Question 1

The primary reason for building and using models in economic analysis is to reveal basic economic principles

Accepted Answer

A) True 
 B)False  True

Question 2

All of the following statements are characteristic of economic theories except:

Accepted Answer

A)  theories may change over time as new evidence is discovered. 
B)  theories are the basis for economic principles. 
C)  theories are based upon abstract ideas and hence cannot be tested. 
D)  theories are tested by applying economic data to a model. 
A)  theories may change over time as new evidence is discovered. 
B)  theories are the basis for economic principles. 
C)  theories are based upon abstract ideas and hence cannot be tested. 
D)  theories are tested by applying economic data to a model. C

Question 3

Economic models and data allow us to study:

Accepted Answer

A)  assumptions. 
B)  the future. 
C)  economic relationships. 
D)  people in laboratories. 
A)  assumptions. 
B)  the future. 
C)  economic relationships. 
D)  people in laboratories. C

Question 4

Explain the difference between real and nominal variables.

Accepted Answer

A nominal variable is measured without r

Question 5

Economists frequently use economic models. These models:

Accepted Answer

A)  are tools used in the analysis of economic relationships. 
B)  may be graphs expressing the relationship between two economic variables. 
C)  may be equations expressing a relationship between two or more variables. 
D)  all of the above. 
A)  are tools used in the analysis of economic relationships. 
B)  may be graphs expressing the relationship between two economic variables. 
C)  may be equations expressing a relationship between two or more variables. 
D)  all of the above.

Question 6

The CPI is not affected by rising prices of imported consumer goods.

Accepted Answer

A) True 
 B)False

Question 7

Linear relationships are always more accurate representations of reality than non-linear relationships.

Accepted Answer

A) True 
 B)False

Question 8

Given the equation Q = 16 - 1.5P, when P has a value of 4, Q has a value of:

Accepted Answer

A)  16. 
B)  22. 
C)  6. 
D)  10. 
A)  16. 
B)  22. 
C)  6. 
D)  10.

Question 9

Table 2.1
-Hyperinflation is:

Accepted Answer

A)  an unusually low level of price increases in the economy. 
B)  a high inflation rate. 
C)  a purely temporary increase in the inflation rate. 
D)  none of the above. 
A)  an unusually low level of price increases in the economy. 
B)  a high inflation rate. 
C)  a purely temporary increase in the inflation rate. 
D)  none of the above.

Question 10

Table 2.2
-Jim's weekly real income in 2004 was:

Accepted Answer

A)  $440 
B)  $460 
C)  $462 
D)  none of the above 
A)  $440 
B)  $460 
C)  $462 
D)  none of the above

Question 11

Consider a negatively sloped linear line in a graph where the vertical axis represents variable Y and the horizontal axis represents variable X. If the vertical intercept is 10 and the slope is -0.5, the horizontal intercept must be:

Accepted Answer

A)  5. 
B)  10. 
C)  20. 
D)  none of the above. 
A)  5. 
B)  10. 
C)  20. 
D)  none of the above.

Question 12

Consider a negatively sloped linear line in a graph where the vertical axis represents variable Y and the horizontal axis represents variable X. The slope of the vertical straight line is zero.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that an individual has earned $400 per week since 1967 and the CPI is currently 340 (1967 =
100). The real weekly income of this individual in 1967 dollars is:

Accepted Answer

A)  361.4. 
B)  117.6. 
C)  400. 
D)  185.9. 
A)  361.4. 
B)  117.6. 
C)  400. 
D)  185.9.

Question 14

An important frequent assumption in economic theories is that all other things remain the same.

Accepted Answer

A) True 
 B)False

Question 15

When economists use time-series data, they collect and analyze information about different economic variables at a particular point in time.

Accepted Answer

A) True 
 B)False

Question 16

The most frequently recognized and widely used price index is the:

Accepted Answer

A)  wholesale price index. 
B)  producers price index. 
C)  consumer price index. 
D)  index of leading economic indicators. 
A)  wholesale price index. 
B)  producers price index. 
C)  consumer price index. 
D)  index of leading economic indicators.

Question 17

Adjusting for changes in prices allows us to:

Accepted Answer

A)  create cross-section data. 
B)  derive a real value from a nominal value. 
C)  create time-series data. 
D)  create a paradigm. 
A)  create cross-section data. 
B)  derive a real value from a nominal value. 
C)  create time-series data. 
D)  create a paradigm.

Question 18

Suppose that a positive relationship exists between the variables x and y. This relationship means that:

Accepted Answer

A)  a plot of the variables will slope downward and to the right. 
B)  as x increases, the value of y decreases. 
C)  as x increases, the value of y also increases. 
D)  as y increases, the value of x decreases. 
A)  a plot of the variables will slope downward and to the right. 
B)  as x increases, the value of y decreases. 
C)  as x increases, the value of y also increases. 
D)  as y increases, the value of x decreases.

Question 19

If the price of apples is $1 per pound and the price of peaches is 50 cents per pound, then the relative price ratio of apples to peaches is 2.

Accepted Answer

A) True 
 B)False

Question 20

The CPI measures:

Accepted Answer

A)  the number of housing starts during a month. 
B)  the prices of goods that households consume. 
C)  changes in the level of unemployment during a given year. 
D)  hourly wage rates of manufacturing workers. 
A)  the number of housing starts during a month. 
B)  the prices of goods that households consume. 
C)  changes in the level of unemployment during a given year. 
D)  hourly wage rates of manufacturing workers.

The primary reason for building and using models in economic analysis is to reveal basic economic principles

All of the following statements are characteristic of economic theories except:

Economic models and data allow us to study:

Explain the difference between real and nominal variables.

Economists frequently use economic models. These models:

The CPI is not affected by rising prices of imported consumer goods.

Linear relationships are always more accurate representations of reality than non-linear relationships.

Given the equation Q = 16 - 1.5P, when P has a value of 4, Q has a value of:

Table 2.1 -Hyperinflation is:

Table 2.2 -Jim's weekly real income in 2004 was:

Consider a negatively sloped linear line in a graph where the vertical axis represents variable Y and the horizontal axis represents variable X. If the vertical intercept is 10 and the slope is -0.5, the horizontal intercept must be:

Consider a negatively sloped linear line in a graph where the vertical axis represents variable Y and the horizontal axis represents variable X. The slope of the vertical straight line is zero.

Suppose that an individual has earned $400 per week since 1967 and the CPI is currently 340 (1967 = 100). The real weekly income of this individual in 1967 dollars is:

An important frequent assumption in economic theories is that all other things remain the same.

When economists use time-series data, they collect and analyze information about different economic variables at a particular point in time.

The most frequently recognized and widely used price index is the:

Adjusting for changes in prices allows us to:

Suppose that a positive relationship exists between the variables x and y. This relationship means that:

If the price of apples is $1 per pound and the price of peaches is 50 cents per pound, then the relative price ratio of apples to peaches is 2.

The CPI measures:

Introduction to Key Ideas

The Classical Marketplace Demand and Supply

Economic Activity and Performance

Output, Business Cycles, Growth Employment

Aggregate Expenditure Aggregate Demand

The Government Sector

Money, Banking Money Supply

Financial Markets, Interest Rates, Foreign Exchange Rates & AD

Central Banking and Monetary Policy

A Traditional Ad As Model

An AD As Model of the Inflation Rate and Real GDP

Economic Growth

International Macroeconomics

International Trade

Filters

Exam 2: Theories, Models and Data

The primary reason for building and using models in economic analysis is to reveal basic economic principles

All of the following statements are characteristic of economic theories except:

Economic models and data allow us to study:

Explain the difference between real and nominal variables.

Economists frequently use economic models. These models:

The CPI is not affected by rising prices of imported consumer goods.

Linear relationships are always more accurate representations of reality than non-linear relationships.

Given the equation Q = 16 - 1.5P, when P has a value of 4, Q has a value of:

Table 2.1 -Hyperinflation is:

Table 2.2 -Jim's weekly real income in 2004 was:

Consider a negatively sloped linear line in a graph where the vertical axis represents variable Y and the horizontal axis represents variable X. If the vertical intercept is 10 and the slope is -0.5, the horizontal intercept must be:

Consider a negatively sloped linear line in a graph where the vertical axis represents variable Y and the horizontal axis represents variable X. The slope of the vertical straight line is zero.

Suppose that an individual has earned $400 per week since 1967 and the CPI is currently 340 (1967 = 100). The real weekly income of this individual in 1967 dollars is:

An important frequent assumption in economic theories is that all other things remain the same.

When economists use time-series data, they collect and analyze information about different economic variables at a particular point in time.

The most frequently recognized and widely used price index is the:

Adjusting for changes in prices allows us to:

Suppose that a positive relationship exists between the variables x and y. This relationship means that:

If the price of apples is $1 per pound and the price of peaches is 50 cents per pound, then the relative price ratio of apples to peaches is 2.

The CPI measures:

Introduction to Key Ideas

The Classical Marketplace Demand and Supply

Economic Activity and Performance

Output, Business Cycles, Growth Employment

Aggregate Expenditure Aggregate Demand

The Government Sector

Money, Banking Money Supply

Financial Markets, Interest Rates, Foreign Exchange Rates & AD

Central Banking and Monetary Policy

A Traditional Ad As Model

An AD As Model of the Inflation Rate and Real GDP

Economic Growth

International Macroeconomics

International Trade

Filters