Question 1

Which of the following would not be classified as a capital resource?

Accepted Answer

A) The Empire State Building. 
B) A Caterpillar bulldozer. 
C) A Macintosh computer. 
D) 100 shares of stock in General Motors. 
A) The Empire State Building. 
B) A Caterpillar bulldozer. 
C) A Macintosh computer. 
D) 100 shares of stock in General Motors.

Question 2

" Ceteris paribus " is a Latin expression that essentially means "holding everything else constant."

Accepted Answer

A) True 
 B)False

Question 3

The subject of economics is primarily the study of:

Accepted Answer

A) the government decision-making process. 
B) how to operate a business successfully. 
C) decision-making because of the problem of scarcity. 
D) how to make money in the stock market. 
A) the government decision-making process. 
B) how to operate a business successfully. 
C) decision-making because of the problem of scarcity. 
D) how to make money in the stock market.

Question 4

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Accepted Answer

A) Why do national economies grow? 
B) What percentage of consumer income is spent on entertainment? 
C) Why do workers prefer the 4-day workweek? 
D) How is the electric industry harmed by the passage of new clean air legislation? 
A) Why do national economies grow? 
B) What percentage of consumer income is spent on entertainment? 
C) Why do workers prefer the 4-day workweek? 
D) How is the electric industry harmed by the passage of new clean air legislation?

Question 5

Economic theories, or models, enable us to predict and to give reasonable explanations regarding economic variables.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the best example of a normative economic statement?

Accepted Answer

A) A rise in gasoline prices will cause gasoline purchases to fall. 
B) The federal government should spend more on health care. 
C) Raising the minimum wage will result in greater unemployment. 
D) If more money is printed, then the economy's price level will rise. 
A) A rise in gasoline prices will cause gasoline purchases to fall. 
B) The federal government should spend more on health care. 
C) Raising the minimum wage will result in greater unemployment. 
D) If more money is printed, then the economy's price level will rise.

Question 7

Which of the following is the best example of an activity that would be undertaken by an entrepreneur?

Accepted Answer

A) Buying and selling of stocks and bonds. 
B) Starting a new business. 
C) Working on an assembly line. 
D) Running for political office. 
A) Buying and selling of stocks and bonds. 
B) Starting a new business. 
C) Working on an assembly line. 
D) Running for political office.

Question 8

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 9

Which of the following markets is closely related to macroeconomics?

Accepted Answer

A) Cattle futures market. 
B) Fulton's fish market. 
C) Skilled labor market. 
D) Nation's unemployment rate. 
A) Cattle futures market. 
B) Fulton's fish market. 
C) Skilled labor market. 
D) Nation's unemployment rate.

Question 10

Scarcity has no importance to understanding economics.

Accepted Answer

A) True 
 B)False

Question 11

What is an economic theory or model? What constitutes a "good" economic theory or model?

Accepted Answer

An economic theory is a simplified versi

Question 12

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

Accepted Answer

A) Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation. 
B) It is not possible for an economist to determine causation between variables. 
C) The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades. 
D) The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom. 
A) Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation. 
B) It is not possible for an economist to determine causation between variables. 
C) The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades. 
D) The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom.

Question 13

Scarcity is a(n):

Accepted Answer

A) problem only in industrialized economies. 
B) condition measured by the quantity of goods available. 
C) subjective concept that human wants can never be satisfied. 
D) problem only in poor economies. 
A) problem only in industrialized economies. 
B) condition measured by the quantity of goods available. 
C) subjective concept that human wants can never be satisfied. 
D) problem only in poor economies.

Question 14

Microeconomics approaches the study of economics from the viewpoint of:

Accepted Answer

A) individual or specific markets. 
B) the national economy. 
C) government units. 
D) economywide markets. 
A) individual or specific markets. 
B) the national economy. 
C) government units. 
D) economywide markets.

Question 15

Scarcity means we are unable to have as much as we would like to have.

Accepted Answer

A) True 
 B)False

Question 16

When economists want to hold a number of factors constant, they are demonstrating which of the following expressions?

Accepted Answer

A) Positive economics model. 
B) Consumer sovereignty. 
C) Ceteris paribus . 
D) Normative economics. 
A) Positive economics model. 
B) Consumer sovereignty. 
C) Ceteris paribus . 
D) Normative economics.

Question 17

Which of the following is a statement of positive economics?

Accepted Answer

A) Government control of rent is a fair way to help poor people afford housing. 
B) Government control of rent keeps landlords from charging too much rent. 
C) Government control of rent decreases the number of new apartments constructed. 
D) Government control of rent is an injustice. 
A) Government control of rent is a fair way to help poor people afford housing. 
B) Government control of rent keeps landlords from charging too much rent. 
C) Government control of rent decreases the number of new apartments constructed. 
D) Government control of rent is an injustice.

Question 18

Distinguish macroeconomics and microeconomics.

Accepted Answer

Macroeconomics studies the ent

Question 19

The sub-discipline of economics that focuses especially on individual markets is:

Accepted Answer

A) normative economics. 
B) positive economics. 
C) microeconomics. 
D) macroeconomics. 
E) econometrics. 
A) normative economics. 
B) positive economics. 
C) microeconomics. 
D) macroeconomics. 
E) econometrics.

Question 20

Which of the following is a macroeconomics topic?

Accepted Answer

A) Wages of textile workers in the Northeast. 
B) The cost of producing 10,000 bookcases. 
C) The economy's annual growth rate. 
D) National demand for fish. 
E) Effects of farm subsidies on food prices. 
A) Wages of textile workers in the Northeast. 
B) The cost of producing 10,000 bookcases. 
C) The economy's annual growth rate. 
D) National demand for fish. 
E) Effects of farm subsidies on food prices.

Exam 1: Introducing the Economic Way of Thinking

Which of the following would not be classified as a capital resource?

" Ceteris paribus " is a Latin expression that essentially means "holding everything else constant."

The subject of economics is primarily the study of:

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Economic theories, or models, enable us to predict and to give reasonable explanations regarding economic variables.

Which of the following is the best example of a normative economic statement?

Which of the following is the best example of an activity that would be undertaken by an entrepreneur?

Which of the following markets is closely related to macroeconomics?

Scarcity has no importance to understanding economics.

What is an economic theory or model? What constitutes a "good" economic theory or model?

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

Scarcity is a(n):

Microeconomics approaches the study of economics from the viewpoint of:

Scarcity means we are unable to have as much as we would like to have.

When economists want to hold a number of factors constant, they are demonstrating which of the following expressions?

Which of the following is a statement of positive economics?

Distinguish macroeconomics and microeconomics.

The sub-discipline of economics that focuses especially on individual markets is:

Which of the following is a macroeconomics topic?

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Applying Graphs to Economics

Consumer Surplus, Producer Surplus, and Market Efficiency

the Self-Correcting Aggregate Demand and Supply Model

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

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