Question 1

Which of the following is not an economic issue?

Accepted Answer

A) Why is college tuition so high? 
B) Why has health-care spending increased faster than the rest of the economy? 
C) How can one earn $1 million without working at all? 
D) How can one reduce the currently high levels of unemployment in Europe? 
E) Why are there so many types of dog food? 
A) Why is college tuition so high? 
B) Why has health-care spending increased faster than the rest of the economy? 
C) How can one earn $1 million without working at all? 
D) How can one reduce the currently high levels of unemployment in Europe? 
E) Why are there so many types of dog food?

Question 2

"Inflation is a more serious problem than unemployment." This statement is an example of

Accepted Answer

A) a normative statement. 
B) the fallacy of composition. 
C) a positive statement. 
D) microeconomics. 
E) macroeconomics. 
A) a normative statement. 
B) the fallacy of composition. 
C) a positive statement. 
D) microeconomics. 
E) macroeconomics.

Question 3

To argue that economics is the only science not used objectively is

Accepted Answer

A) true because only economics engages in politically controversial issues. 
B) false because other sciences besides economics engage in politically controversial issues. 
C) true because all other sciences use controlled experiments. 
D) false because one's reasoning is either correct or incorrect. 
E) false because none of the other sciences use controlled experiments. 
A) true because only economics engages in politically controversial issues. 
B) false because other sciences besides economics engage in politically controversial issues. 
C) true because all other sciences use controlled experiments. 
D) false because one's reasoning is either correct or incorrect. 
E) false because none of the other sciences use controlled experiments.

Question 4

Macroeconomics is concerned primarily with

Accepted Answer

A) the economy as a whole. 
B) the operation of a particular firm. 
C) individual consumer behavior. 
D) the labor market. 
E) a detailed examination of how price and output decisions are made in specific markets. 
A) the economy as a whole. 
B) the operation of a particular firm. 
C) individual consumer behavior. 
D) the labor market. 
E) a detailed examination of how price and output decisions are made in specific markets.

Question 5

Using gasoline prices as an example,explain what a normative statement is and what a positive statement is.

Accepted Answer

Valid positive statements would include

Question 6

Identify whether the following issues are macroeconomic or microeconomic and explain why you categorized them in that way.
(A)The growth rate of real GDP
(B)A government policy that guarantees a minimum price of agricultural goods
(C)A tax on restaurant meals
(D)A government policy to affect the increase in the overall price level

Accepted Answer

(A) Macroeconomic issue because it conce

Question 7

Causation

Accepted Answer

A) occurs when there is no correlation. 
B) occurs when two variables are correlated. 
C) means one event brings about another event. 
D) means one event is observed to occur along with another. 
E) means one event occurs subsequently to another event. 
A) occurs when there is no correlation. 
B) occurs when two variables are correlated. 
C) means one event brings about another event. 
D) means one event is observed to occur along with another. 
E) means one event occurs subsequently to another event.

Exam 2: Observing and Explaining the Economy

Which of the following is not an economic issue?

"Inflation is a more serious problem than unemployment." This statement is an example of

To argue that economics is the only science not used objectively is

Macroeconomics is concerned primarily with

Using gasoline prices as an example,explain what a normative statement is and what a positive statement is.

Causation

The Central Idea

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

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