Question 1

Which of the following is a microeconomic issue?

Accepted Answer

A) What is the impact on the quantity of Pepsi purchased if consumers' tastes change in favor of non-carbonated drinks? 
B) Why has economic growth been rapid in China? 
C) Why is the average income lower in Africa than in Latin America? 
D) Why did overall production increase within the United States last year? 
E) Why has unemployment risen nationwide? 
A) What is the impact on the quantity of Pepsi purchased if consumers' tastes change in favor of non-carbonated drinks? 
B) Why has economic growth been rapid in China? 
C) Why is the average income lower in Africa than in Latin America? 
D) Why did overall production increase within the United States last year? 
E) Why has unemployment risen nationwide?

Question 2

In the figure above, ceteris paribus, an increase in x is associated with

Accepted Answer

A) no change in either y or z. 
B) an increase in y. 
C) a decrease in y. 
D) an increase in z. 
E) a random change in z. 
A) no change in either y or z. 
B) an increase in y. 
C) a decrease in y. 
D) an increase in z. 
E) a random change in z.

Question 3

As the price of home heating oil rises, families buy less home heating oil. Hence a scatter diagram with the price of home heating oil on the vertical axis and the quantity purchased on the horizontal axis reveals a---------- relationship.

Accepted Answer

A) cross-sectional 
B) negative 
C) time-series 
D) linear 
E) positive 
A) cross-sectional 
B) negative 
C) time-series 
D) linear 
E) positive

Question 4

An incentive is

Accepted Answer

A) the marginal cost of some course of action. 
B) a constraint that society imposes on those who make self-interested choices. 
C) the marginal benefit of some course of action. 
D) an inducement to take a particular action. 
E) the net gain of some course of action. 
A) the marginal cost of some course of action. 
B) a constraint that society imposes on those who make self-interested choices. 
C) the marginal benefit of some course of action. 
D) an inducement to take a particular action. 
E) the net gain of some course of action.

Question 5

A curve with a positive but decreasing slope represents a relationship where, every time the variable measured along the horizontal axis increases by one unit, the variable measured along the vertical axis

Accepted Answer

A) increases by a constant amount. 
B) does not change by much. 
C) increases by a decreasing amount. 
D) decreases. 
E) increases by an increasing amount. 
A) increases by a constant amount. 
B) does not change by much. 
C) increases by a decreasing amount. 
D) decreases. 
E) increases by an increasing amount.

Question 6

Which of the following is a positive statement?

Accepted Answer

A) My economics class should last for two terms because it is my favorite class. 
B) Given their negative impact on productivity, the government should eliminate labor unions. 
C) Taxes should be lower because then people get to keep more of what they earn, so they will work more. 
D) The class average on this test should be more than 80 percent. 
E) A 10 percent increase in income leads to a 4 percent increase in the consumption of beef. 
A) My economics class should last for two terms because it is my favorite class. 
B) Given their negative impact on productivity, the government should eliminate labor unions. 
C) Taxes should be lower because then people get to keep more of what they earn, so they will work more. 
D) The class average on this test should be more than 80 percent. 
E) A 10 percent increase in income leads to a 4 percent increase in the consumption of beef.

Question 7

A normative statement
I. can be tested as to whether it is true or false.
Ii. is considered negative.
Iii. depends on a person's values.

Accepted Answer

A) ii and iii 
B) i, ii, and iii 
C) i only 
D) i and iii 
E) iii only 
A) ii and iii 
B) i, ii, and iii 
C) i only 
D) i and iii 
E) iii only

Question 8

Which of the following is true?
I. A rational choice is made on the margin.
Ii. Microeconomics is the study of the national economy while macroeconomics is the study of the global economy.
Iii. Economists try to understand how the economic world works by testing normative statements.

Accepted Answer

A) i and ii 
B) only ii 
C) only iii 
D) only i 
E) i and iii 
A) i and ii 
B) only ii 
C) only iii 
D) only i 
E) i and iii

Question 9

A time-series graph measures

Accepted Answer

A) time on the x-axis and the variable or variables in which we are interested on the y-axis. 
B) the value of one variable against the value of another variable. 
C) time on the y-axis and the variable or variables in which we are interested on the x-axis. 
D) time on both the x-axis and y-axis and the variable or variables in which we are interested in the rest of the figure. 
E) the value of an economic variable for different groups in a population at a point in time. 
A) time on the x-axis and the variable or variables in which we are interested on the y-axis. 
B) the value of one variable against the value of another variable. 
C) time on the y-axis and the variable or variables in which we are interested on the x-axis. 
D) time on both the x-axis and y-axis and the variable or variables in which we are interested in the rest of the figure. 
E) the value of an economic variable for different groups in a population at a point in time.

Question 10

A linear relationship

Accepted Answer

A) can be a positive or a negative relationship. 
B) when graphed is a line whose slope changes. 
C) when graphed is a straight line. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct. 
A) can be a positive or a negative relationship. 
B) when graphed is a line whose slope changes. 
C) when graphed is a straight line. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct.

Question 11

As a shoe factory adds more workers, shoe production grows, reaches a maximum, and then shrinks. In a diagram that has the number of workers on the horizontal axis and the number of shoes on the vertical axis, the relationship between the number of workers and the number of shoes starts as -------------------- and then, after the maximum point, is --------------------.

Accepted Answer

A) linear; negative 
B) positive; linear 
C) positive; nonexistent 
D) positive; negative 
E) negative; positive 
A) linear; negative 
B) positive; linear 
C) positive; nonexistent 
D) positive; negative 
E) negative; positive

Question 12

A straight line falls when moving rightward along it. Hence the slope of the line is

Accepted Answer

A) negative. 
B) positive. 
C) zero because it is a straight line. 
D) undefined. 
E) perhaps positive, negative, or zero, but without more information it is impossible to determine. 
A) negative. 
B) positive. 
C) zero because it is a straight line. 
D) undefined. 
E) perhaps positive, negative, or zero, but without more information it is impossible to determine.

Question 13

To graph a relationship that involves more than two variables, we use

Accepted Answer

A) a direct relationship. 
B) a positive relationship. 
C) a negative relationship. 
D) ceteris paribus. 
E) movement up along one of the lines showing the relationship between x and y. 
A) a direct relationship. 
B) a positive relationship. 
C) a negative relationship. 
D) ceteris paribus. 
E) movement up along one of the lines showing the relationship between x and y.

Question 14

We are investigating the relationship among three variables. We have graphed two of them. Suppose that the variable that is not measured on the x-axis or the y-axis changes. Then, there is

Accepted Answer

A) an omitted variable. 
B) a violation of the absence of trend assumption. 
C) a movement along the plotted curve. 
D) no impact on the plotted curve because the variable is not measured on either of the axes. 
E) a shift in the plotted curve. 
A) an omitted variable. 
B) a violation of the absence of trend assumption. 
C) a movement along the plotted curve. 
D) no impact on the plotted curve because the variable is not measured on either of the axes. 
E) a shift in the plotted curve.

Question 15

The additional benefit of increasing some activity by one-unit is called the

Accepted Answer

A) opportunity cost. 
B) scarcity. 
C) unit cost/benefit. 
D) marginal benefit. 
E) total benefit. 
A) opportunity cost. 
B) scarcity. 
C) unit cost/benefit. 
D) marginal benefit. 
E) total benefit.

Question 16

In the above figure, a negative relationship between x and y is shown in Figure

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
E) B and Figure C. 
A) A. 
B) B. 
C) C. 
D) D. 
E) B and Figure C.

Question 17

Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that

Accepted Answer

A) the opportunity cost of working is negative. 
B) workers are irrational. 
C) workers make decisions based on the social interest. 
D) workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work. 
E) the marginal cost of each additional work hour is not important to most workers. 
A) the opportunity cost of working is negative. 
B) workers are irrational. 
C) workers make decisions based on the social interest. 
D) workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work. 
E) the marginal cost of each additional work hour is not important to most workers.

Question 18

The figure above shows the relationship between distance sprinted and recovery time. The curve becomes steeper because as the distance sprinted increases,

Accepted Answer

A) the extra recovery time needed from sprinting another 100 yards increases. 
B) the recovery time decreases. 
C) the extra recovery time needed from sprinting another 100 yards decreases. 
D) the relationship between distance sprinted and recovery time becomes more inverse. 
E) the recovery time increases. 
A) the extra recovery time needed from sprinting another 100 yards increases. 
B) the recovery time decreases. 
C) the extra recovery time needed from sprinting another 100 yards decreases. 
D) the relationship between distance sprinted and recovery time becomes more inverse. 
E) the recovery time increases.

Question 19

When two variables in a graph are related to a third, changing the third causes

Accepted Answer

A) a movement along the curve. 
B) no change in the curve because the third variable isn't on the axes. 
C) a shift of the curve. 
D) either a shift or a movement in the curve but more information is needed to determine which occurs. 
E) None of the above answers is correct. 
A) a movement along the curve. 
B) no change in the curve because the third variable isn't on the axes. 
C) a shift of the curve. 
D) either a shift or a movement in the curve but more information is needed to determine which occurs. 
E) None of the above answers is correct.

Question 20

In the above figure, no relationship between x and y is shown in Figure

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
E) A and Figure B. 
A) A. 
B) B. 
C) C. 
D) D. 
E) A and Figure B.

Which of the following is a microeconomic issue?

In the figure above, ceteris paribus, an increase in x is associated with

As the price of home heating oil rises, families buy less home heating oil. Hence a scatter diagram with the price of home heating oil on the vertical axis and the quantity purchased on the horizontal axis reveals a_---------- relationship.

An incentive is

A curve with a positive but decreasing slope represents a relationship where, every time the variable measured along the horizontal axis increases by one unit, the variable measured along the vertical axis

Which of the following is a positive statement?

A normative statement I. can be tested as to whether it is true or false. Ii. is considered negative. Iii. depends on a person's values.

Which of the following is true? I. A rational choice is made on the margin. Ii. Microeconomics is the study of the national economy while macroeconomics is the study of the global economy. Iii. Economists try to understand how the economic world works by testing normative statements.

A time-series graph measures

A linear relationship

A straight line falls when moving rightward along it. Hence the slope of the line is

To graph a relationship that involves more than two variables, we use

We are investigating the relationship among three variables. We have graphed two of them. Suppose that the variable that is not measured on the x-axis or the y-axis changes. Then, there is

The additional benefit of increasing some activity by one-unit is called the

In the above figure, a negative relationship between x and y is shown in Figure

Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that

The figure above shows the relationship between distance sprinted and recovery time. The curve becomes steeper because as the distance sprinted increases,

When two variables in a graph are related to a third, changing the third causes

In the above figure, no relationship between x and y is shown in Figure

The Us and Global Economies

The Economic Problem

Demand and Supply

GDP: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply Ad Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 1: Getting Started

Which of the following is a microeconomic issue?

In the figure above, ceteris paribus, an increase in x is associated with

As the price of home heating oil rises, families buy less home heating oil. Hence a scatter diagram with the price of home heating oil on the vertical axis and the quantity purchased on the horizontal axis reveals a---------- relationship.

An incentive is

A curve with a positive but decreasing slope represents a relationship where, every time the variable measured along the horizontal axis increases by one unit, the variable measured along the vertical axis

Which of the following is a positive statement?

A normative statement I. can be tested as to whether it is true or false. Ii. is considered negative. Iii. depends on a person's values.

Which of the following is true? I. A rational choice is made on the margin. Ii. Microeconomics is the study of the national economy while macroeconomics is the study of the global economy. Iii. Economists try to understand how the economic world works by testing normative statements.

A time-series graph measures

A linear relationship

A straight line falls when moving rightward along it. Hence the slope of the line is

To graph a relationship that involves more than two variables, we use

We are investigating the relationship among three variables. We have graphed two of them. Suppose that the variable that is not measured on the x-axis or the y-axis changes. Then, there is

The additional benefit of increasing some activity by one-unit is called the

In the above figure, a negative relationship between x and y is shown in Figure

Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that

The figure above shows the relationship between distance sprinted and recovery time. The curve becomes steeper because as the distance sprinted increases,

When two variables in a graph are related to a third, changing the third causes

In the above figure, no relationship between x and y is shown in Figure

The Us and Global Economies

The Economic Problem

Demand and Supply

GDP: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply Ad Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

As the price of home heating oil rises, families buy less home heating oil. Hence a scatter diagram with the price of home heating oil on the vertical axis and the quantity purchased on the horizontal axis reveals a_---------- relationship.