Question 1

A direct relationship exists when:

Accepted Answer

A)  there is no association between two variables. 
B)  one variable increases and there is no change in the other variable. 
C)  one variable increases and the other variable increases. 
D)  one variable increases and the other variable decreases. 
A)  there is no association between two variables. 
B)  one variable increases and there is no change in the other variable. 
C)  one variable increases and the other variable increases. 
D)  one variable increases and the other variable decreases.

Question 2

Exhibit 1A-9 Multi-curve graph  
Exhibit 1A-9 represents a three-variable relationship. As the annual income of consumers falls from $50,000 (line A) to $30,000 (line B), the result is a:

Accepted Answer

A)  rightward movement along each curve. 
B)  leftward movement along each curve,. 
C)  leftward shift from curve A to curve B. 
D)  rightward shift from curve B to curve A. 
A)  rightward movement along each curve. 
B)  leftward movement along each curve,. 
C)  leftward shift from curve A to curve B. 
D)  rightward shift from curve B to curve A.

Question 3

The television network newscaster reports that the national inflation rate the past year equaled 4 percent. This report would be of particular interest to a

Accepted Answer

A)  microeconomist. 
B)  normative economist. 
C)  macroeconomist. 
D)  social science economist. 
A)  microeconomist. 
B)  normative economist. 
C)  macroeconomist. 
D)  social science economist.

Question 4

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 5

The Latin expression Ceteris paribus means:

Accepted Answer

A)  everything else being equal. 
B)  economic model. 
C)  economists are partly right. 
D)  partial scarcity is certain. 
A)  everything else being equal. 
B)  economic model. 
C)  economists are partly right. 
D)  partial scarcity is certain.

Question 6

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 7

Which of the following is the best example of a microeconomics topic?

Accepted Answer

A)  a price of a new home 
B)  the inflation rate 
C)  the economy's growth rate 
D)  forecasts of a recession next year 
A)  a price of a new home 
B)  the inflation rate 
C)  the economy's growth rate 
D)  forecasts of a recession next year

Question 8

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. 
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.

Question 9

Which of the following is the best example of a microeconomic topic?

Accepted Answer

A)  The impact that the money supply has on inflation. 
B)  The reasons for increases in the price of soft drinks. 
C)  The effect that federal budget deficits have on the interest rate. 
D)  The tradeoff between inflation and unemployment. 
A)  The impact that the money supply has on inflation. 
B)  The reasons for increases in the price of soft drinks. 
C)  The effect that federal budget deficits have on the interest rate. 
D)  The tradeoff between inflation and unemployment.

Question 10

A positive economic statement is:

Accepted Answer

A)  an opinion of an action that should be taken. 
B)  an action that will have a positive effect on the economy. 
C)  a statement testable by facts. 
D)  a claim that the speaker is positive will occur. 
A)  an opinion of an action that should be taken. 
B)  an action that will have a positive effect on the economy. 
C)  a statement testable by facts. 
D)  a claim that the speaker is positive will occur.

Question 11

Which of the following would an economist classify as capital?

Accepted Answer

A)  100 shares of Microsoft stock. 
B)  $50 bill. 
C)  credit card. 
D)  lawyer's personal computer. 
A)  100 shares of Microsoft stock. 
B)  $50 bill. 
C)  credit card. 
D)  lawyer's personal computer.

Question 12

Exhibit 1A-8 Straight line relationship  
For the relationship shown in Exhibit 1A-8, suppose the price of hamburgers increases and hamburgers are a substitute for pizza. What change would occur on the graph?

Accepted Answer

A)  There will be a movement upward and to the left along the curve. 
B)  There will be a movement downward and to the right along the curve. 
C)  The curve will shift. 
D)  The slope of the curve will become steeper. 
A)  There will be a movement upward and to the left along the curve. 
B)  There will be a movement downward and to the right along the curve. 
C)  The curve will shift. 
D)  The slope of the curve will become steeper.

Question 13

The services of farmers are an example of:

Accepted Answer

A)  capital. 
B)  a natural resource. 
C)  labor. 
D)  entrepreneurship. 
A)  capital. 
B)  a natural resource. 
C)  labor. 
D)  entrepreneurship.

Question 14

Exhibit 1A-8 Straight line relationship  
According to the Exhibit 1A-8, the relationship between the price and quantity purchased of pizza is:

Accepted Answer

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

Question 15

Which one of the following is a positive economic statement?

Accepted Answer

A)  An increase in the minimum wage will reduce employment for teenagers. 
B)  The minimum wage should be increased. 
C)  Social justice will be served by increasing the minimum wage. 
D)  Thoughtful people oppose an increase in the minimum wage. 
A)  An increase in the minimum wage will reduce employment for teenagers. 
B)  The minimum wage should be increased. 
C)  Social justice will be served by increasing the minimum wage. 
D)  Thoughtful people oppose an increase in the minimum wage.

Question 16

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)  A rise in the price of pizza. 
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)  A rise in the price of pizza.

Question 17

Which of the following statements is correct?

Accepted Answer

A)  Slope is the ratio of the vertical change (the rise or fall) to the horizontal change (the run). 
B)  A direct relationship is one in which two variables change in the opposite direction. 
C)  An inverse relationship is one in which two variables change in same directions. 
D)  An independent relationship is one in which two variables are upward sloping. 
A)  Slope is the ratio of the vertical change (the rise or fall) to the horizontal change (the run). 
B)  A direct relationship is one in which two variables change in the opposite direction. 
C)  An inverse relationship is one in which two variables change in same directions. 
D)  An independent relationship is one in which two variables are upward sloping.

Question 18

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

Accepted Answer

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

Question 19

Determining the price of mobile phones 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 20

An entrepreneur is a(n):

Accepted Answer

A)  individual who has much education. 
B)  organizer who seeks profitable opportunities and is willing to accept risks. 
C)  business organization that uses inputs to produce output. 
D)  depot or warehouse for commercial products. 
A)  individual who has much education. 
B)  organizer who seeks profitable opportunities and is willing to accept risks. 
C)  business organization that uses inputs to produce output. 
D)  depot or warehouse for commercial products.

Exam 1: Introducing the Economic Way of Thinking

A direct relationship exists when:

Exhibit 1A-9 Multi-curve graph Exhibit 1A-9 represents a three-variable relationship. As the annual income of consumers falls from $50,000 (line A) to $30,000 (line B), the result is a:

The television network newscaster reports that the national inflation rate the past year equaled 4 percent. This report would be of particular interest to a

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

The Latin expression Ceteris paribus means:

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:

Which of the following is the best example of a microeconomics topic?

To abstract from reality in an economic model means that:

Which of the following is the best example of a microeconomic topic?

A positive economic statement is:

Which of the following would an economist classify as capital?

Exhibit 1A-8 Straight line relationship For the relationship shown in Exhibit 1A-8, suppose the price of hamburgers increases and hamburgers are a substitute for pizza. What change would occur on the graph?

The services of farmers are an example of:

Exhibit 1A-8 Straight line relationship According to the Exhibit 1A-8, the relationship between the price and quantity purchased of pizza is:

Which one of the following is a positive economic statement?

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

Which of the following statements is correct?

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

Determining the price of mobile phones is a concern of:

An entrepreneur is a(n):

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

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

Monetary Policy

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

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