Question 1

All of the following are examples of capital except:

Accepted Answer

A)  the robot used to help produce your car. 
B)  a computer used by your professor to write this exam. 
C)  the factory that produces the costume jewelry you buy. 
D)  the inventory of unsold goods at your local hardware store. 
E)  an uncut diamond that you discover in your backyard. 
A)  the robot used to help produce your car. 
B)  a computer used by your professor to write this exam. 
C)  the factory that produces the costume jewelry you buy. 
D)  the inventory of unsold goods at your local hardware store. 
E)  an uncut diamond that you discover in your backyard.

Question 2

The finite nature of the economy's resource base:

Accepted Answer

A)  will be solved if only we would learn to conserve. 
B)  is only a problem in developing countries. 
C)  will be solved as technology advances. 
D)  will always be with us. 
A)  will be solved if only we would learn to conserve. 
B)  is only a problem in developing countries. 
C)  will be solved as technology advances. 
D)  will always be with us.

Question 3

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 4

"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 5

A normative economic statement can be proven either true or false.

Accepted Answer

A) True 
 B)False

Question 6

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 7

The statement,"John buys more of good X as his income increases,Ceteris paribus," means:

Accepted Answer

A)  John's income is being held constant. 
B)  John's purchases of good X are being held constant. 
C)  John's income and purchases of this good are being held constant. 
D)  the price of this good is being allowed to change. 
A)  John's income is being held constant. 
B)  John's purchases of good X are being held constant. 
C)  John's income and purchases of this good are being held constant. 
D)  the price of this good is being allowed to change.

Question 8

The three basic categories of resources are land,labor,and:

Accepted Answer

A)  money. 
B)  time. 
C)  energy. 
D)  capital. 
A)  money. 
B)  time. 
C)  energy. 
D)  capital.

Question 9

Economic theories,or models,enable us to predict and to give reasonable explanations regarding economic variables.

Accepted Answer

A) True 
 B)False

Question 10

When building a model,an economist must:

Accepted Answer

A)  adjust for exceptional situations. 
B)  provide a complete description of reality. 
C)  make simplifying assumptions. 
D)  develop a set of behavioral equations. 
A)  adjust for exceptional situations. 
B)  provide a complete description of reality. 
C)  make simplifying assumptions. 
D)  develop a set of behavioral equations.

Question 11

Which of the following is a normative economic statement?

Accepted Answer

A)  The unemployment rate for the United States is currently 5.4 percent. 
B)  The inflation rate in the United States is too high. 
C)  An increase in the price of a good will reduce the amount purchased. 
D)  Higher profits in an industry will attract more entrepreneurs into the industry. 
A)  The unemployment rate for the United States is currently 5.4 percent. 
B)  The inflation rate in the United States is too high. 
C)  An increase in the price of a good will reduce the amount purchased. 
D)  Higher profits in an industry will attract more entrepreneurs into the industry.

Question 12

Which of the following is an example of a positive economic statement?

Accepted Answer

A)  The economy's real output increased at about 3 percent last year and the unemployment rate decreased. 
B)  A central bank should not print too much money because inflation could result. 
C)  Congress should stabilize the social security system by raising taxes now. 
D)  The government farm products surplus should be distributed to the needy. 
A)  The economy's real output increased at about 3 percent last year and the unemployment rate decreased. 
B)  A central bank should not print too much money because inflation could result. 
C)  Congress should stabilize the social security system by raising taxes now. 
D)  The government farm products surplus should be distributed to the needy.

Question 13

Scarcity means we are unable to have as much as we would like to have.

Accepted Answer

A) True 
 B)False

Question 14

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.

Question 15

"The government should provide health care for all citizens." This statement is an illustration of:

Accepted Answer

A)  positive economic analysis. 
B)  correlation analysis. 
C)  fallacy of association analysis. 
D)  normative economic analysis. 
A)  positive economic analysis. 
B)  correlation analysis. 
C)  fallacy of association analysis. 
D)  normative economic analysis.

Question 16

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 17

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year.The head of a local labor union states that wage gains have not kept pace with the 3 percent rate of inflation.The Secretary's statement is a(n)____ economic statement,and the labor head's statement is a(n)____ economic statement.

Accepted Answer

A)  normative; normative 
B)  normative; positive 
C)  positive, normative 
D)  positive, positive 
E)  proper; improper 
A)  normative; normative 
B)  normative; positive 
C)  positive, normative 
D)  positive, positive 
E)  proper; improper

Question 18

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Accepted Answer

A)  Why do national economies grow? 
B)  What percentage of consumer income is spent on entertainment? 
C)  Why do workers prefer the 4-day workweek? 
D)  How is the electric industry harmed by the passage of new clean air legislation? 
A)  Why do national economies grow? 
B)  What percentage of consumer income is spent on entertainment? 
C)  Why do workers prefer the 4-day workweek? 
D)  How is the electric industry harmed by the passage of new clean air legislation?

Question 19

Human wants:

Accepted Answer

A)  are unfilled only in the poorer countries of the world. 
B)  can be completely satisfied by advancing technology. 
C)  can never be fully satisfied. 
D)  only apply to necessities. 
E)  exist only if we are selfish. 
A)  are unfilled only in the poorer countries of the world. 
B)  can be completely satisfied by advancing technology. 
C)  can never be fully satisfied. 
D)  only apply to necessities. 
E)  exist only if we are selfish.

Question 20

Determining the price of compact discs 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.

Exam 1: Introducing the Economic Way of Thinking

All of the following are examples of capital except:

The finite nature of the economy's resource base:

The central question in economics is how to:

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

A normative economic statement can be proven either true or false.

The Latin expression Ceteris paribus means:

The statement,"John buys more of good X as his income increases,Ceteris paribus," means:

The three basic categories of resources are land,labor,and:

Economic theories,or models,enable us to predict and to give reasonable explanations regarding economic variables.

When building a model,an economist must:

Which of the following is a normative economic statement?

Which of the following is an example of a positive economic statement?

Scarcity means we are unable to have as much as we would like to have.

An entrepreneur is a(n):

"The government should provide health care for all citizens." This statement is an illustration of:

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

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Human wants:

Determining the price of compact discs is a concern of:

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

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

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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