Question 1

Which of the following pairs is the most likely to exhibit an inverse relationship?

Accepted Answer

A)  The amount of time you study and your grade point average. 
B)  People's annual income and their expenditure on personal computers. 
C)  Baseball players' salaries and their batting averages. 
D)  The price of a concert and the number of tickets people purchase. 
A)  The amount of time you study and your grade point average. 
B)  People's annual income and their expenditure on personal computers. 
C)  Baseball players' salaries and their batting averages. 
D)  The price of a concert and the number of tickets people purchase.

Question 2

When economists say goods are scarce, they mean:

Accepted Answer

A)  consumers are too poor to afford the goods and services available. 
B)  consumers are unwilling to buy goods unless they have very low prices. 
C)  goods are generally freely available from nature in most countries. 
D)  the desire for goods and services exceeds our ability to produce them with the limited resources available. 
A)  consumers are too poor to afford the goods and services available. 
B)  consumers are unwilling to buy goods unless they have very low prices. 
C)  goods are generally freely available from nature in most countries. 
D)  the desire for goods and services exceeds our ability to produce them with the limited resources available.

Question 3

The most fundamental concepts underlying the discipline of economics are:

Accepted Answer

A)  scarcity and choice. 
B)  supply and demand. 
C)  money, stocks, and bonds. 
D)  inflation and unemployment. 
A)  scarcity and choice. 
B)  supply and demand. 
C)  money, stocks, and bonds. 
D)  inflation and unemployment.

Question 4

Which of the following is a normative economic statement?

Accepted Answer

A)  The unemployment rate for the United States is currently 5.4 percent. 
B)  The inflation rate in the United States is too high. 
C)  An increase in the price of a good will reduce the amount purchased. 
D)  Higher profits in an industry will attract more entrepreneurs into the industry. 
A)  The unemployment rate for the United States is currently 5.4 percent. 
B)  The inflation rate in the United States is too high. 
C)  An increase in the price of a good will reduce the amount purchased. 
D)  Higher profits in an industry will attract more entrepreneurs into the industry.

Question 5

Exhibit 1A-6  Straight line   In Exhibit 1A-6, the slope of straight line A-D is:

Accepted Answer

A)  greater than 1. 
B)  equal to 1. 
C)  less than 1. 
D)  zero. 
A)  greater than 1. 
B)  equal to 1. 
C)  less than 1. 
D)  zero.

Question 6

A line that has a different slope at each point is a:

Accepted Answer

A)  curve. 
B)  straight line. 
C)  vertical line. 
D)  horizontal line. 
A)  curve. 
B)  straight line. 
C)  vertical line. 
D)  horizontal line.

Question 7

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 8

Which of the following is a normative statement?

Accepted Answer

A)  The deduction for state taxes cost the federal government $100 billion per year. 
B)  Taxpayers in North Carolina pay state taxes which are above the national average. 
C)  Twenty-two states use a lottery to raise state taxes. 
D)  Congress is considering the president's tax plan to increase taxes which is a fair plan. 
A)  The deduction for state taxes cost the federal government $100 billion per year. 
B)  Taxpayers in North Carolina pay state taxes which are above the national average. 
C)  Twenty-two states use a lottery to raise state taxes. 
D)  Congress is considering the president's tax plan to increase taxes which is a fair plan.

Question 9

Exhibit 1A-3  Straight line   As shown in Exhibit 1A-3, 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 10

A positive economic statement:

Accepted Answer

A)  contains personal and social value judgments. 
B)  is always a mathematical expression. 
C)  should never be used by an economist. 
D)  is proper provided the advocator is clear the position rests on personal assessment. 
E)  is an unbiased report of the facts of the economy. 
A)  contains personal and social value judgments. 
B)  is always a mathematical expression. 
C)  should never be used by an economist. 
D)  is proper provided the advocator is clear the position rests on personal assessment. 
E)  is an unbiased report of the facts of the economy.

Question 11

An economic model is defined as:

Accepted Answer

A)  a value judgment. 
B)  a presentation of all possible relevant real-world variables. 
C)  a simplified representation of the way in which facts are related. 
D)  data adjusted for irrational actions. 
A)  a value judgment. 
B)  a presentation of all possible relevant real-world variables. 
C)  a simplified representation of the way in which facts are related. 
D)  data adjusted for irrational actions.

Question 12

Direct relationships are illustrated using upward-sloping lines and curves.

Accepted Answer

A) True 
 B)False

Question 13

A review of the performance of the economy during the Bush administration is the 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 14

Which of the following is not a factor of production?

Accepted Answer

A)  A computer chip. 
B)  The service of a lawyer. 
C)  Dollars. 
D)  All of the above are factors of production. 
A)  A computer chip. 
B)  The service of a lawyer. 
C)  Dollars. 
D)  All of the above are factors of production.

Question 15

Suppose two variables are directly related. If one variable rises, then the other variable:

Accepted Answer

A)  also rises. 
B)  falls. 
C)  remains unchanged. 
D)  reacts unpredictably. 
A)  also rises. 
B)  falls. 
C)  remains unchanged. 
D)  reacts unpredictably.

Question 16

Economics, according to its definition, studies how people:

Accepted Answer

A)  earn and spend money. 
B)  invest in the stock and bond markets. 
C)  make choices in the face of scarcity. 
D)  supply goods in response to demand. 
A)  earn and spend money. 
B)  invest in the stock and bond markets. 
C)  make choices in the face of scarcity. 
D)  supply goods in response to demand.

Question 17

Economics could be defined as the study of scarcity.

Accepted Answer

A) True 
 B)False

Question 18

To abstract from reality in an economic model means that:

Accepted Answer

A)  we include only a few of the essential aspects of reality. 
B)  the economic study surveys only a very limited period of time. 
C)  we include only those elements which support our hypothesis. 
D)  the model includes every aspect of the real world. 
E)  the model examines the actions of the consumers in the absence of producers and the government. 
A)  we include only a few of the essential aspects of reality. 
B)  the economic study surveys only a very limited period of time. 
C)  we include only those elements which support our hypothesis. 
D)  the model includes every aspect of the real world. 
E)  the model examines the actions of the consumers in the absence of producers and the government.

Question 19

A two-dimensional graph can only represent the relationship between two variables.

Accepted Answer

A) True 
 B)False

Question 20

Microeconomics approaches the study of economics from the viewpoint of:

Accepted Answer

A)  inflation, unemployment, and economic growth. 
B)  the federal government. 
C)  individual economic units, such as consumers, firms, and units of government. 
D)  the economy as a whole. 
A)  inflation, unemployment, and economic growth. 
B)  the federal government. 
C)  individual economic units, such as consumers, firms, and units of government. 
D)  the economy as a whole.

Exam 1: Introducing the Economic Way of Thinking

Which of the following pairs is the most likely to exhibit an inverse relationship?

When economists say goods are scarce, they mean:

The most fundamental concepts underlying the discipline of economics are:

Which of the following is a normative economic statement?

Exhibit 1A-6 Straight line In Exhibit 1A-6, the slope of straight line A-D is:

A line that has a different slope at each point is a:

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

Which of the following is a normative statement?

Exhibit 1A-3 Straight line As shown in Exhibit 1A-3, the slope of straight line AB:

A positive economic statement:

An economic model is defined as:

Direct relationships are illustrated using upward-sloping lines and curves.

A review of the performance of the economy during the Bush administration is the concern of:

Which of the following is not a factor of production?

Suppose two variables are directly related. If one variable rises, then the other variable:

Economics, according to its definition, studies how people:

Economics could be defined as the study of scarcity.

To abstract from reality in an economic model means that:

A two-dimensional graph can only represent the relationship between two variables.

Microeconomics approaches the study of economics from the viewpoint of:

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