Question 1

The issues that an economic system attempts to solve include:

Accepted Answer

A) what to produce. 
B) how to produce items. 
C) for whom items are produced. 
D) all of the above. 
A) what to produce. 
B) how to produce items. 
C) for whom items are produced. 
D) all of the above. D

Question 2

Which of the following statements is a positive economic statement?

Accepted Answer

A) The Congress should pass the president's tax package. 
B) Tax rebates always give too much favor to rich people. 
C) The President's budget included an increase in unemployment insurance payments. 
D) none of the above 
A) The Congress should pass the president's tax package. 
B) Tax rebates always give too much favor to rich people. 
C) The President's budget included an increase in unemployment insurance payments. 
D) none of the above C

Question 3

Economics is the study of

Accepted Answer

A) how to get rich. 
B) how people allocate their limited resources to satisfy their unlimited wants. 
C) how people spend their income. 
D) why people want certain goods and services rather than other goods and services. 
A) how to get rich. 
B) how people allocate their limited resources to satisfy their unlimited wants. 
C) how people spend their income. 
D) why people want certain goods and services rather than other goods and services. B

Question 4

Positive statements can contain

Accepted Answer

A) opinions and conditions. 
B) facts and predictions. 
C) a mixture of facts and opinions. 
D) logical arguments mixed with statements of opinion. 
A) opinions and conditions. 
B) facts and predictions. 
C) a mixture of facts and opinions. 
D) logical arguments mixed with statements of opinion.

Question 5

Microeconomics is concerned with studying which of the following?

Accepted Answer

A) the determinants of national unemployment 
B) the effects of monetary policy 
C) the study of individual markets 
D) all of the above 
A) the determinants of national unemployment 
B) the effects of monetary policy 
C) the study of individual markets 
D) all of the above

Question 6

Rational self-interest means

Accepted Answer

A) always increasing your wealth. 
B) pursuing what makes you better off. 
C) pursuing activities that maximize income. 
D) always pursuing activities that are consistent with your faith. 
A) always increasing your wealth. 
B) pursuing what makes you better off. 
C) pursuing activities that maximize income. 
D) always pursuing activities that are consistent with your faith.

Question 7

The idea of bounded rationality is used to address all of the following characteristics EXCEPT

Accepted Answer

A) unbounded selfishness. 
B) unbounded knowledge. 
C) unbounded willpower. 
D) unbounded rationality. 
A) unbounded selfishness. 
B) unbounded knowledge. 
C) unbounded willpower. 
D) unbounded rationality.

Question 8

Which of the following is true of incentives?

Accepted Answer

A) Different people are motivated by different incentives. 
B) Money is the only measure of incentives. 
C) All of the people in a particular nation are motivated by the same incentives. 
D) In economics,people are assumed to respond to disincentives instead of incentives. 
A) Different people are motivated by different incentives. 
B) Money is the only measure of incentives. 
C) All of the people in a particular nation are motivated by the same incentives. 
D) In economics,people are assumed to respond to disincentives instead of incentives.

Question 9

The usefulness of a model is determined by

Accepted Answer

A) whether it helps to explain or predict real world phenomena. 
B) whether it possesses realistic assumptions. 
C) how well it uses the ceteris paribus assumption. 
D) how many of the possible relationships that exist are included in the model. 
A) whether it helps to explain or predict real world phenomena. 
B) whether it possesses realistic assumptions. 
C) how well it uses the ceteris paribus assumption. 
D) how many of the possible relationships that exist are included in the model.

Question 10

In economics,items that are used to produce goods and services are known as

Accepted Answer

A) wants. 
B) aggregates. 
C) factors of need. 
D) resources. 
A) wants. 
B) aggregates. 
C) factors of need. 
D) resources.

Question 11

A negative slope

Accepted Answer

A) represents an inverse relationship,such as beers consumed and test score. 
B) represents a direct relationship,such as snow fall and car accidents. 
C) indicates that there is no relationship between two variables,such as women's wages and likelihood of sunshine. 
D) means that the line crosses below the x-axis. 
A) represents an inverse relationship,such as beers consumed and test score. 
B) represents a direct relationship,such as snow fall and car accidents. 
C) indicates that there is no relationship between two variables,such as women's wages and likelihood of sunshine. 
D) means that the line crosses below the x-axis.

Question 12

Charitable donations to the Red Cross

Accepted Answer

A) can be explained by the rational ignorance theory. 
B) can be explained by the rational self-interest theory. 
C) cannot be explained by the rational self-interest theory. 
D) prove that there is no scarcity in the United States. 
A) can be explained by the rational ignorance theory. 
B) can be explained by the rational self-interest theory. 
C) cannot be explained by the rational self-interest theory. 
D) prove that there is no scarcity in the United States.

Question 13

What is economics and what does it try to explain?

Accepted Answer

Economics is the study of how people all

Question 14

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,economist Adam Smith argued that individuals

Accepted Answer

A) always tend to act in an altruistic manner. 
B) always consider the impact of their actions on the welfare of others. 
C) are motivated by self-interest. 
D) are generally not concerned with economic questions. 
A) always tend to act in an altruistic manner. 
B) always consider the impact of their actions on the welfare of others. 
C) are motivated by self-interest. 
D) are generally not concerned with economic questions.

Question 15

Economists assume that people are motivated by

Accepted Answer

A) benevolence. 
B) altruism. 
C) greed. 
D) rational self-interest. 
A) benevolence. 
B) altruism. 
C) greed. 
D) rational self-interest.

Question 16

A possible rational reason why older people,on average,show less interest in learning how to use new technologies is because

Accepted Answer

A) older people are not as smart as (today's)young people. 
B) they are acting irrationally. 
C) they have fewer years to gain a return from learning how to use new technologies. 
D) the financial cost for older people is greater than the cost to younger people. 
A) older people are not as smart as (today's)young people. 
B) they are acting irrationally. 
C) they have fewer years to gain a return from learning how to use new technologies. 
D) the financial cost for older people is greater than the cost to younger people.

Question 17

The headline in the local paper today is "College tuition next fall will be raised by 3 percent." This statement is an example of

Accepted Answer

A) a normative statement. 
B) a positive statement. 
C) a macroeconomic statement. 
D) ceteris paribus. 
A) a normative statement. 
B) a positive statement. 
C) a macroeconomic statement. 
D) ceteris paribus.

Question 18

-In the above graphs a direct relationship is shown by

Accepted Answer

A) Graph A. 
B) Graph B. 
C) Graph C. 
D) Graph D. 
A) Graph A. 
B) Graph B. 
C) Graph C. 
D) Graph D.

Question 19

Which of the following is a microeconomic topic?

Accepted Answer

A) the unemployment rate of the United States economy as a whole 
B) the rate at which prices increase in Brazil 
C) the advertising strategy of a particular company 
D) the increase in the national income of the United States over the past three months 
A) the unemployment rate of the United States economy as a whole 
B) the rate at which prices increase in Brazil 
C) the advertising strategy of a particular company 
D) the increase in the national income of the United States over the past three months

Question 20

Which statement most accurately defines economics?

Accepted Answer

A) Economics is the study of how people make money. 
B) Economics is the study of how people make choices to satisfy their wants. 
C) Economics is the study of values a society should choose. 
D) Economics is the study of how to eliminate scarcity. 
A) Economics is the study of how people make money. 
B) Economics is the study of how people make choices to satisfy their wants. 
C) Economics is the study of values a society should choose. 
D) Economics is the study of how to eliminate scarcity.

Exam 1: The Nature of Economics

The issues that an economic system attempts to solve include:

Which of the following statements is a positive economic statement?

Economics is the study of

Positive statements can contain

Microeconomics is concerned with studying which of the following?

Rational self-interest means

The idea of bounded rationality is used to address all of the following characteristics EXCEPT

Which of the following is true of incentives?

The usefulness of a model is determined by

In economics,items that are used to produce goods and services are known as

A negative slope

Charitable donations to the Red Cross

What is economics and what does it try to explain?

In his book,An Inquiry into the Nature and Causes of the Wealth of Nations,economist Adam Smith argued that individuals

Economists assume that people are motivated by

A possible rational reason why older people,on average,show less interest in learning how to use new technologies is because

The headline in the local paper today is "College tuition next fall will be raised by 3 percent." This statement is an example of

-In the above graphs a direct relationship is shown by

Which of the following is a microeconomic topic?

Which statement most accurately defines economics?

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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