Question 1

The central question in economics is how to:

Accepted Answer

A)  deal with the problem of scarcity. 
B)  change government economic policy. 
C)  change people's wants to match their needs. 
D)  manage money and become wealthy. 
A)  deal with the problem of scarcity. 
B)  change government economic policy. 
C)  change people's wants to match their needs. 
D)  manage money and become wealthy.

Question 2

Microeconomics and macroeconomics use different types of analysis.

Accepted Answer

A) True 
 B)False

Question 3

The slope of a line is calculated as the ratio of the "rise" over the "run".

Accepted Answer

A) True 
 B)False

Question 4

Economists most often disagree over positive rather than normative economic issues.

Accepted Answer

A) True 
 B)False

Question 5

A good economic model should capture as many details about real-world behavior as possible.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 1A-2  Straight line   As shown in Exhibit 1A-2, the slope of straight line CD:

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 7

Capital resources include money and other financial assets.

Accepted Answer

A) True 
 B)False

Question 8

An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus . The phrase " Ceteris paribus " means that:

Accepted Answer

A)  other relevant factors like consumer incomes must be held constant. 
B)  the gasoline prices must first be adjusted for inflation. 
C)  the theory is widely accepted but cannot be accurately tested. 
D)  consumers' need for gasoline remains the same regardless of the price. 
A)  other relevant factors like consumer incomes must be held constant. 
B)  the gasoline prices must first be adjusted for inflation. 
C)  the theory is widely accepted but cannot be accurately tested. 
D)  consumers' need for gasoline remains the same regardless of the price.

Question 9

Which of the following is true about renewable resources?​

Accepted Answer

A)  ​Land resources include oil, coal, and natural gas that have a fixed stock. 
B)  ​Land resources include irrigation networks and wastewater treatment plants that utilize water. 
C)  ​Land resources include air filtration systems in buildings that renew and refresh polluted air from the outside. 
D)  ​Land resources include forests, range lands, and marine fisheries that naturally regenerate. 
A)  ​Land resources include oil, coal, and natural gas that have a fixed stock. 
B)  ​Land resources include irrigation networks and wastewater treatment plants that utilize water. 
C)  ​Land resources include air filtration systems in buildings that renew and refresh polluted air from the outside. 
D)  ​Land resources include forests, range lands, and marine fisheries that naturally regenerate.

Question 10

The statement "It is better to suffer a little more unemployment than a little lower prices" is an example of normative economic analysis.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 1A-8  Straight line relationship   Which of the following would cause a shift in the relationship shown in Exhibit 1A-8?

Accepted Answer

A)  A fall in household incomes. 
B)  A fall in the price of pizza. 
C)  A fall in the quantity of pizza that people wish to purchase. 
D)  All of the above would shift the line in the graph. 
A)  A fall in household incomes. 
B)  A fall in the price of pizza. 
C)  A fall in the quantity of pizza that people wish to purchase. 
D)  All of the above would shift the line in the graph.

Question 12

The definition of a model is a:

Accepted Answer

A)  description of all variables affecting a situation. 
B)  positive analysis of all variables affecting an event. 
C)  simplified description of reality to understand and predict an economic event. 
D)  data adjusted for rational action. 
A)  description of all variables affecting a situation. 
B)  positive analysis of all variables affecting an event. 
C)  simplified description of reality to understand and predict an economic event. 
D)  data adjusted for rational action.

Question 13

Policies to lower the price level of goods in the nation are a concern of:

Accepted Answer

A)  macroeconomics. 
B)  microeconomics. 
C)  both microeconomics and macroeconomics. 
D)  political science. 
A)  macroeconomics. 
B)  microeconomics. 
C)  both microeconomics and macroeconomics. 
D)  political science.

Question 14

A positive economic statement must be verifiable.

Accepted Answer

A) True 
 B)False

Question 15

The observation that interest rates are higher in years ending with a 1 or a 6 represents causality rather than association.

Accepted Answer

A) True 
 B)False

Question 16

The perpetual problem of scarcity forcing people to make choices is the basis for the definition of economics.

Accepted Answer

A) True 
 B)False

Question 17

A normative economic statement is:

Accepted Answer

A)  a statement of fact. 
B)  a statement of opinion which advocates a particular position. 
C)  not acceptable in the economics profession. 
D)  the only acceptable manner to present economic information. 
E)  a statement based upon government-supplied information. 
A)  a statement of fact. 
B)  a statement of opinion which advocates a particular position. 
C)  not acceptable in the economics profession. 
D)  the only acceptable manner to present economic information. 
E)  a statement based upon government-supplied information.

Question 18

Exhibit 1A-4  Straight line   In Exhibit 1A-4, as X increases along the horizontal axis, corresponding to points A-D on the line, the Y value remains unchanged at 40 units. The relationship between the X and Y variables is:

Accepted Answer

A)  direct. 
B)  inverse. 
C)  independent. 
D)  undefined. 
A)  direct. 
B)  inverse. 
C)  independent. 
D)  undefined.

Question 19

If two variables are inversely related, then they change in the same direction.

Accepted Answer

A) True 
 B)False

Question 20

Distinguish macroeconomics and microeconomics.

Accepted Answer

Macroeconomics studies the ent

Exam 1: Introducing the Economic Way of Thinking

The central question in economics is how to:

Microeconomics and macroeconomics use different types of analysis.

The slope of a line is calculated as the ratio of the "rise" over the "run".

Economists most often disagree over positive rather than normative economic issues.

A good economic model should capture as many details about real-world behavior as possible.

Exhibit 1A-2 Straight line As shown in Exhibit 1A-2, the slope of straight line CD:

Capital resources include money and other financial assets.

An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, Ceteris paribus . The phrase " Ceteris paribus " means that:

Which of the following is true about renewable resources?​

The statement "It is better to suffer a little more unemployment than a little lower prices" is an example of normative economic analysis.

Exhibit 1A-8 Straight line relationship Which of the following would cause a shift in the relationship shown in Exhibit 1A-8?

The definition of a model is a:

Policies to lower the price level of goods in the nation are a concern of:

A positive economic statement must be verifiable.

The observation that interest rates are higher in years ending with a 1 or a 6 represents causality rather than association.

The perpetual problem of scarcity forcing people to make choices is the basis for the definition of economics.

A normative economic statement is:

Exhibit 1A-4 Straight line In Exhibit 1A-4, as X increases along the horizontal axis, corresponding to points A-D on the line, the Y value remains unchanged at 40 units. The relationship between the X and Y variables is:

If two variables are inversely related, then they change in the same direction.

Distinguish macroeconomics and microeconomics.

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

Filters

Which of the following is true about renewable resources?