Question 1

What is true about an economic model?

Accepted Answer

A)  It is built on a series of assumptions. 
B)  It establishes cause and effect between variables. 
C)  It could also be called an economic theory. 
D)  All of the above. 
A)  It is built on a series of assumptions. 
B)  It establishes cause and effect between variables. 
C)  It could also be called an economic theory. 
D)  All of the above.

Question 2

An economic variable is anything that affects the what, how, and for whom questions that every society must answer.

Accepted Answer

A) True 
 B)False

Question 3

An individual's real income per year measures the:

Accepted Answer

A)  amount of income subject to income tax. 
B)  number of dollars earned during the year. 
C)  amount of goods and services that can be purchased by the individual. 
D)  number of hours worked by the individual. 
A)  amount of income subject to income tax. 
B)  number of dollars earned during the year. 
C)  amount of goods and services that can be purchased by the individual. 
D)  number of hours worked by the individual.

Question 4

An increase in the price level as reflected by a rising consumer price index causes the real value of an economic variable to increase.

Accepted Answer

A) True 
 B)False

Question 5

If you have the equation Q = 20 - 3P, then:

Accepted Answer

A)  a plot of the equation will result in a graph with a negative slope. 
B)  a negative relationship exists between P and Q. 
C)  every time P increases by 1 unit, Q falls by 3 units. 
D)  all of the above are correct. 
A)  a plot of the equation will result in a graph with a negative slope. 
B)  a negative relationship exists between P and Q. 
C)  every time P increases by 1 unit, Q falls by 3 units. 
D)  all of the above are correct.

Question 6

Has technological change affected our standard of living?

Accepted Answer

Most definitely, though many economists

Question 7

Table 2.1
-Using Table 2.1, the price index in 1997, using 1977 as the base year, for this basket of goods is:

Accepted Answer

A)  100. 
B)  158. 
C)  200. 
D)  173. 
A)  100. 
B)  158. 
C)  200. 
D)  173.

Question 8

Knowing the intercept and slope enables you to draw:

Accepted Answer

A)  a curve. 
B)  a circle. 
C)  an ellipse. 
D)  a straight line. 
A)  a curve. 
B)  a circle. 
C)  an ellipse. 
D)  a straight line.

Question 9

Econometrics is the study of fitting relationships through scatter diagrams.

Accepted Answer

A) True 
 B)False

Question 10

Deflation describes periods when:

Accepted Answer

A)  the average level of prices is falling. 
B)  real output neither increases nor decreases. 
C)  relative prices remain constant. 
D)  the average level of prices is rising. 
A)  the average level of prices is falling. 
B)  real output neither increases nor decreases. 
C)  relative prices remain constant. 
D)  the average level of prices is rising.

Question 11

The solution to the equations P = 2 + 0.5Q and P = 10 yields a solution for Q of:

Accepted Answer

A)  12. 
B)  20. 
C)  16. 
D)  24. 
A)  12. 
B)  20. 
C)  16. 
D)  24.

Question 12

Why are simple models so important to economists?

Accepted Answer

Models are important for several reasons

Question 13

A table titled "Commodity Price Index, 1950-1998 (1970 = 100)" has a base year of:

Accepted Answer

A)  1950. 
B)  1998. 
C)  1970. 
D)  none of the above. 
A)  1950. 
B)  1998. 
C)  1970. 
D)  none of the above.

Question 14

Which one of the following steps does not belong in the economists' approach to problem solving?

Accepted Answer

A)  Observe the phenomenon. 
B)  Disregard all previous theories. 
C)  Develop a theory to explain the phenomenon. 
D)  Test the predictions of the theory with data. 
A)  Observe the phenomenon. 
B)  Disregard all previous theories. 
C)  Develop a theory to explain the phenomenon. 
D)  Test the predictions of the theory with data.

Question 15

When specifying economic models, economists often make assumptions about the real world. The purpose of assumptions in economics is to:

Accepted Answer

A)  make the model more realistic. 
B)  simplify the model and provide a primary focus for the theory. 
C)  ensure that the model only covers specific conditions. 
D)  guarantee the accuracy of the theory. 
A)  make the model more realistic. 
B)  simplify the model and provide a primary focus for the theory. 
C)  ensure that the model only covers specific conditions. 
D)  guarantee the accuracy of the theory.

Question 16

All of the following statements are correct except:

Accepted Answer

A)  Generally, what matters most to consumers is what a good costs in dollars. 
B)  The relative price of a good is its price measured relative to the price of other goods. 
C)  The real price of a good is calculated by adjusting its nominal price to account for changes in the prices of goods in general. 
D)  When the price of eggs goes up by the same proportion as prices of all other goods, the relative price of eggs does not change. 
A)  Generally, what matters most to consumers is what a good costs in dollars. 
B)  The relative price of a good is its price measured relative to the price of other goods. 
C)  The real price of a good is calculated by adjusting its nominal price to account for changes in the prices of goods in general. 
D)  When the price of eggs goes up by the same proportion as prices of all other goods, the relative price of eggs does not change.

Question 17

Time series data:

Accepted Answer

A)  are used very infrequently in economic analysis. 
B)  measure different variables for different economic units at a point in time. 
C)  measure a given variable for different economic units at a point in time. 
D)  measure a variable or variables at different points in time. 
A)  are used very infrequently in economic analysis. 
B)  measure different variables for different economic units at a point in time. 
C)  measure a given variable for different economic units at a point in time. 
D)  measure a variable or variables at different points in time.

Question 18

Data that follow the same individuals over time are called:

Accepted Answer

A)  time-series data. 
B)  cross-section data. 
C)  longitudinal data. 
D)  survey data. 
A)  time-series data. 
B)  cross-section data. 
C)  longitudinal data. 
D)  survey data.

Question 19

When economists compute the real value of an economic variable denominated in dollars, they do so by:

Accepted Answer

A)  dividing the nominal value by 100. 
B)  multiplying the nominal value by the price level. 
C)  dividing the nominal value by the price index. 
D)  subtracting the price level from the nominal value and multiplying by 100. 
A)  dividing the nominal value by 100. 
B)  multiplying the nominal value by the price level. 
C)  dividing the nominal value by the price index. 
D)  subtracting the price level from the nominal value and multiplying by 100.

Question 20

Human behaviour, as well as the behaviour of an individual, can always be predicted accurately.

Accepted Answer

A) True 
 B)False

What is true about an economic model?

An economic variable is anything that affects the what, how, and for whom questions that every society must answer.

An individual's real income per year measures the:

An increase in the price level as reflected by a rising consumer price index causes the real value of an economic variable to increase.

If you have the equation Q = 20 - 3P, then:

Has technological change affected our standard of living?

Table 2.1 -Using Table 2.1, the price index in 1997, using 1977 as the base year, for this basket of goods is:

Knowing the intercept and slope enables you to draw:

Econometrics is the study of fitting relationships through scatter diagrams.

Deflation describes periods when:

The solution to the equations P = 2 + 0.5Q and P = 10 yields a solution for Q of:

Why are simple models so important to economists?

A table titled "Commodity Price Index, 1950-1998 (1970 = 100)" has a base year of:

Which one of the following steps does not belong in the economists' approach to problem solving?

When specifying economic models, economists often make assumptions about the real world. The purpose of assumptions in economics is to:

All of the following statements are correct except:

Time series data:

Data that follow the same individuals over time are called:

When economists compute the real value of an economic variable denominated in dollars, they do so by:

Human behaviour, as well as the behaviour of an individual, can always be predicted accurately.

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

What is true about an economic model?

An economic variable is anything that affects the what, how, and for whom questions that every society must answer.

An individual's real income per year measures the:

An increase in the price level as reflected by a rising consumer price index causes the real value of an economic variable to increase.

If you have the equation Q = 20 - 3P, then:

Has technological change affected our standard of living?

Table 2.1 -Using Table 2.1, the price index in 1997, using 1977 as the base year, for this basket of goods is:

Knowing the intercept and slope enables you to draw:

Econometrics is the study of fitting relationships through scatter diagrams.

Deflation describes periods when:

The solution to the equations P = 2 + 0.5Q and P = 10 yields a solution for Q of:

Why are simple models so important to economists?

A table titled "Commodity Price Index, 1950-1998 (1970 = 100)" has a base year of:

Which one of the following steps does not belong in the economists' approach to problem solving?

When specifying economic models, economists often make assumptions about the real world. The purpose of assumptions in economics is to:

All of the following statements are correct except:

Time series data:

Data that follow the same individuals over time are called:

When economists compute the real value of an economic variable denominated in dollars, they do so by:

Human behaviour, as well as the behaviour of an individual, can always be predicted accurately.

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