raise state taxes. 
D)  Congress is considering the president's tax plan to increase taxes which is a fair plan. 
A)  The deduction for state taxes cost the federal government $100 billion per year. 
B)  Taxpayers in North Carolina pay state taxes which are above the national average. 
C)  Twenty-two states use a lottery to raise state taxes. 
D)  Congress is considering the president's tax plan to increase taxes which is a fair plan.

Question 8

What type of economic analysis is limited to testable, verifiable statements?

Accepted Answer

A)  Macroeconomics. 
B)  Entrepreneurial economics. 
C)  Positive economics. 
D)  Normative economics. 
A)  Macroeconomics. 
B)  Entrepreneurial economics. 
C)  Positive economics. 
D)  Normative economics.

Question 9

Microeconomics approaches the study of economics from the viewpoint of:

Accepted Answer

A)  inflation, unemployment, and economic growth. 
B)  the federal government. 
C)  individual economic units, such as consumers, firms, and units of government. 
D)  the economy as a whole. 
A)  inflation, unemployment, and economic growth. 
B)  the federal government. 
C)  individual economic units, such as consumers, firms, and units of government. 
D)  the economy as a whole.

Question 10

Exhibit 1A-6 Straight line  
-In Exhibit 1A-6, the slope of straight line A-D is:

Accepted Answer

A)  positive. 
B)  zero. 
C)  negative. 
D)  variable. 
A)  positive. 
B)  zero. 
C)  negative. 
D)  variable.

Question 11

Macroeconomics deals with the analysis of all of the following questions except:

Accepted Answer

A)  why do national economies grow. 
B)  what determines a nation's savings and investments. 
C)  how does a central bank influence inflation. 
D)  why does a country experience recessions. 
E)  how does Microsoft price its software packages. 
A)  why do national economies grow. 
B)  what determines a nation's savings and investments. 
C)  how does a central bank influence inflation. 
D)  why does a country experience recessions. 
E)  how does Microsoft price its software packages.

Question 12

A textbook is an example of:

Accepted Answer

A)  capital. 
B)  a natural resource. 
C)  labor. 
D)  all of these. 
A)  capital. 
B)  a natural resource. 
C)  labor. 
D)  all of these.

Question 13

Financial capital by itself is not a factor of production; instead it is only a paper claim on economic capital.

Accepted Answer

A) True 
 B)False

Question 14

A theory is:

Accepted Answer

A)  based only on critical factors or variables. 
B)  a simplified abstraction of the real world. 
C)  a detailed description of reality. 
D)  a and b 
A)  based only on critical factors or variables. 
B)  a simplified abstraction of the real world. 
C)  a detailed description of reality. 
D)  a and b

Question 15

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

Accepted Answer

A) True 
 B)False

Question 16

Economists believe that scarcity forces everyone to:

Accepted Answer

A)  satisfy all their wants. 
B)  abandon consumer sovereignty. 
C)  lie about their wants. 
D)  create unlimited resources. 
E)  make choices. 
A)  satisfy all their wants. 
B)  abandon consumer sovereignty. 
C)  lie about their wants. 
D)  create unlimited resources. 
E)  make choices.

Question 17

Which of the following is the best example of a nonrenewable resource?

Accepted Answer

A)  Forests. 
B)  Oil. 
C)  Clean air. 
D)  Fish in the ocean. 
A)  Forests. 
B)  Oil. 
C)  Clean air. 
D)  Fish in the ocean.

Question 18

To abstract from reality in an economic model means that:

Accepted Answer

A)  we include only a few of the essential aspects of reality. 
B)  the economic study surveys only a very limited period of time. 
C)  we include only those elements which support our hypothesis. 
D)  the model includes every aspect of the real world. 
E)  the model examines the actions of the consumers in the absence of producers and the government. 
A)  we include only a few of the essential aspects of reality. 
B)  the economic study surveys only a very limited period of time. 
C)  we include only those elements which support our hypothesis. 
D)  the model includes every aspect of the real world. 
E)  the model examines the actions of the consumers in the absence of producers and the government.

Question 19

The statement "Cutting government spending is the best way to boost consumer confidence" is an example of normative economics.

Accepted Answer

A) True 
 B)False

Question 20

A chain saw is 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.

The statement "The income tax is unfair to those who work hard to earn their incomes" is an example of positive economic analysis.

When an inverse relationship is graphed, the resulting line or curve is:

A horizontal line has an infinite slope.

Which one of the following is a positive economic statement?

The graph of a direct relationship will have a positive slope.

Which of the following is a normative statement?

What type of economic analysis is limited to testable, verifiable statements?

Microeconomics approaches the study of economics from the viewpoint of:

Exhibit 1A-6 Straight line -In Exhibit 1A-6, the slope of straight line A-D is:

Macroeconomics deals with the analysis of all of the following questions except:

A textbook is an example of:

Financial capital by itself is not a factor of production; instead it is only a paper claim on economic capital.

A theory is:

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

Economists believe that scarcity forces everyone to:

Which of the following is the best example of a nonrenewable resource?

To abstract from reality in an economic model means that:

The statement "Cutting government spending is the best way to boost consumer confidence" is an example of normative economics.

A chain saw is an example of:

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

The statement "The income tax is unfair to those who work hard to earn their incomes" is an example of positive economic analysis.

When an inverse relationship is graphed, the resulting line or curve is:

A horizontal line has an infinite slope.

Which one of the following is a positive economic statement?

The graph of a direct relationship will have a positive slope.

Which of the following is a normative statement?

What type of economic analysis is limited to testable, verifiable statements?

Microeconomics approaches the study of economics from the viewpoint of:

Exhibit 1A-6 Straight line -In Exhibit 1A-6, the slope of straight line A-D is:

Macroeconomics deals with the analysis of all of the following questions except:

A textbook is an example of:

Financial capital by itself is not a factor of production; instead it is only a paper claim on economic capital.

A theory is:

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

Economists believe that scarcity forces everyone to:

Which of the following is the best example of a nonrenewable resource?

To abstract from reality in an economic model means that:

The statement "Cutting government spending is the best way to boost consumer confidence" is an example of normative economics.

A chain saw is an example of:

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