Question 1

Exhibit 1A-1  Straight line   As shown in Exhibit 1A-1, the slope of straight line AB:

Accepted Answer

A)  decreases with increases in X. 
B)  increases with increases in X. 
C)  increases with decreases in X. 
D)  remains constant with changes in X. 
A)  decreases with increases in X. 
B)  increases with increases in X. 
C)  increases with decreases in X. 
D)  remains constant with changes in X.

Question 2

Campaign speeches normally include normative economic statements.

Accepted Answer

A) True 
 B)False

Question 3

People are forced to make choices because of:

Accepted Answer

A)  unlimited wants and unlimited resources. 
B)  limited wants and unlimited resources. 
C)  unlimited wants and limited resources. 
D)  limited wants and limited resources. 
E)  irrational wants and limited resources. 
A)  unlimited wants and unlimited resources. 
B)  limited wants and unlimited resources. 
C)  unlimited wants and limited resources. 
D)  limited wants and limited resources. 
E)  irrational wants and limited resources.

Question 4

Which phrase(s) is (are) associated with normative statements?

Accepted Answer

A)  c and e. 
B)  Has been shown. 
C)  Should be. 
D)  Can be. 
E)  More than. 
A)  c and e. 
B)  Has been shown. 
C)  Should be. 
D)  Can be. 
E)  More than.

Question 5

Microeconomics deals with the analysis of all the following questions except how :

Accepted Answer

A)  the wages of carpenters are determined. 
B)  high did unemployment rise during the Great Depression. 
C)  does Ford decide how to price its cars. 
D)  does a college student decide how to spend her income. 
E)  do monopolies and competitive markets differ. 
A)  the wages of carpenters are determined. 
B)  high did unemployment rise during the Great Depression. 
C)  does Ford decide how to price its cars. 
D)  does a college student decide how to spend her income. 
E)  do monopolies and competitive markets differ.

Question 6

A horizontal line represents an independent relationship.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

Human wants:

Accepted Answer

A)  are unfilled only in the poorer countries of the world. 
B)  can be completely satisfied by advancing technology. 
C)  can never be fully satisfied. 
D)  only apply to necessities. 
E)  exist only if we are selfish. 
A)  are unfilled only in the poorer countries of the world. 
B)  can be completely satisfied by advancing technology. 
C)  can never be fully satisfied. 
D)  only apply to necessities. 
E)  exist only if we are selfish.

Question 10

A model (or theory):

Accepted Answer

A)  is a general statement about the causal relationship between variables based on facts. 
B)  helps explain and predict the relationship between variables. 
C)  when expressed as a downward (negatively) sloping graph implies an inverse relationship between the variables. 
D)  all of the above. 
A)  is a general statement about the causal relationship between variables based on facts. 
B)  helps explain and predict the relationship between variables. 
C)  when expressed as a downward (negatively) sloping graph implies an inverse relationship between the variables. 
D)  all of the above.

Question 11

Which of the following is a macroeconomic subject?

Accepted Answer

A)  Shipping rates. 
B)  Price of corporate stock. 
C)  Market price of Japanese cars. 
D)  Unemployment rate in the nation. 
A)  Shipping rates. 
B)  Price of corporate stock. 
C)  Market price of Japanese cars. 
D)  Unemployment rate in the nation.

Question 12

Measured between two points on a curve, the ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis is the:

Accepted Answer

A)  axis. 
B)  slope. 
C)  dependent curve. 
D)  independent curve. 
A)  axis. 
B)  slope. 
C)  dependent curve. 
D)  independent curve.

Question 13

The statement "American workers are lazy" is an example of positive economic analysis.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following illustrates the concept of scarcity?

Accepted Answer

A)  There is usually more than one use of your "free" time in the evening. 
B)  More clean air is wanted than is available in large polluted metropolitan areas such as Los Angeles. 
C)  There are many competing uses for the annual budget of your city, county, or state. 
D)  All of the answers are correct. 
A)  There is usually more than one use of your "free" time in the evening. 
B)  More clean air is wanted than is available in large polluted metropolitan areas such as Los Angeles. 
C)  There are many competing uses for the annual budget of your city, county, or state. 
D)  All of the answers are correct.

Question 15

Select the positive statement that completes the sentence: If wages rise more rapidly than productivity:

Accepted Answer

A)  profits will fall. 
B)  workers will earn 3/4 of GDP. 
C)  the rate of inflation increases. 
D)  all of the above. 
A)  profits will fall. 
B)  workers will earn 3/4 of GDP. 
C)  the rate of inflation increases. 
D)  all of the above.

Question 16

Exhibit 1A-4  Straight line   In Exhibit 1A-4, the slope of the straight line A-D is:

Accepted Answer

A)  0. 
B)  1. 
C)  1/2. 
D)  − 1. 
A)  0. 
B)  1. 
C)  1/2. 
D)  − 1.

Question 17

Determining the price of compact discs is a concern of:

Accepted Answer

A)  macroeconomics. 
B)  microeconomics. 
C)  both macroeconomics and microeconomics. 
D)  neither macroeconomics nor microeconomics. 
A)  macroeconomics. 
B)  microeconomics. 
C)  both macroeconomics and microeconomics. 
D)  neither macroeconomics nor microeconomics.

Question 18

Abstracting from reality is an important element of all economic models.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  The inflation rate in the United States decreased from 4 percent last year to 3 percent this year as a result of lower energy prices. 
B)  The economy grew at an annual rate of 5 percent during the first quarter of this year. 
C)  If two automobile companies merge, it is likely that the price of automobiles will rise. 
D)  An increase in international trade benefits some workers but hurts others. 
E)  The minimum wage should be increased so that low income workers can afford to keep up with the cost of living. 
A)  The inflation rate in the United States decreased from 4 percent last year to 3 percent this year as a result of lower energy prices. 
B)  The economy grew at an annual rate of 5 percent during the first quarter of this year. 
C)  If two automobile companies merge, it is likely that the price of automobiles will rise. 
D)  An increase in international trade benefits some workers but hurts others. 
E)  The minimum wage should be increased so that low income workers can afford to keep up with the cost of living.

Question 20

The finite nature of the economy's resource base:

Accepted Answer

A)  will be solved if only we would learn to conserve. 
B)  is only a problem in developing countries. 
C)  will be solved as technology advances. 
D)  will always be with us. 
A)  will be solved if only we would learn to conserve. 
B)  is only a problem in developing countries. 
C)  will be solved as technology advances. 
D)  will always be with us.

Exam 1: Introducing the Economic Way of Thinking

Exhibit 1A-1 Straight line As shown in Exhibit 1A-1, the slope of straight line AB:

Campaign speeches normally include normative economic statements.

People are forced to make choices because of:

Which phrase(s) is (are) associated with normative statements?

Microeconomics deals with the analysis of all the following questions except how :

A horizontal line represents an independent relationship.

Which of the following markets is closely related to macroeconomics?

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?

Human wants:

A model (or theory):

Which of the following is a macroeconomic subject?

Measured between two points on a curve, the ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis is the:

The statement "American workers are lazy" is an example of positive economic analysis.

Which of the following illustrates the concept of scarcity?

Select the positive statement that completes the sentence: If wages rise more rapidly than productivity:

Exhibit 1A-4 Straight line In Exhibit 1A-4, the slope of the straight line A-D is:

Determining the price of compact discs is a concern of:

Abstracting from reality is an important element of all economic models.

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

The finite nature of the economy's resource base:

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

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

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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