Question 1

The slope of a graph relating two variables is -5.This indicates that as one variable decreases, the other variable also decreases.

Accepted Answer

A) True 
 B)False

Question 2

(Last Word) The post hoc, ergo propter hoc fallacy suggests that

Accepted Answer

A) positive statements are always followed by normative judgments. 
B) positive statements can never be proven true or false. 
C) if one acts on one's expectations, those expectations will always be fulfilled. 
D) cause and effect can be determined merely by observing the sequence of events. 
A) positive statements are always followed by normative judgments. 
B) positive statements can never be proven true or false. 
C) if one acts on one's expectations, those expectations will always be fulfilled. 
D) cause and effect can be determined merely by observing the sequence of events.

Question 3

In constructing the demand graph to show how the price of a good price affects how much of it the buyers will buy, the convention that economists follow is to measure price on the

Accepted Answer

A) horizontal axis because it is the independent variable. 
B) vertical axis because it is the dependent variable. 
C) vertical axis even though it is the independent variable. 
D) horizontal axis even though it is the dependent variable. 
A) horizontal axis because it is the independent variable. 
B) vertical axis because it is the dependent variable. 
C) vertical axis even though it is the independent variable. 
D) horizontal axis even though it is the dependent variable.

Question 4

Which of the following is a normative economic statement?

Accepted Answer

A) The poverty rate hit a new high last year and income distribution also worsened. 
B) Health care accounts for roughly a third of total spending in the economy. 
C) The government needs to revamp the Social Security program to make it sustainable. 
D) Retail sales are expected to continue on their downward trend in the next three quarters. 
A) The poverty rate hit a new high last year and income distribution also worsened. 
B) Health care accounts for roughly a third of total spending in the economy. 
C) The government needs to revamp the Social Security program to make it sustainable. 
D) Retail sales are expected to continue on their downward trend in the next three quarters.

Question 5

Economics is a social science that studies how individuals, institutions, and society may

Accepted Answer

A) expand the amount of resources available to them. 
B) attain a minimum level of production. 
C) best use resources to maximize satisfaction of economic wants. 
D) reduce the amount of goods and services they need. 
A) expand the amount of resources available to them. 
B) attain a minimum level of production. 
C) best use resources to maximize satisfaction of economic wants. 
D) reduce the amount of goods and services they need.

Question 6

Economists contend that most economic decisions are

Accepted Answer

A) random. 
B) chaotic. 
C) spontaneous. 
D) purposeful. 
A) random. 
B) chaotic. 
C) spontaneous. 
D) purposeful.

Question 7

The economizing problem is one of deciding how to make the best use of

Accepted Answer

A) virtually unlimited resources to satisfy virtually unlimited wants. 
B) limited resources to satisfy virtually unlimited wants. 
C) unlimited resources to satisfy limited wants. 
D) limited resources to satisfy limited wants. 
A) virtually unlimited resources to satisfy virtually unlimited wants. 
B) limited resources to satisfy virtually unlimited wants. 
C) unlimited resources to satisfy limited wants. 
D) limited resources to satisfy limited wants.

Question 8

Which of the following is a positive statement?

Accepted Answer

A) A humidity level of 90 percent is too high. 
B) It is too hot to run outside when the temperature exceeds 80 degrees. 
C) The temperature is 92 degrees today. 
D) Summer evenings are nice when it cools off to around 70 degrees. 
A) A humidity level of 90 percent is too high. 
B) It is too hot to run outside when the temperature exceeds 80 degrees. 
C) The temperature is 92 degrees today. 
D) Summer evenings are nice when it cools off to around 70 degrees.

Question 9

An economy will always operate at some point on its production possibilities curve.Difficulty: 02 Medium
Learning Objective: 01-07 Explain how economic growth and international trade increase consumption possibilities.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not considered by economists to be an economic resource?

Accepted Answer

A) money 
B) factory workers 
C) computers at a retail store. 
D) a forest 
A) money 
B) factory workers 
C) computers at a retail store. 
D) a forest

Question 11

The role of the entrepreneur in society is to

Accepted Answer

A) provide capital to the firm, which the management combines with labor. 
B) bring the factors of production together and take the risks of producing output. 
C) control the land upon which all production takes place and to get the most rent. 
D) regulate what products are considered safe to market. 
A) provide capital to the firm, which the management combines with labor. 
B) bring the factors of production together and take the risks of producing output. 
C) control the land upon which all production takes place and to get the most rent. 
D) regulate what products are considered safe to market.

Question 12

Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves.If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future

Accepted Answer

A) Alpha will experience greater economic growth than Beta. 
B) Beta will experience greater economic growth than Alpha. 
C) Alpha will not be able to achieve full employment or productive efficiency. 
D) Beta will not be able to achieve full employment or productive efficiency. 
A) Alpha will experience greater economic growth than Beta. 
B) Beta will experience greater economic growth than Alpha. 
C) Alpha will not be able to achieve full employment or productive efficiency. 
D) Beta will not be able to achieve full employment or productive efficiency.

Question 13

Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?

Accepted Answer

A) Other things equal, the more consumer goods a nation produces, the greater will be its future growth rate. 
B) Other things equal, the more capital goods a nation produces, the greater will be its future growth rate. 
C) There is no general relationship between the current division of output between consumer and capital goods and the future growth rate. 
D) None of these statements are correct. 
A) Other things equal, the more consumer goods a nation produces, the greater will be its future growth rate. 
B) Other things equal, the more capital goods a nation produces, the greater will be its future growth rate. 
C) There is no general relationship between the current division of output between consumer and capital goods and the future growth rate. 
D) None of these statements are correct.

Question 14

A nation's production possibilities curve is bowed out from the origin because

Accepted Answer

A) resources are not generally equally efficient in producing every good. 
B) opportunity costs of producing a good tend to fall as more of the good is produced. 
C) resources are scarce. 
D) wants are virtually unlimited. 
A) resources are not generally equally efficient in producing every good. 
B) opportunity costs of producing a good tend to fall as more of the good is produced. 
C) resources are scarce. 
D) wants are virtually unlimited.

Question 15

You should decide to go to a movie

Accepted Answer

A) if the marginal cost of the movie exceeds its marginal benefit. 
B) if the marginal benefit of the movie exceeds its marginal cost. 
C) if your income will allow you to buy a ticket. 
D) because movies are enjoyable. 
A) if the marginal cost of the movie exceeds its marginal benefit. 
B) if the marginal benefit of the movie exceeds its marginal cost. 
C) if your income will allow you to buy a ticket. 
D) because movies are enjoyable.

Question 16

Which question is an illustration of a macroeconomic question?

Accepted Answer

A) Is a corporation unresponsive to the demands of its customers? 
B) Is a consumer boycott an effective means of reducing a product's price? 
C) How will the government's budget deficit be affected by public infrastructure projects? 
D) Are oil companies ripping off consumers by charging exorbitantly high prices for gasoline? 
A) Is a corporation unresponsive to the demands of its customers? 
B) Is a consumer boycott an effective means of reducing a product's price? 
C) How will the government's budget deficit be affected by public infrastructure projects? 
D) Are oil companies ripping off consumers by charging exorbitantly high prices for gasoline?

Question 17

In a graph of the relationship between income and saving, economists generally consider

Accepted Answer

A) income to be the independent variable and place it on the vertical axis. 
B) income to be the dependent variable and place it on the horizontal axis. 
C) saving to be the dependent variable and place it on the vertical axis. 
D) saving to be the independent variable and place it on the vertical axis. 
A) income to be the independent variable and place it on the vertical axis. 
B) income to be the dependent variable and place it on the horizontal axis. 
C) saving to be the dependent variable and place it on the vertical axis. 
D) saving to be the independent variable and place it on the vertical axis.

Question 18

Scarcity

Accepted Answer

A) persists only because countries have failed to achieve continuous full employment. 
B) persists because economic wants exceed available resources. 
C) has been solved in all industrialized nations. 
D) has been eliminated in affluent societies such as the United States and Canada. 
A) persists only because countries have failed to achieve continuous full employment. 
B) persists because economic wants exceed available resources. 
C) has been solved in all industrialized nations. 
D) has been eliminated in affluent societies such as the United States and Canada.

Question 19

If a nation is initially on its production possibilities curve, then it can increase its production of one good only by

Accepted Answer

A) decreasing the production of the other good. 
B) increasing the production of the other good. 
C) holding constant the production of the other good. 
D) decreasing the price of the other good. 
A) decreasing the production of the other good. 
B) increasing the production of the other good. 
C) holding constant the production of the other good. 
D) decreasing the price of the other good.

Question 20

Which of the following indicates an inverse relationship between x and y?

Accepted Answer

A) y = -3 + 5x 
B) y = 6.2x 
C) y = 7 - 0.9x 
D) y = -50 
A) y = -3 + 5x 
B) y = 6.2x 
C) y = 7 - 0.9x 
D) y = -50

Exam 1: Limits, Alternatives, and Choices

The slope of a graph relating two variables is -5.This indicates that as one variable decreases, the other variable also decreases.

(Last Word) The post hoc, ergo propter hoc fallacy suggests that

In constructing the demand graph to show how the price of a good price affects how much of it the buyers will buy, the convention that economists follow is to measure price on the

Which of the following is a normative economic statement?

Economics is a social science that studies how individuals, institutions, and society may

Economists contend that most economic decisions are

The economizing problem is one of deciding how to make the best use of

Which of the following is a positive statement?

An economy will always operate at some point on its production possibilities curve.Difficulty: 02 Medium Learning Objective: 01-07 Explain how economic growth and international trade increase consumption possibilities.

Which of the following is not considered by economists to be an economic resource?

The role of the entrepreneur in society is to

Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves.If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future

Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?

A nation's production possibilities curve is bowed out from the origin because

You should decide to go to a movie

Which question is an illustration of a macroeconomic question?

In a graph of the relationship between income and saving, economists generally consider

Scarcity

If a nation is initially on its production possibilities curve, then it can increase its production of one good only by

Which of the following indicates an inverse relationship between x and y?

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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