Question 1

All human wants cannot be satisfied because of the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 2

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class,does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

Accepted Answer

A)  Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation. 
B)  It is not possible for an economist to determine causation between variables. 
C)  The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades. 
D)  The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom. 
A)  Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation. 
B)  It is not possible for an economist to determine causation between variables. 
C)  The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades. 
D)  The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom.

Question 3

Money is one of our nation's resources (factors or means of production).

Accepted Answer

A) True 
 B)False

Question 4

When economists want to hold a number of factors constant,they are demonstrating which of the following expressions?

Accepted Answer

A)  Positive economics model. 
B)  Consumer sovereignty. 
C)  Ceteris paribus. 
D)  Normative economics. 
A)  Positive economics model. 
B)  Consumer sovereignty. 
C)  Ceteris paribus. 
D)  Normative economics.

Question 5

What is scarcity and why does it exist? How is scarcity related to the study of economics?

Accepted Answer

Scarcity exists because resources are li

Question 6

A theory is:

Accepted Answer

A)  based only on critical factors or variables. 
B)  a simplified abstraction of the real world. 
C)  a detailed description of reality. 
D)  a and 
A)  based only on critical factors or variables. 
B)  a simplified abstraction of the real world. 
C)  a detailed description of reality. 
D)  a and

Question 7

Economics is the study of how people:

Accepted Answer

A)  vote for political leaders who decide what is to be produced. 
B)  make choices to produce and consume goods and services. 
C)  establish social institutions that maximize well-being. 
D)  develop value systems that affect their consumption choices. 
A)  vote for political leaders who decide what is to be produced. 
B)  make choices to produce and consume goods and services. 
C)  establish social institutions that maximize well-being. 
D)  develop value systems that affect their consumption choices.

Question 8

To be valid,an economic model must:

Accepted Answer

A)  include every activity which occurs in the real world. 
B)  include at least 85 percent of the activity which occurs in the real world. 
C)  be able to predict events occurring in the real world. 
D)  exclude any link to the real world. 
E)  not be based on an abstraction of the real world. 
A)  include every activity which occurs in the real world. 
B)  include at least 85 percent of the activity which occurs in the real world. 
C)  be able to predict events occurring in the real world. 
D)  exclude any link to the real world. 
E)  not be based on an abstraction of the real world.

Question 9

Which one of the following is the most accurate definition of economics?

Accepted Answer

A)  Economics is the study of stocks and bonds. 
B)  Economics is the study of how people allocate unlimited resources. 
C)  Economics is the study of how consumers choose to spend their income. 
D)  Economics is the study of how society chooses to allocate scarce resources. 
A)  Economics is the study of stocks and bonds. 
B)  Economics is the study of how people allocate unlimited resources. 
C)  Economics is the study of how consumers choose to spend their income. 
D)  Economics is the study of how society chooses to allocate scarce resources.

Question 10

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following represents a positive statement?

Accepted Answer

A)  A higher income tax rate will reduce the amount of time that people spend working. 
B)  Teenage unemployment should be reduced. 
C)  We should raise the standard of living for the elderly. 
D)  A decrease in tax rates is needed to help the poor. 
A)  A higher income tax rate will reduce the amount of time that people spend working. 
B)  Teenage unemployment should be reduced. 
C)  We should raise the standard of living for the elderly. 
D)  A decrease in tax rates is needed to help the poor.

Question 12

Which of the following is the best example of a nonrenewable resource?

Accepted Answer

A)  Forests. 
B)  Oil. 
C)  Clean air. 
D)  Fish in the ocean. 
A)  Forests. 
B)  Oil. 
C)  Clean air. 
D)  Fish in the ocean.

Question 13

The most fundamental concepts underlying the discipline of economics are:

Accepted Answer

A)  scarcity and choice. 
B)  supply and demand. 
C)  money, stocks, and bonds. 
D)  inflation and unemployment. 
A)  scarcity and choice. 
B)  supply and demand. 
C)  money, stocks, and bonds. 
D)  inflation and unemployment.

Question 14

The sub-discipline of economics that focuses especially on individual markets is:

Accepted Answer

A)  normative economics. 
B)  positive economics. 
C)  microeconomics. 
D)  macroeconomics. 
E)  econometrics. 
A)  normative economics. 
B)  positive economics. 
C)  microeconomics. 
D)  macroeconomics. 
E)  econometrics.

Question 15

The statement "Cutting government spending is the best way to boost consumer confidence" is an example of normative economics.

Accepted Answer

A) True 
 B)False

Question 16

Your scarcity problem would disappear if you were rich.

Accepted Answer

A) True 
 B)False

Question 17

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Accepted Answer

A)  cost per unit of output will rise. 
B)  workers will gain their rightful share of total income. 
C)  the rate of inflation will increase. 
D)  profits will fall. 
A)  cost per unit of output will rise. 
B)  workers will gain their rightful share of total income. 
C)  the rate of inflation will increase. 
D)  profits will fall.

Question 18

Computer programs or software are an example of:

Accepted Answer

A)  land. 
B)  labor. 
C)  capital. 
D)  none of the above. 
A)  land. 
B)  labor. 
C)  capital. 
D)  none of the above.

Question 19

Macroeconomics studies economywide issues like inflation and unemployment.

Accepted Answer

A) True 
 B)False

Question 20

The branch of economics that focuses on decision making for the economy as a whole is called:

Accepted Answer

A)  normative economics. 
B)  macroeconomics. 
C)  microeconomics. 
D)  consumer economics. 
A)  normative economics. 
B)  macroeconomics. 
C)  microeconomics. 
D)  consumer economics.

Exam 1: Introducing the Economic Way of Thinking

All human wants cannot be satisfied because of the problem of scarcity.

If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class,does that mean that sitting in the back of a classroom causes one to perform poorly on exams?

Money is one of our nation's resources (factors or means of production).

When economists want to hold a number of factors constant,they are demonstrating which of the following expressions?

What is scarcity and why does it exist? How is scarcity related to the study of economics?

A theory is:

Economics is the study of how people:

To be valid,an economic model must:

Which one of the following is the most accurate definition of economics?

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy.

Which of the following represents a positive statement?

Which of the following is the best example of a nonrenewable resource?

The most fundamental concepts underlying the discipline of economics are:

The sub-discipline of economics that focuses especially on individual markets is:

The statement "Cutting government spending is the best way to boost consumer confidence" is an example of normative economics.

Your scarcity problem would disappear if you were rich.

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Computer programs or software are an example of:

Macroeconomics studies economywide issues like inflation and unemployment.

The branch of economics that focuses on decision making for the economy as a whole is called:

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

Filters