Deck 1: What Is Economics?

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Question
Comparative advantage explains how two nations can benefit from trade.
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Externalities are social costs that affect parties external to a particular economic transaction.
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The marginal cost of an airline ticket is the total cost of flying the plane divided by the number of passengers.
Question
Government controls over market prices frequently "backfire."
Question
There are never any adverse consequences of government attempts to modify the laws of supply and demand.
Question
In economics the true cost of making a choice is the value of what must be given up.
Question
Externalities are created when parties not involved in an economic transaction are affected by it.
Question
Externalities affect only the buyer and seller involved in an exchange.
Question
There are frequently market solutions that the government can use to deal with externalities.
Question
Marginal analysis involves looking at the extra costs involved in a decision.
Question
Both parties gain in a voluntary exchange.
Question
It is impossible for both nations to gain when trading with one other.
Question
Opportunity cost is the value of the next best alternative to a given choice.
Question
If Japan is twice as good at producing cameras and three times as good at producing TV sets as the United States, Japan is said to have a comparative advantage in TV sets and the United States has a comparative advantage in cameras.
Question
In international trade, one country's gain is another country's loss.
Question
As a student, one of the costs of sleeping in rather than going to class is likely to be a lower grade in the class.
Question
In her calculation of the cost of going to college, an economist would include the amount of forgone earnings over the years spent at college.
Question
Opportunity cost is the highest possible price you can receive when you sell an object.
Question
All economic transactions involve only buyers and sellers; no third parties are involved.
Question
Even though international trade in undertaken voluntarily, a country that engages in trade may not benefit from it.
Question
Over the past century, the main factor responsible for rising living standards in the United States has been productivity growth.
Question
Productivity growth is the main cause of rising living standards.
Question
The high unemployment of 2008-2010 caused a substantial decrease in inflation which created fears of deflation.
Question
The relatively low rate of inflation coupled with a low unemployment rate that occurred in the 1990s represented a "normal" economic situation.
Question
Greater economic efficiency often leads to greater economic inequality.
Question
Attempts by the government to reduce the rate of inflation often result in higher unemployment in the short run.
Question
Lower inflation rates are usually correlated with lower unemployment rates.
Question
Economic efficiency and income equality are often conflicting goals in an economy.
Question
The achievement of greater efficiency in the United States has been at the expense of growing inequality.
Question
The market mechanism provides a financial incentive for firms to minimize the pollution they create.
Question
A small increase in productivity growth can have a huge impact on a country's standard of living.
Question
One of the consequences of allowing wages to fall in the United States has been growing wage inequality.
Question
The United States has chosen to balance the competing claims of efficiency versus equality by emphasizing greater efficiency over greater equality.
Question
One problem with the European Union's choice regarding equality versus efficiency is that it may inadvertently shrink the size of its "economic pie".
Question
The concept of economic efficiency refers to the size of the "economic pie" whereas the concept of equality refers to how the "pie" is distributed.
Question
The United States has been willing to trade off greater efficiency for greater wage equality.
Question
In both the 1970s and the 1990s, extreme economic events caused unemployment to move in the same direction as inflation.
Question
One of the consequences of preventing wages from falling in the European Union has been growing unemployment.
Question
The growth rate of productivity is the most important determinant of material well-being in the short run.
Question
There is no trade-off between efficiency and equality.
Question
Economic analysis requires both mathematical reasoning and historical study.
Question
Economists are often required to make unrealistic assumptions concerning the problems they are investigating.
Question
The use of abstraction in economics is analogous to the use of a road map providing directions to a location.
Question
The word "theory" means the same to the scientist as it does to the man on the street.
Question
In scientific language, a theory is an untested assertion of alleged fact.
Question
A model that is an oversimplification for one purpose will likely be an oversimplification for other purposes as well.
Question
The statement "saccharine causes cancer" is not a theory; it is a hypothesis.
Question
The optimal degree of abstraction depends on the objective of the analysis.
Question
Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied.
Question
In economics, abstraction from reality is necessary because of the complexity of the real world.
Question
Abstraction can lead to gross distortions of pertinent facts.
Question
Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.
Question
Economic problems are made manageable by stripping away some of the unnecessary details.
Question
Abstraction ignores many details in order to focus on the most important elements of a problem.
Question
A theory is an explanation of the causal mechanism behind observed phenomena.
Question
Inaccurate prediction generally invalidates the use of theory in economics.
Question
Eliminating important details in economic analysis is necessary to understand the complexity of the economy.
Question
Economic theory is necessary and extremely important because of its relationship to economic policy.
Question
A theory is a deliberate simplification or abstraction of factual relationships.
Question
A theory is an untested assertion of alleged fact.
Question
In economic theorizing, common sense will always lead to the correct answer.
Question
Models are simplifications that are used to observe the workings of a system.
Question
An economic model is a realistic depiction of the operation of the economy.
Question
"Correlation" is a measure of how one variable causes another to change.
Question
A horizontal line always has a slope of one.
Question
The terms "correlation" and "causation" are synonymous.
Question
A graph's origin is the point of intersection of all lines or curves in the graph.
Question
Economists probably agree more often than they disagree.
Question
Models are used to describe cause-and-effect relationships.
Question
Economists disagree on most economic issues facing an economy.
Question
Two variables that systematically change together are correlated.
Question
All two-dimensional graphs must have an origin, a horizontal axis, and a vertical axis.
Question
Value judgments are based on people's tastes, preferences, and ethical opinions.
Question
A vertical line always has a slope of one.
Question
The lower left-hand corner of a graph where the two axes meet is called the graph's origin.
Question
Only economists and other "social" scientists have areas of dispute within their disciplines.
Question
Economic theory simplifies relationships to explain how the relationships interact.
Question
Graphs are valuable because they facilitate interpretation of data.
Question
A graph conveys information about a cause-and-effect relationship.
Question
Individuals will have different value judgments about the appropriate rate of unemployment and the appropriate rate of inflation.
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Deck 1: What Is Economics?
1
Comparative advantage explains how two nations can benefit from trade.
True
2
Externalities are social costs that affect parties external to a particular economic transaction.
True
3
The marginal cost of an airline ticket is the total cost of flying the plane divided by the number of passengers.
False
4
Government controls over market prices frequently "backfire."
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5
There are never any adverse consequences of government attempts to modify the laws of supply and demand.
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6
In economics the true cost of making a choice is the value of what must be given up.
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7
Externalities are created when parties not involved in an economic transaction are affected by it.
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8
Externalities affect only the buyer and seller involved in an exchange.
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9
There are frequently market solutions that the government can use to deal with externalities.
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10
Marginal analysis involves looking at the extra costs involved in a decision.
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11
Both parties gain in a voluntary exchange.
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12
It is impossible for both nations to gain when trading with one other.
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13
Opportunity cost is the value of the next best alternative to a given choice.
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14
If Japan is twice as good at producing cameras and three times as good at producing TV sets as the United States, Japan is said to have a comparative advantage in TV sets and the United States has a comparative advantage in cameras.
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15
In international trade, one country's gain is another country's loss.
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16
As a student, one of the costs of sleeping in rather than going to class is likely to be a lower grade in the class.
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17
In her calculation of the cost of going to college, an economist would include the amount of forgone earnings over the years spent at college.
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18
Opportunity cost is the highest possible price you can receive when you sell an object.
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19
All economic transactions involve only buyers and sellers; no third parties are involved.
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20
Even though international trade in undertaken voluntarily, a country that engages in trade may not benefit from it.
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21
Over the past century, the main factor responsible for rising living standards in the United States has been productivity growth.
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22
Productivity growth is the main cause of rising living standards.
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23
The high unemployment of 2008-2010 caused a substantial decrease in inflation which created fears of deflation.
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24
The relatively low rate of inflation coupled with a low unemployment rate that occurred in the 1990s represented a "normal" economic situation.
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25
Greater economic efficiency often leads to greater economic inequality.
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26
Attempts by the government to reduce the rate of inflation often result in higher unemployment in the short run.
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27
Lower inflation rates are usually correlated with lower unemployment rates.
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28
Economic efficiency and income equality are often conflicting goals in an economy.
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29
The achievement of greater efficiency in the United States has been at the expense of growing inequality.
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30
The market mechanism provides a financial incentive for firms to minimize the pollution they create.
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31
A small increase in productivity growth can have a huge impact on a country's standard of living.
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32
One of the consequences of allowing wages to fall in the United States has been growing wage inequality.
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33
The United States has chosen to balance the competing claims of efficiency versus equality by emphasizing greater efficiency over greater equality.
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34
One problem with the European Union's choice regarding equality versus efficiency is that it may inadvertently shrink the size of its "economic pie".
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35
The concept of economic efficiency refers to the size of the "economic pie" whereas the concept of equality refers to how the "pie" is distributed.
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36
The United States has been willing to trade off greater efficiency for greater wage equality.
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37
In both the 1970s and the 1990s, extreme economic events caused unemployment to move in the same direction as inflation.
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38
One of the consequences of preventing wages from falling in the European Union has been growing unemployment.
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39
The growth rate of productivity is the most important determinant of material well-being in the short run.
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40
There is no trade-off between efficiency and equality.
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41
Economic analysis requires both mathematical reasoning and historical study.
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42
Economists are often required to make unrealistic assumptions concerning the problems they are investigating.
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43
The use of abstraction in economics is analogous to the use of a road map providing directions to a location.
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44
The word "theory" means the same to the scientist as it does to the man on the street.
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45
In scientific language, a theory is an untested assertion of alleged fact.
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46
A model that is an oversimplification for one purpose will likely be an oversimplification for other purposes as well.
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47
The statement "saccharine causes cancer" is not a theory; it is a hypothesis.
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48
The optimal degree of abstraction depends on the objective of the analysis.
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49
Abstraction is used in economics to omit unnecessary details and focus on the essence of the problem being studied.
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50
In economics, abstraction from reality is necessary because of the complexity of the real world.
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51
Abstraction can lead to gross distortions of pertinent facts.
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52
Unemployment and inflation are important determinants of short-run material welfare, whereas productivity growth is an important determinant of long-run material well-being.
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53
Economic problems are made manageable by stripping away some of the unnecessary details.
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54
Abstraction ignores many details in order to focus on the most important elements of a problem.
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55
A theory is an explanation of the causal mechanism behind observed phenomena.
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56
Inaccurate prediction generally invalidates the use of theory in economics.
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57
Eliminating important details in economic analysis is necessary to understand the complexity of the economy.
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58
Economic theory is necessary and extremely important because of its relationship to economic policy.
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59
A theory is a deliberate simplification or abstraction of factual relationships.
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60
A theory is an untested assertion of alleged fact.
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61
In economic theorizing, common sense will always lead to the correct answer.
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62
Models are simplifications that are used to observe the workings of a system.
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63
An economic model is a realistic depiction of the operation of the economy.
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64
"Correlation" is a measure of how one variable causes another to change.
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65
A horizontal line always has a slope of one.
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66
The terms "correlation" and "causation" are synonymous.
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67
A graph's origin is the point of intersection of all lines or curves in the graph.
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68
Economists probably agree more often than they disagree.
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69
Models are used to describe cause-and-effect relationships.
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70
Economists disagree on most economic issues facing an economy.
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71
Two variables that systematically change together are correlated.
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72
All two-dimensional graphs must have an origin, a horizontal axis, and a vertical axis.
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73
Value judgments are based on people's tastes, preferences, and ethical opinions.
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74
A vertical line always has a slope of one.
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75
The lower left-hand corner of a graph where the two axes meet is called the graph's origin.
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76
Only economists and other "social" scientists have areas of dispute within their disciplines.
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77
Economic theory simplifies relationships to explain how the relationships interact.
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78
Graphs are valuable because they facilitate interpretation of data.
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79
A graph conveys information about a cause-and-effect relationship.
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80
Individuals will have different value judgments about the appropriate rate of unemployment and the appropriate rate of inflation.
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