Question 1

Why must all economic models involve simplifications?

Accepted Answer

A)  because economic models are generally mathematically based 
B)  because human behaviour is very erratic and unpredictable 
C)  because reality is too complex to understand in its entirety, so it must be reduced to a level that can be understood 
D)  because economic models always try to duplicate all possible information and cover all possible variables that might influence decision making 
A)  because economic models are generally mathematically based 
B)  because human behaviour is very erratic and unpredictable 
C)  because reality is too complex to understand in its entirety, so it must be reduced to a level that can be understood 
D)  because economic models always try to duplicate all possible information and cover all possible variables that might influence decision making C

Question 2

Which of the following is NOT part of the scientific method in economics?

Accepted Answer

A)  making normative statements 
B)  comparing predictions to evidence 
C)  formulating a hypothesis 
D)  creating a hypothesis 
A)  making normative statements 
B)  comparing predictions to evidence 
C)  formulating a hypothesis 
D)  creating a hypothesis A

Question 3

What type of economics studies the economic behaviour of individual decision makers as well as the determination of price and output in specific markets?

Accepted Answer

A)  microeconomics 
B)  macroeconomics 
C)  positive economics 
D)  normative economics 
A)  microeconomics 
B)  macroeconomics 
C)  positive economics 
D)  normative economics A

Question 4

Canada has an abundant supply of fresh water.Why would an economist consider water in Canada to be a scarce resource?

Accepted Answer

A)  because water is necessary for human life 
B)  because pollution will eventually destroy all life in the Great Lakes 
C)  because water is limited relative to people's unlimited wants 
D)  because water commands a very high price 
A)  because water is necessary for human life 
B)  because pollution will eventually destroy all life in the Great Lakes 
C)  because water is limited relative to people's unlimited wants 
D)  because water commands a very high price

Question 5

What statement describes the reality of scarcity?

Accepted Answer

A)  There are NOT enough jobs available to all people. 
B)  There are NOT enough resources to satisfy people's unlimited wants. 
C)  There are NOT enough resources to satisfy people's limited wants. 
D)  There are NOT enough taxes to fund daycare spaces. 
A)  There are NOT enough jobs available to all people. 
B)  There are NOT enough resources to satisfy people's unlimited wants. 
C)  There are NOT enough resources to satisfy people's limited wants. 
D)  There are NOT enough taxes to fund daycare spaces.

Question 6

Why does economic scarcity exist?

Accepted Answer

A)  because people have wants that are unlimited relative to the availability of resources to satisfy those wants 
B)  because governments have the means to provide as many services as it decides to 
C)  because individuals do NOT have to make choices 
D)  because NOT everyone has unlimited wants 
A)  because people have wants that are unlimited relative to the availability of resources to satisfy those wants 
B)  because governments have the means to provide as many services as it decides to 
C)  because individuals do NOT have to make choices 
D)  because NOT everyone has unlimited wants

Question 7

What does it mean to say that people make marginal decisions?

Accepted Answer

A)  that people usually wait until the last minute before they make a decision to buy 
B)  that people weigh the additional costs and additional benefits of various activities before they make a decision 
C)  that, given a choice, most people would prefer to make their own decisions concerning the things that affect their lives 
D)  that people consider the total costs and benefits of various activities before they make a purchase 
A)  that people usually wait until the last minute before they make a decision to buy 
B)  that people weigh the additional costs and additional benefits of various activities before they make a decision 
C)  that, given a choice, most people would prefer to make their own decisions concerning the things that affect their lives 
D)  that people consider the total costs and benefits of various activities before they make a purchase

Question 8

What is microeconomics the study of?

Accepted Answer

A)  marginal or inferior products 
B)  the economic behaviour of individual decision makers 
C)  the behaviour of the economy as a whole 
D)  how to use the fewest natural resources to produce goods and services 
A)  marginal or inferior products 
B)  the economic behaviour of individual decision makers 
C)  the behaviour of the economy as a whole 
D)  how to use the fewest natural resources to produce goods and services

Question 9

What is implied by the assumption that individual people act rationally?

Accepted Answer

A)  People think only of themselves and disregard the well-being of others. 
B)  People undertake all those activities that yield benefits to themselves. 
C)  The greater the cost of a charitable deed to a benefactor, the more likely a person is to perform that deed. 
D)  People implicitly calculate the costs and benefits of an activity to decide if it is worthwhile. 
A)  People think only of themselves and disregard the well-being of others. 
B)  People undertake all those activities that yield benefits to themselves. 
C)  The greater the cost of a charitable deed to a benefactor, the more likely a person is to perform that deed. 
D)  People implicitly calculate the costs and benefits of an activity to decide if it is worthwhile.

Question 10

Elijah, a basketball fan, reasons that because his favourite team has three superstars on it, the team must be a great team and will win the championship.What is Elijah committing?

Accepted Answer

A)  the fallacy of composition 
B)  the fallacy that association is causation 
C)  the fallacy of segmentation 
D)  the mistake of ignoring secondary effects 
A)  the fallacy of composition 
B)  the fallacy that association is causation 
C)  the fallacy of segmentation 
D)  the mistake of ignoring secondary effects

Question 11

What is a good theory?

Accepted Answer

A)  one that is widely accepted 
B)  one that starts from realistic assumptions 
C)  one that helps us to understand the world better 
D)  one where no logical mistakes were made in developing it 
A)  one that is widely accepted 
B)  one that starts from realistic assumptions 
C)  one that helps us to understand the world better 
D)  one where no logical mistakes were made in developing it

Question 12

Why are goods and services scarce?

Accepted Answer

A)  because people are greedy 
B)  because economic resources must be used to make them 
C)  because firms keep production low in order to earn higher profits 
D)  because they are produced by firms that seek profits 
A)  because people are greedy 
B)  because economic resources must be used to make them 
C)  because firms keep production low in order to earn higher profits 
D)  because they are produced by firms that seek profits

Question 13

In what way may marginal analysis be useful in helping to make economic choices?

Accepted Answer

A)  It eliminates impractical or irrelevant information. 
B)  It eliminates incorrect decisions and bad choices. 
C)  It involves comparing the additional costs and additional benefits of an activity prior to making a decision. 
D)  It involves examining only the total costs and total benefits of an activity prior to making a decision. 
A)  It eliminates impractical or irrelevant information. 
B)  It eliminates incorrect decisions and bad choices. 
C)  It involves comparing the additional costs and additional benefits of an activity prior to making a decision. 
D)  It involves examining only the total costs and total benefits of an activity prior to making a decision.

Question 14

What do economists generally assume about the capacity of consumers to make decisions?

Accepted Answer

A)  that buyers and sellers have all the information they need to make decisions 
B)  that buyers acquire information as long as the additional benefits exceed the additional costs of acquiring this information 
C)  that decision makers never make mistakes 
D)  that economic decisions result from random behaviour 
A)  that buyers and sellers have all the information they need to make decisions 
B)  that buyers acquire information as long as the additional benefits exceed the additional costs of acquiring this information 
C)  that decision makers never make mistakes 
D)  that economic decisions result from random behaviour

Question 15

How do we know if an economic model is useful?

Accepted Answer

A)  It includes every detail of reality. 
B)  It involves no unproven assumptions. 
C)  It is expressed in equations. 
D)  It makes accurate predictions. 
A)  It includes every detail of reality. 
B)  It involves no unproven assumptions. 
C)  It is expressed in equations. 
D)  It makes accurate predictions.

Question 16

What is the role of an entrepreneur?

Accepted Answer

A)  to always make a profit 
B)  to generally avoid risky situations 
C)  to claim the residual (i.e., whatever is left over) after other resource suppliers are compensated 
D)  to be a parasite that benefits by NOT paying other resources for their services 
A)  to always make a profit 
B)  to generally avoid risky situations 
C)  to claim the residual (i.e., whatever is left over) after other resource suppliers are compensated 
D)  to be a parasite that benefits by NOT paying other resources for their services

Question 17

Which of the following would be concluded by someone who committed the association-is-causation fallacy?

Accepted Answer

A)  that Event B, which follows event A, was caused by the event A 
B)  that Event B, which follows event A, was NOT necessarily caused by event A 
C)  that what is true for the individual is also true for the group 
D)  that what is true for the individual is NOT necessarily true for the group 
A)  that Event B, which follows event A, was caused by the event A 
B)  that Event B, which follows event A, was NOT necessarily caused by event A 
C)  that what is true for the individual is also true for the group 
D)  that what is true for the individual is NOT necessarily true for the group

Question 18

Which of the following is a problem with using rent control as an economic policy?

Accepted Answer

A)  that politicians do NOT consider its secondary effects 
B)  that economists disagree about the impacts of the policy 
C)  that enforcing antidiscrimination laws in the rental housing market is NOT easy 
D)  that it makes landlords wealthy at the expense of renters 
A)  that politicians do NOT consider its secondary effects 
B)  that economists disagree about the impacts of the policy 
C)  that enforcing antidiscrimination laws in the rental housing market is NOT easy 
D)  that it makes landlords wealthy at the expense of renters

Question 19

Which of the following describes how economic information is acquired?

Accepted Answer

A)  Acquiring information involves using scarce resources. 
B)  Acquiring information is usually available free to any decision maker. 
C)  Acquiring information is usually NOT required for rational decision making. 
D)  Acquiring information must be complete before any decision is made. 
A)  Acquiring information involves using scarce resources. 
B)  Acquiring information is usually available free to any decision maker. 
C)  Acquiring information is usually NOT required for rational decision making. 
D)  Acquiring information must be complete before any decision is made.

Question 20

Which of the following is a positive economic statement?

Accepted Answer

A)  An unemployment rate of 7 percent or higher is a national disgrace. 
B)  When the national unemployment rate is 7 percent, the unemployment rate for inner-city youth is often close to 40 percent. 
C)  Unemployment and inflation are equally important problems. 
D)  An inflation rate of 7 percent is too high. 
A)  An unemployment rate of 7 percent or higher is a national disgrace. 
B)  When the national unemployment rate is 7 percent, the unemployment rate for inner-city youth is often close to 40 percent. 
C)  Unemployment and inflation are equally important problems. 
D)  An inflation rate of 7 percent is too high.

Why must all economic models involve simplifications?

Which of the following is NOT part of the scientific method in economics?

What type of economics studies the economic behaviour of individual decision makers as well as the determination of price and output in specific markets?

Canada has an abundant supply of fresh water.Why would an economist consider water in Canada to be a scarce resource?

What statement describes the reality of scarcity?

Why does economic scarcity exist?

What does it mean to say that people make marginal decisions?

What is microeconomics the study of?

What is implied by the assumption that individual people act rationally?

Elijah, a basketball fan, reasons that because his favourite team has three superstars on it, the team must be a great team and will win the championship.What is Elijah committing?

What is a good theory?

Why are goods and services scarce?

In what way may marginal analysis be useful in helping to make economic choices?

What do economists generally assume about the capacity of consumers to make decisions?

How do we know if an economic model is useful?

What is the role of an entrepreneur?

Which of the following would be concluded by someone who committed the association-is-causation fallacy?

Which of the following is a problem with using rent control as an economic policy?

Which of the following describes how economic information is acquired?

Which of the following is a positive economic statement?

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters

Exam 1: The Art and Science of Economic Analysis

Why must all economic models involve simplifications?

Which of the following is NOT part of the scientific method in economics?

What type of economics studies the economic behaviour of individual decision makers as well as the determination of price and output in specific markets?

Canada has an abundant supply of fresh water.Why would an economist consider water in Canada to be a scarce resource?

What statement describes the reality of scarcity?

Why does economic scarcity exist?

What does it mean to say that people make marginal decisions?

What is microeconomics the study of?

What is implied by the assumption that individual people act rationally?

Elijah, a basketball fan, reasons that because his favourite team has three superstars on it, the team must be a great team and will win the championship.What is Elijah committing?

What is a good theory?

Why are goods and services scarce?

In what way may marginal analysis be useful in helping to make economic choices?

What do economists generally assume about the capacity of consumers to make decisions?

How do we know if an economic model is useful?

What is the role of an entrepreneur?

Which of the following would be concluded by someone who committed the association-is-causation fallacy?

Which of the following is a problem with using rent control as an economic policy?

Which of the following describes how economic information is acquired?

Which of the following is a positive economic statement?

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Tracking the Canadian Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters