Question 1

If two variables are inversely related, then as the value of one variable

Accepted Answer

A) increases, the value of the other may either increase or decrease. 
B) decreases, the value of the other decreases. 
C) increases, the value of the other decreases. 
D) increases, the value of the other increases. 
A) increases, the value of the other may either increase or decrease. 
B) decreases, the value of the other decreases. 
C) increases, the value of the other decreases. 
D) increases, the value of the other increases.

Question 2

Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"?

Accepted Answer

A) abstraction 
B) biases 
C) the fallacy of composition 
D) confusing correlation and causation 
A) abstraction 
B) biases 
C) the fallacy of composition 
D) confusing correlation and causation

Question 3

(Consider This) The assertion by economists that "there is no free lunch"

Accepted Answer

A) is contradicted by the presence of free goods offered by firms. 
B) applies to goods that have prices, not to goods given away free by firms. 
C) remains true even for goods given away free by firms. 
D) applies to agricultural goods but not to manufactured goods. 
A) is contradicted by the presence of free goods offered by firms. 
B) applies to goods that have prices, not to goods given away free by firms. 
C) remains true even for goods given away free by firms. 
D) applies to agricultural goods but not to manufactured goods.

Question 4

"Economics is concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity." This statement is

Accepted Answer

A) positive but incorrect. 
B) positive and correct. 
C) normative but incorrect. 
D) normative and correct. 
A) positive but incorrect. 
B) positive and correct. 
C) normative but incorrect. 
D) normative and correct.

Question 5

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because

Accepted Answer

A) of the law of increasing opportunity costs. 
B) economic wants are insatiable. 
C) resources are limited. 
D) resources are specialized and only imperfectly substitutable. 
A) of the law of increasing opportunity costs. 
B) economic wants are insatiable. 
C) resources are limited. 
D) resources are specialized and only imperfectly substitutable.

Question 6

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day.This fact

Accepted Answer

A) is an example of irrational behavior. 
B) implies that electronic media sources are displacing print sources for many consumers. 
C) contradicts the economic perspective. 
D) implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost. 
A) is an example of irrational behavior. 
B) implies that electronic media sources are displacing print sources for many consumers. 
C) contradicts the economic perspective. 
D) implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

Question 7

(Last Word) Which of the following has to do with the problem of distinguishing cause and effect in economic reasoning?

Accepted Answer

A) the law of large numbers 
B) the law of averages 
C) the post hoc, ergo propter hoc fallacy 
D) the fallacy of composition 
A) the law of large numbers 
B) the law of averages 
C) the post hoc, ergo propter hoc fallacy 
D) the fallacy of composition

Question 8

Assume an economy is incurring unemployment.The effect of resolving this problem will be to

Accepted Answer

A) move the level of actual output closer to the economy's production possibilities curve. 
B) create a less equal distribution of income. 
C) shift its production possibilities curve to the left. 
D) shift its production possibilities curve to the right. 
A) move the level of actual output closer to the economy's production possibilities curve. 
B) create a less equal distribution of income. 
C) shift its production possibilities curve to the left. 
D) shift its production possibilities curve to the right.

Question 9

Economic resources are also called

Accepted Answer

A) free gifts of nature. 
B) consumption goods. 
C) units of money capital. 
D) factors of production. 
A) free gifts of nature. 
B) consumption goods. 
C) units of money capital. 
D) factors of production.

Question 10

The amount of pizzas that consumers want to buy per week is reflected in the equation P = 15 - .02Qd, where Qd is the amount of pizzas purchased per week and P is the price of pizzas.On the basis of this information, we can say that

Accepted Answer

A) if pizzas were free, people would consume 800 per week. 
B) more pizzas will be purchased at a high price than at a low price. 
C) if the price of pizzas is $6, then 150 will be purchased. 
D) 50 fewer pizzas will be purchased per week for every $1 increase in price. 
A) if pizzas were free, people would consume 800 per week. 
B) more pizzas will be purchased at a high price than at a low price. 
C) if the price of pizzas is $6, then 150 will be purchased. 
D) 50 fewer pizzas will be purchased per week for every $1 increase in price.

Question 11

Which of the following will shift the production possibilities curve to the right?

Accepted Answer

A) an increase in the unemployment rate from 6 to 8 percent 
B) a decline in the efficiency with which the present labor force is allocated 
C) a decrease in the unemployment rate from 8 to 6 percent 
D) a technological advance that allows farmers to produce more output from given inputs 
A) an increase in the unemployment rate from 6 to 8 percent 
B) a decline in the efficiency with which the present labor force is allocated 
C) a decrease in the unemployment rate from 8 to 6 percent 
D) a technological advance that allows farmers to produce more output from given inputs

Question 12

A person should consume more of something when its marginal

Accepted Answer

A) benefit exceeds its marginal cost. 
B) cost exceeds its marginal benefit. 
C) cost equals its marginal benefit. 
D) benefit is still better. 
A) benefit exceeds its marginal cost. 
B) cost exceeds its marginal benefit. 
C) cost equals its marginal benefit. 
D) benefit is still better.

Question 13

The lower the consumer's income, the higher his or her budget line.

Accepted Answer

A) True 
 B)False

Question 14

"Macroeconomics is the part of economics concerned with individual units, such as a person, a household, a firm, or an industry." This statement is

Accepted Answer

A) positive but incorrect. 
B) positive and correct. 
C) normative but incorrect. 
D) normative and correct. 
A) positive but incorrect. 
B) positive and correct. 
C) normative but incorrect. 
D) normative and correct.

Question 15

Which of the following will not produce an outward shift of the production possibilities curve?

Accepted Answer

A) upgrading the quality of a nation's human resources 
B) reducing unemployment 
C) increasing the quantity of a society's labor force 
D) improving a society's technological knowledge 
A) upgrading the quality of a nation's human resources 
B) reducing unemployment 
C) increasing the quantity of a society's labor force 
D) improving a society's technological knowledge

Question 16

Which of the following would not be considered a capital resource by economists?

Accepted Answer

A) a van used by a mother to transport the family around 
B) an office computer used by an accountant 
C) a crane used by a building contractor 
D) a camera used by a professional photographer 
A) a van used by a mother to transport the family around 
B) an office computer used by an accountant 
C) a crane used by a building contractor 
D) a camera used by a professional photographer

Question 17

Macroeconomics can best be described as the

Accepted Answer

A) analysis of how a consumer tries to spend income. 
B) study of the large aggregates of the economy or the economy as a whole. 
C) analysis of how firms attempt to maximize their profits. 
D) study of how supply and demand determine prices in individual markets. 
A) analysis of how a consumer tries to spend income. 
B) study of the large aggregates of the economy or the economy as a whole. 
C) analysis of how firms attempt to maximize their profits. 
D) study of how supply and demand determine prices in individual markets.

Question 18

Macroeconomics approaches the study of economics from the viewpoint of

Accepted Answer

A) the entire economy. 
B) governmental units. 
C) the operation of specific product and resource markets. 
D) individual firms. 
A) the entire economy. 
B) governmental units. 
C) the operation of specific product and resource markets. 
D) individual firms.

Question 19

A nation's production possibilities curve might shift to the left (inward) as a result of

Accepted Answer

A) technological advance. 
B) increases in the size of the labor force. 
C) the depletion of its soil fertility due to overplanting and overgrazing. 
D) investing in more capital goods. 
A) technological advance. 
B) increases in the size of the labor force. 
C) the depletion of its soil fertility due to overplanting and overgrazing. 
D) investing in more capital goods.

Question 20

A country can achieve some combination of goods outside its production possibilities curve by

Accepted Answer

A) idling some of its resources. 
B) specializing and engaging in international trade. 
C) buying the debt (bonds and stocks) of foreign nations. 
D) producing more capital goods and fewer consumer goods. 
A) idling some of its resources. 
B) specializing and engaging in international trade. 
C) buying the debt (bonds and stocks) of foreign nations. 
D) producing more capital goods and fewer consumer goods.

Exam 1: Limits, Alternatives, and Choices

If two variables are inversely related, then as the value of one variable

Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"?

(Consider This) The assertion by economists that "there is no free lunch"

"Economics is concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity." This statement is

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day.This fact

(Last Word) Which of the following has to do with the problem of distinguishing cause and effect in economic reasoning?

Assume an economy is incurring unemployment.The effect of resolving this problem will be to

Economic resources are also called

The amount of pizzas that consumers want to buy per week is reflected in the equation P = 15 - .02Qd, where Qd is the amount of pizzas purchased per week and P is the price of pizzas.On the basis of this information, we can say that

Which of the following will shift the production possibilities curve to the right?

A person should consume more of something when its marginal

The lower the consumer's income, the higher his or her budget line.

"Macroeconomics is the part of economics concerned with individual units, such as a person, a household, a firm, or an industry." This statement is

Which of the following will not produce an outward shift of the production possibilities curve?

Which of the following would not be considered a capital resource by economists?

Macroeconomics can best be described as the

Macroeconomics approaches the study of economics from the viewpoint of

A nation's production possibilities curve might shift to the left (inward) as a result of

A country can achieve some combination of goods outside its production possibilities curve by

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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