Question 1

Scarcity:

Accepted Answer

A)  is a problem only in industrialized economies. 
B)  is a condition measured by the quantity of goods available. 
C)  exists everywhere because human wants can never be satisfied. 
D)  is a problem only in poor economies. 
A)  is a problem only in industrialized economies. 
B)  is a condition measured by the quantity of goods available. 
C)  exists everywhere because human wants can never be satisfied. 
D)  is a problem only in poor economies.

Question 2

The study of microeconomics and macroeconomics differ in that:

Accepted Answer

A)  microeconomics is concerned with the domestic economy and macroeconomics is concerned only with the international economy. 
B)  microeconomics examines the individual markets of the economy while macroeconomics studies the whole economy. 
C)  microeconomics studies the actions of households and macroeconomics studies the actions of business firms. 
D)  microeconomics examines the whole economy while macroeconomics studies the individual units of the economy. 
A)  microeconomics is concerned with the domestic economy and macroeconomics is concerned only with the international economy. 
B)  microeconomics examines the individual markets of the economy while macroeconomics studies the whole economy. 
C)  microeconomics studies the actions of households and macroeconomics studies the actions of business firms. 
D)  microeconomics examines the whole economy while macroeconomics studies the individual units of the economy.

Question 3

All of the following are examples of capital except :

Accepted Answer

A)  the robot used to help produce your car. 
B)  the classroom in which you learn. 
C)  the factory that produces the costume jewelry you buy. 
D)  an uncut diamond that you discover in your backyard. 
A)  the robot used to help produce your car. 
B)  the classroom in which you learn. 
C)  the factory that produces the costume jewelry you buy. 
D)  an uncut diamond that you discover in your backyard.

Question 4

Exhibit 1A-4 Straight line  
Straight line A-D in Exhibit 1A-4 shows that:

Accepted Answer

A)  as the X value increases by 80, the Y value increases by 40 so the slope is 2. 
B)  as the Y value increases by 40, the X value increases by 80 so the slope is 1/2. 
C)  increasing values for X do not affect the value of Y. 
D)  increasing values for Y do not affect the value of X. 
A)  as the X value increases by 80, the Y value increases by 40 so the slope is 2. 
B)  as the Y value increases by 40, the X value increases by 80 so the slope is 1/2. 
C)  increasing values for X do not affect the value of Y. 
D)  increasing values for Y do not affect the value of X.

Question 5

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 6

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 7

Exhibit 1A-5 Straight line  
In Exhibit 1A-5, the slope for straight line CD is:

Accepted Answer

A)  5. 
B)  1. 
C)  − 1. 
D)  − 5. 
A)  5. 
B)  1. 
C)  − 1. 
D)  − 5.

Question 8

When an inverse relationship is graphed, the resulting line or curve is:

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  upward-sloping. 
D)  downward-sloping. 
A)  horizontal. 
B)  vertical. 
C)  upward-sloping. 
D)  downward-sloping.

Question 9

An upward-sloping line or curve is used to illustrate:

Accepted Answer

A)  a direct relationship. 
B)  an inverse relationship. 
C)  two unrelated variables. 
D)  the ceteris paribus assumption. 
A)  a direct relationship. 
B)  an inverse relationship. 
C)  two unrelated variables. 
D)  the ceteris paribus assumption.

Question 10

The question "why do national economies grow" would be a macroeconomic, rather than a microeconomic topic, because it

Accepted Answer

A)  relates to the economy as a whole. 
B)  studies a single market. 
C)  considers the decisions of one industry. 
D)  depends on the actions of suppliers. 
A)  relates to the economy as a whole. 
B)  studies a single market. 
C)  considers the decisions of one industry. 
D)  depends on the actions of suppliers.

Question 11

An economics textbook is an example of:

Accepted Answer

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

Question 12

Which of the following statements best illustrates the form of an economic theory?

Accepted Answer

A)  If A, then B. 
B)  If A, then B, when C, D, E, and F are also changing. 
C)  A, B, and C all occurred at the same time. 
D)  If A, then B, other things held constant. 
A)  If A, then B. 
B)  If A, then B, when C, D, E, and F are also changing. 
C)  A, B, and C all occurred at the same time. 
D)  If A, then B, other things held constant.

Question 13

Arrange the following topics into lists of microeconomic and macroeconomic topics:  - wages of textile workers
 - cost of producing 10,000 bookcases
 - the economy's annual growth rate
 - national demand for fish
 - the unemployment rate
 - the gold futures market
 - money supply
 - projected inflation rate next year

Accepted Answer

A)  Microeconomics: wages of textile workers, the unemployment rate, cost of producing 10,000 bookcases, the gold futures market Macroeconomics: the economy's annual growth rate, money supply, national demand for fish, projected inflation rate next year 
B)  Microeconomics: wages of textile workers, cost of producing 10,000 bookcases, the economy's annual growth rate, unemployment rate Macroeconomics: national demand for fish, the gold futures market, money supply, projected inflation rate next year 
C)  Microeconomics: wages of textile workers, cost of producing 10,000 bookcases, the gold futures market, national demand for fish Macroeconomics: the economy's annual growth rate, the unemployment rate, money supply, projected inflation rate next year 
D)  Microeconomics: the economy's annual growth rate, the unemployment rate, money supply, projected inflation rate next year Macroeconomics: wages of textile workers, cost of producing 10,000 bookcases, the gold futures market, national demand for fish 
A)  Microeconomics: wages of textile workers, the unemployment rate, cost of producing 10,000 bookcases, the gold futures market Macroeconomics: the economy's annual growth rate, money supply, national demand for fish, projected inflation rate next year 
B)  Microeconomics: wages of textile workers, cost of producing 10,000 bookcases, the economy's annual growth rate, unemployment rate Macroeconomics: national demand for fish, the gold futures market, money supply, projected inflation rate next year 
C)  Microeconomics: wages of textile workers, cost of producing 10,000 bookcases, the gold futures market, national demand for fish Macroeconomics: the economy's annual growth rate, the unemployment rate, money supply, projected inflation rate next year 
D)  Microeconomics: the economy's annual growth rate, the unemployment rate, money supply, projected inflation rate next year Macroeconomics: wages of textile workers, cost of producing 10,000 bookcases, the gold futures market, national demand for fish

Question 14

"An increase in the federal minimum wage causes an increase in unemployment among teenagers" is a:

Accepted Answer

A)  statement of positive economics. 
B)  statement of normative economics. 
C)  testable value judgment. 
D)  fallacy of composition. 
A)  statement of positive economics. 
B)  statement of normative economics. 
C)  testable value judgment. 
D)  fallacy of composition.

Question 15

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 16

If the amount of time spent procrastinating and the performance on an exam are inversely related, then

Accepted Answer

A)  more procrastination leads to lower exam grades. 
B)  more procrastination leads to higher exam grades. 
C)  a graph with this relationship would be positively sloped. 
D)  the slope of the line reflecting this relationship will be 0. 
A)  more procrastination leads to lower exam grades. 
B)  more procrastination leads to higher exam grades. 
C)  a graph with this relationship would be positively sloped. 
D)  the slope of the line reflecting this relationship will be 0.

Question 17

Organize the steps an economist would follow in the model-building process into their proper order.  - Develop a model  based on simplifying assumptions
 - Collect data
 - Identify the problem
 - Formulate a conclusion

Accepted Answer

A)  1. Develop a model based on simplifying assumptions. 2. Collect data.  3. Identify the problem. 4. Formulate a conclusion 
B)  1. Collect data. 2. Develop a model based on simplifying assumptions. 3. Identify the problem. 4. Formulate a conclusion . 
C)  1. Identify the problem. 2. Develop a model based on simplifying assumptions.  3. Collect data. 4. Formulate a conclusion 
D)  1. Formulate a conclusion. 2. Collect data. 3. Identify the problem. 4. Develop a model based on simplifying assumptions. 
A)  1. Develop a model based on simplifying assumptions. 2. Collect data.  3. Identify the problem. 4. Formulate a conclusion 
B)  1. Collect data. 2. Develop a model based on simplifying assumptions. 3. Identify the problem. 4. Formulate a conclusion . 
C)  1. Identify the problem. 2. Develop a model based on simplifying assumptions.  3. Collect data. 4. Formulate a conclusion 
D)  1. Formulate a conclusion. 2. Collect data. 3. Identify the problem. 4. Develop a model based on simplifying assumptions.

Question 18

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has:

Accepted Answer

A)  confused association and causation. 
B)  misunderstood the Ceteris paribus assumption. 
C)  used normative economics to answer a positive question. 
D)  built an untestable model. 
A)  confused association and causation. 
B)  misunderstood the Ceteris paribus assumption. 
C)  used normative economics to answer a positive question. 
D)  built an untestable model.

Question 19

If the price of a textbook rises and then students purchase fewer textbooks, an economic model can show a cause-and-effect relationship only if which of the following conditions holds:

Accepted Answer

A)  students' incomes fall. 
B)  tuition decreases. 
C)  the number of students increases. 
D)  everything else is constant. 
A)  students' incomes fall. 
B)  tuition decreases. 
C)  the number of students increases. 
D)  everything else is constant.

Question 20

Which of the following is true of resources?

Accepted Answer

A)  Resources are outputs from the production of goods and services. 
B)  A $1,000 investment is an example of a capital resource. 
C)  Entrepreneurship organizes resources to produce goods and services. 
D)  Land resources do not include water. 
A)  Resources are outputs from the production of goods and services. 
B)  A $1,000 investment is an example of a capital resource. 
C)  Entrepreneurship organizes resources to produce goods and services. 
D)  Land resources do not include water.

Exam 1: Introducing the Economic Way of Thinking

Scarcity:

The study of microeconomics and macroeconomics differ in that:

All of the following are examples of capital except :

Exhibit 1A-4 Straight line Straight line A-D in Exhibit 1A-4 shows that:

When economists say goods are scarce, they mean:

An economic model is defined as:

Exhibit 1A-5 Straight line In Exhibit 1A-5, the slope for straight line CD is:

When an inverse relationship is graphed, the resulting line or curve is:

An upward-sloping line or curve is used to illustrate:

The question "why do national economies grow" would be a macroeconomic, rather than a microeconomic topic, because it

An economics textbook is an example of:

Which of the following statements best illustrates the form of an economic theory?

"An increase in the federal minimum wage causes an increase in unemployment among teenagers" is a:

The central question in economics is how to:

If the amount of time spent procrastinating and the performance on an exam are inversely related, then

Organize the steps an economist would follow in the model-building process into their proper order. - Develop a model based on simplifying assumptions - Collect data - Identify the problem - Formulate a conclusion

Someone notices that sunspot activity is high just prior to recessions and concludes that sunspots cause recessions. This person has:

If the price of a textbook rises and then students purchase fewer textbooks, an economic model can show a cause-and-effect relationship only if which of the following conditions holds:

Which of the following is true of resources?

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

Filters