Question 1

Positive economics is a(n):

Accepted Answer

A)  reflection of a country's values. 
B)  judgment of the correctness of an economic outcome. 
C)  statement of fact. 
D)  analysis of what ought to be. 
E)  analysis of all the good market outcomes. 
A)  reflection of a country's values. 
B)  judgment of the correctness of an economic outcome. 
C)  statement of fact. 
D)  analysis of what ought to be. 
E)  analysis of all the good market outcomes.

Question 2

A chain saw is an example of which of the following factors of production?

Accepted Answer

A)  Land. 
B)  Labor. 
C)  Capital. 
D)  None of the above. 
A)  Land. 
B)  Labor. 
C)  Capital. 
D)  None of the above.

Question 3

The statement, "Violent crime has decreased in the last five years," is:

Accepted Answer

A)  obviously wrong and, therefore, cannot be a positive statement. 
B)  normative since it can be answered by simply looking at the facts. 
C)  positive because it is testable. 
D)  not very interesting because all normative issues are of little importance. 
A)  obviously wrong and, therefore, cannot be a positive statement. 
B)  normative since it can be answered by simply looking at the facts. 
C)  positive because it is testable. 
D)  not very interesting because all normative issues are of little importance.

Question 4

Which of the following is a microeconomics topic?

Accepted Answer

A)  A price of a new home. 
B)  The inflation rate. 
C)  The economy's growth rate. 
D)  The unemployment rate. 
E)  Forecasts of a recession next year. 
A)  A price of a new home. 
B)  The inflation rate. 
C)  The economy's growth rate. 
D)  The unemployment rate. 
E)  Forecasts of a recession next year.

Question 5

What is the difference between positive and normative economics? How can knowledge of positive economics be useful in normative economics?

Accepted Answer

Positive economics deals with "what is"

Question 6

Which of the following is the best definition of economics?

Accepted Answer

A)  Economics is the study of how to manage corporations to generate the greatest return on shareholder investment. 
B)  Economics is the study of how to mange city and country government to generate the greatest good to its citizens. 
C)  Economics is the study of how society chooses to allocate its scarce resources. 
D)  Economics is the study of how to track revenues and costs within a business. 
A)  Economics is the study of how to manage corporations to generate the greatest return on shareholder investment. 
B)  Economics is the study of how to mange city and country government to generate the greatest good to its citizens. 
C)  Economics is the study of how society chooses to allocate its scarce resources. 
D)  Economics is the study of how to track revenues and costs within a business.

Question 7

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 8

The factors of production are which of the following?

Accepted Answer

A)  The outputs generated by the production process of transforming land, labor, and capital into goods and services. 
B)  The land resources, such as natural resources, that are unimproved by human economic activity. 
C)  Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories). 
D)  Labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services. 
A)  The outputs generated by the production process of transforming land, labor, and capital into goods and services. 
B)  The land resources, such as natural resources, that are unimproved by human economic activity. 
C)  Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories). 
D)  Labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services.

Question 9

A normative economic statement can be proven either true or false.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Economics is the study of decisions made necessary by the problem of unlimited wants and limited means to satisfy them.

Accepted Answer

A) True 
 B)False

Question 12

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 13

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 1A-2  Straight line   In Exhibit 1A-2, the slope of straight line CD is:

Accepted Answer

A)  3. 
B)  1. 
C)  − 1. 
D)  1/2. 
A)  3. 
B)  1. 
C)  − 1. 
D)  1/2.

Question 15

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

Accepted Answer

A)  positive. 
B)  zero. 
C)  negative. 
D)  variable. 
A)  positive. 
B)  zero. 
C)  negative. 
D)  variable.

Question 16

Which of the following is true of resources?

Accepted Answer

A)  Resources are inputs used to produce goods and services. 
B)  Labor is the mental and physical capacity of workers to produce goods and services. 
C)  Entrepreneurship organizes resources to produce goods and services. 
D)  All of the above are true. 
A)  Resources are inputs used to produce goods and services. 
B)  Labor is the mental and physical capacity of workers to produce goods and services. 
C)  Entrepreneurship organizes resources to produce goods and services. 
D)  All of the above are true.

Question 17

A straight line or curve can shift when a factor not included on the vertical axis or horizontal axis changes.

Accepted Answer

A) True 
 B)False

Question 18

Factors which determine the price of corn would be studied in macroeconomics.

Accepted Answer

A) True 
 B)False

Question 19

Economics is the study of how people:

Accepted Answer

A)  vote for political leaders who decide what is to be produced. 
B)  make choices to produce and consume goods and services. 
C)  establish social institutions that maximize well-being. 
D)  develop value systems that affect their consumption choices. 
A)  vote for political leaders who decide what is to be produced. 
B)  make choices to produce and consume goods and services. 
C)  establish social institutions that maximize well-being. 
D)  develop value systems that affect their consumption choices.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 1: Introducing the Economic Way of Thinking

Positive economics is a(n):

A chain saw is an example of which of the following factors of production?

The statement, "Violent crime has decreased in the last five years," is:

Which of the following is a microeconomics topic?

What is the difference between positive and normative economics? How can knowledge of positive economics be useful in normative economics?

Which of the following is the best definition of economics?

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

The factors of production are which of the following?

A normative economic statement can be proven either true or false.

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

Economics is the study of decisions made necessary by the problem of unlimited wants and limited means to satisfy them.

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

The statement "It would be better to put up with price controls than to have continuing higher medical care prices" is an example of normative economic analysis.

Exhibit 1A-2 Straight line In Exhibit 1A-2, the slope of straight line CD is:

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

Which of the following is true of resources?

A straight line or curve can shift when a factor not included on the vertical axis or horizontal axis changes.

Factors which determine the price of corn would be studied in macroeconomics.

Economics is the study of how people:

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

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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