Question 1

When studying human behavior, economists assume rational self-interest.This means that

Accepted Answer

A) people make decisions based on some desired outcome. 
B) people are quite selfish and are not concerned about others. 
C) people always make the right decisions. 
D) people have all the information they need to make a decision. 
A) people make decisions based on some desired outcome. 
B) people are quite selfish and are not concerned about others. 
C) people always make the right decisions. 
D) people have all the information they need to make a decision.

Question 2

When economists say that people act rationally in their self-interest, they mean that individuals

Accepted Answer

A) look for and pursue opportunities to increase their utility. 
B) generally disregard the interests of others. 
C) are mainly creatures of habit. 
D) are usually impulsive and unpredictable. 
A) look for and pursue opportunities to increase their utility. 
B) generally disregard the interests of others. 
C) are mainly creatures of habit. 
D) are usually impulsive and unpredictable.

Question 3

Slopes of lines are especially important in economics because

Accepted Answer

A) they measure marginal changes. 
B) they always tell us something about profits. 
C) positive slopes are always preferred to negative slopes. 
D) they always relate to resource and output scarcity. 
A) they measure marginal changes. 
B) they always tell us something about profits. 
C) positive slopes are always preferred to negative slopes. 
D) they always relate to resource and output scarcity.

Question 4

Which of the following statements pertains to macroeconomics?

Accepted Answer

A) Because the minimum wage was raised, Mrs.Olsen decided to enter the labor force. 
B) A decline in the price of soybeans caused farmer Wanek to plant more wheat. 
C) National income grew by 2.7 percent last year. 
D) The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point. 
A) Because the minimum wage was raised, Mrs.Olsen decided to enter the labor force. 
B) A decline in the price of soybeans caused farmer Wanek to plant more wheat. 
C) National income grew by 2.7 percent last year. 
D) The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point.

Question 5

All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve, except

Accepted Answer

A) emigration of skilled workers to other nations. 
B) a decline in the birthrate. 
C) an increase in the average skill level of all occupational groups. 
D) depletion and reduced availability of major energy resources. 
A) emigration of skilled workers to other nations. 
B) a decline in the birthrate. 
C) an increase in the average skill level of all occupational groups. 
D) depletion and reduced availability of major energy resources.

Question 6

Economists

Accepted Answer

A) always put the independent variable on the horizontal axis and the dependent variable on the vertical axis. 
B) always put the dependent variable on the horizontal axis and the independent variable on the vertical axis. 
C) are somewhat arbitrary in assigning independent and dependent variables to the horizontal and vertical axes. 
D) measure the slope of a line differently than do mathematicians. 
A) always put the independent variable on the horizontal axis and the dependent variable on the vertical axis. 
B) always put the dependent variable on the horizontal axis and the independent variable on the vertical axis. 
C) are somewhat arbitrary in assigning independent and dependent variables to the horizontal and vertical axes. 
D) measure the slope of a line differently than do mathematicians.

Question 7

The basic purpose of the other-things-equal assumption is to

Accepted Answer

A) allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. 
B) allow one to focus upon micro variables by ignoring macro variables. 
C) allow one to focus upon macro variables by ignoring micro variables. 
D) determine whether X causes Y or vice versa. 
A) allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. 
B) allow one to focus upon micro variables by ignoring macro variables. 
C) allow one to focus upon macro variables by ignoring micro variables. 
D) determine whether X causes Y or vice versa.

Question 8

The best output or the optimal production of the nation is

Accepted Answer

A) a combination of products at the midpoint of the production possibilities curve. 
B) a combination of products at either of the two endpoints of the production possibilities curve. 
C) determined by equalizing the marginal benefits and marginal costs of each product. 
D) the production combination where the opportunity costs are minimized. 
A) a combination of products at the midpoint of the production possibilities curve. 
B) a combination of products at either of the two endpoints of the production possibilities curve. 
C) determined by equalizing the marginal benefits and marginal costs of each product. 
D) the production combination where the opportunity costs are minimized.

Question 9

Another way of saying "ceteris paribus" is

Accepted Answer

A) other things equal. 
B) in general. 
C) in reality. 
D) because of this. 
A) other things equal. 
B) in general. 
C) in reality. 
D) because of this.

Question 10

Macroeconomics explains the behavior of individual households and business firms; microeconomics is concerned with the behavior of aggregates or the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 11

The four factors of production are

Accepted Answer

A) land, labor, capital, and money. 
B) land, labor, capital, and entrepreneurial ability. 
C) labor, capital, technology, and entrepreneurial ability. 
D) labor, capital, entrepreneurial ability, and money. 
A) land, labor, capital, and money. 
B) land, labor, capital, and entrepreneurial ability. 
C) labor, capital, technology, and entrepreneurial ability. 
D) labor, capital, entrepreneurial ability, and money.

Question 12

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

Accepted Answer

A) the discovery of a low-cost means of generating and storing solar energy 
B) the entrance of more women into the labor force 
C) a law requiring mandatory retirement from the labor force at age 55 
D) an increase in the proportion of total output that consists of capital or investment goods 
A) the discovery of a low-cost means of generating and storing solar energy 
B) the entrance of more women into the labor force 
C) a law requiring mandatory retirement from the labor force at age 55 
D) an increase in the proportion of total output that consists of capital or investment goods

Question 13

What is a major opportunity cost of going to college on a full-time basis?

Accepted Answer

A) the cost of transportation to college instead of to a job 
B) the cost of living expenses (room and board) to attend college 
C) the forgone income that would have been earned working in a full-time job 
D) the greater income that will be earned from having a college degree 
A) the cost of transportation to college instead of to a job 
B) the cost of living expenses (room and board) to attend college 
C) the forgone income that would have been earned working in a full-time job 
D) the greater income that will be earned from having a college degree

Question 14

If all discrimination in the United States were eliminated, the economy would

Accepted Answer

A) have a less concave production possibilities curve. 
B) produce at some point closer to its production possibilities curve. 
C) be able to produce at some point outside of its production possibilities curve. 
D) produce more consumer goods and fewer investment goods. 
A) have a less concave production possibilities curve. 
B) produce at some point closer to its production possibilities curve. 
C) be able to produce at some point outside of its production possibilities curve. 
D) produce more consumer goods and fewer investment goods.

Question 15

If we say that two variables are inversely related, this means that

Accepted Answer

A) the two graph as an upsloping line. 
B) an increase in one variable is associated with a decrease in the other. 
C) an increase in one variable is associated with an increase in the other. 
D) the resulting relationship can be portrayed by a straight line parallel to the horizontal axis. 
A) the two graph as an upsloping line. 
B) an increase in one variable is associated with a decrease in the other. 
C) an increase in one variable is associated with an increase in the other. 
D) the resulting relationship can be portrayed by a straight line parallel to the horizontal axis.

Question 16

Economic theories

Accepted Answer

A) are useless because they are not based on laboratory experimentation. 
B) that are true for individual economic units are never true for the economy as a whole. 
C) are generalizations based on hypotheses tested and supported with observed facts. 
D) are abstractions and therefore of no application to real situations. 
A) are useless because they are not based on laboratory experimentation. 
B) that are true for individual economic units are never true for the economy as a whole. 
C) are generalizations based on hypotheses tested and supported with observed facts. 
D) are abstractions and therefore of no application to real situations.

Question 17

The slope of a line parallel to the horizontal axis is

Accepted Answer

A) zero. 
B) one. 
C) infinite. 
D) one-half. 
A) zero. 
B) one. 
C) infinite. 
D) one-half.

Question 18

The economic principle that the "unemployment rate will tend to increase as the economy moves into a recession" is an example of

Accepted Answer

A) a normative statement. 
B) an assumption. 
C) loaded terminology. 
D) a generalization. 
A) a normative statement. 
B) an assumption. 
C) loaded terminology. 
D) a generalization.

Question 19

Economic analysis assumes "purposeful behavior," which means that people will pursue decisions or actions

Accepted Answer

A) that will increase their well-being. 
B) always based on full or complete information. 
C) with minimal consideration for their emotions. 
D) without making any logical mistakes. 
A) that will increase their well-being. 
B) always based on full or complete information. 
C) with minimal consideration for their emotions. 
D) without making any logical mistakes.

Question 20

Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates

Accepted Answer

A) a rightward (outward) shift of the production possibilities curve. 
B) increasing opportunity costs. 
C) achieving points beyond the production possibilities curve through international specialization and trade. 
D) productive efficiency. 
A) a rightward (outward) shift of the production possibilities curve. 
B) increasing opportunity costs. 
C) achieving points beyond the production possibilities curve through international specialization and trade. 
D) productive efficiency.

Exam 1: Limits, Alternatives, and Choices

When studying human behavior, economists assume rational self-interest.This means that

When economists say that people act rationally in their self-interest, they mean that individuals

Slopes of lines are especially important in economics because

Which of the following statements pertains to macroeconomics?

All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve, except

Economists

The basic purpose of the other-things-equal assumption is to

The best output or the optimal production of the nation is

Another way of saying "ceteris paribus" is

Macroeconomics explains the behavior of individual households and business firms; microeconomics is concerned with the behavior of aggregates or the economy as a whole.

The four factors of production are

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

What is a major opportunity cost of going to college on a full-time basis?

If all discrimination in the United States were eliminated, the economy would

If we say that two variables are inversely related, this means that

Economic theories

The slope of a line parallel to the horizontal axis is

The economic principle that the "unemployment rate will tend to increase as the economy moves into a recession" is an example of

Economic analysis assumes "purposeful behavior," which means that people will pursue decisions or actions

Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates

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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