Deck 1: What is Economics?

Question 1

Society's core economic problem is

A) the role of government in the economy
B) a scarcity of land,labor,and machinery to produce goods and services
C) the federal budget deficit
D) an unequal distribution of income
E) low living standards

Answer 1

a scarcity of land,labor,and machinery to produce goods and services

Question 2

The core problem faced by all economic systems is that

A) scarcity forces each of us to make choices
B) the government must intervene to allocate scarce resources
C) of matching people's wants with their needs
D) of allocating unlimited resources
E) it needs to maximize each household's material standard of living

Answer 2

scarcity forces each of us to make choices

Question 3

The basic problem addressed in economics is

A) scarce resources and unlimited wants
B) scarce wants and unlimited resources
C) cost minimization
D) how to manage a financial portfolio
E) unlimited time and unlimited potential

Answer 3

scarce resources and unlimited wants

Question 4

Which of the following disciplines is not a social science?

A) psychology
B) mathematics
C) economics
D) political science
E) sociology

Question 5

Which of the following explains why individuals must make choices?

A) competition among firms
B) scarcity of resources
C) inflation
D) changes in the money supply
E) conflict between positive and normative economic statements

Question 6

In every economic system,scarcity imposes limitations on

A) households,business firms,governments,and the nation as a whole
B) households and business firms,but not the governments
C) local and state governments,but not the federal government
D) households and governments,but not business firms
E) business firms,governments,and the nation as a whole

Question 7

In the United States,individuals are forced to make choices

A) because time is scarce,though spending power is not
B) because spending power is scarce,though time is not
C) though neither time nor spending power are scarce
D) because both time and spending power are scarce
E) because living standards are low

Question 8

All the problems studied in economics arise from

A) the unequal distribution of income
B) overpopulation
C) the scarcity of resources
D) inappropriate government action
E) war

Question 9

Economics is

A) a discipline in the physical sciences
B) a field that deals exclusively with normative issues
C) a field that deals exclusively with positive issues
D) only useful for examining behavior in capitalist economies
E) a discipline that focuses on how choices are made in society

Question 10

What does economics have in common with sociology?

A) Economics and sociology ask fundamentally the same questions.
B) Economics and sociology use the same tools to analyze issues.
C) Both are social sciences.
D) What and how economists study is very similar to what and how sociologists study.
E) Explaining something about society is only a secondary purpose in both areas.

Question 11

The basic problem of economics arises when there are unlimited resources available to fulfill society's limited wants.

Question 12

Economics is

A) the narrow study of how to make money in financial markets
B) the broad study of how to allocate unlimited resources to satisfy limited uses
C) the broad study of how to allocate limited resources to satisfy unlimited wants
D) the narrow study of using stocks and bonds to their maximum potential
E) the narrow study of how to be conservative in financial affairs

Question 13

Due to a scarcity of resources,

A) governments should decide what should be produced
B) the government must decide how to allocate available resources
C) some members of each society must live in poverty
D) every society must choose among competing uses of available resources
E) resource availability exceeds the possible uses for available resources

Question 14

Economics is the study of

A) how to start a business
B) how to make money in stocks,bonds,and real estate
C) choice under conditions of abundance
D) choice under conditions of scarcity
E) multinational business

Question 15

Individuals must make choices because

A) resources are scarce and wants are limited
B) resources and wants are unlimited
C) assets and wealth are distributed unevenly
D) resources are scarce and wants are unlimited
E) inflation usually outpaces income growth

Question 16

Economics is

A) exclusively the study of the markets for stocks and bonds
B) the study of choice under conditions of scarcity
C) exclusively the study of business firms
D) fundamentally the same as sociology
E) applicable only when scarcity is not a problem

Question 17

People and organizations have to make choices about how to allocate time and money because

A) government requires it
B) corporations control our lives
C) time and money are both scarce
D) religious values conflict with economics
E) there are unlimited resources

Question 18

Economics is the study of

A) scarcity under conditions of democracy
B) choice within a system of free speech
C) financial markets
D) the role of government in a market system
E) choice under conditions of scarcity

Question 19

Economics is the study of choice under conditions of

A) demand
B) supply
C) scarcity
D) opportunity
E) abundance

Question 20

The study of economics would be superfluous if __________ did not exist.

A) demand
B) capital
C) corporations
D) profit
E) scarcity

Question 21

Physical capital differs from raw materials in the sense that raw materials

A) have a longer useful life in production
B) are considered human capital
C) cannot be used to produce goods and services
D) are used up in production
E) are not a resource used in production

Question 22

The four main categories of resources are

A) labor,money,capital,and inputs
B) capital,land,raw materials,and entrepreneurship
C) raw materials,money,labor,and capital
D) land,capital,labor,natural resources,and entrepreneurship
E) human capital,physical capital,labor,and natural resources

Question 23

Society's resources include

A) land and labor
B) labor and machinery
C) land,labor,and capital
D) land,capital,and money
E) labor,capital,and money

Question 24

Which of the following is the best example of physical capital used to produce a textbook?

A) the expertise and writing ability of the author
B) the ink used in the printing press
C) the printing press
D) the property on which the publisher's office is located
E) the time spent by editors reviewing the textbook

Question 25

Even though households may have unlimited wants,they have to allocate their spending carefully because they

A) do not want their credit card bills to be too high
B) worry about their taxes
C) have limited intelligence
D) have limited incomes
E) basically want to become wealthy

Question 26

Society has to establish priorities among its goals because of

A) lazy politicians
B) manipulative politicians
C) uneducated voters
D) a scarcity of resources
E) too many bosses and not enough workers

Question 27

Because of economic scarcity

A) there are not enough jobs for everyone
B) people are afraid to become entrepreneurs
C) the government interferes in the economy
D) businesses cannot obtain the resources they need
E) people and organizations have to allocate resources carefully

Question 28

Which of the following is a characteristic of entrepreneurship?

A) the ability to navigate bodies of water
B) it is produced using physical capital
C) it is used up quickly in the production process
D) it is a pre-existing resource like land
E) it is associated with risk taking and innovation

Question 29

No society can provide its citizens with everything that they want because of

A) greedy politicians
B) lazy workers
C) an educational system that does not provide hands on experience
D) firms that strive to maximize profits
E) a scarcity of resources

Question 30

In examining consumer behavior,one of the constraints faced by consumers is

A) happiness
B) quantities consumed
C) tastes and preferences
D) entrepreneurial ability
E) income

Question 31

The economic behavior of government is constrained by

A) limited budgets
B) the absence of prices on most government output
C) moral philosophy of the community
D) low voter participation rates
E) political self interest

Question 32

A physician's knowledge and skills are referred to by economists as

A) human capital
B) labor
C) physical capital
D) entrepreneurship
E) intellectual raw materials

Question 33

All of the following are examples of constraints faced by decision makers,except one.Which is the exception?

A) income for a consumer
B) natural resources for a firm
C) time for a laborer
D) consumer wants
E) wealth for a consumer

Question 34

Due to society's overall scarcity of resources,

A) only households are constrained by income
B) only government agencies are constrained by limited budgets
C) only business firms are constrained by the cost of buying their inputs
D) households,business firms and government agencies all face constraints
E) households and business firms face constraints,but government agencies do not

Question 35

Land,labor,and money are the three categories of economic resources.

Question 36

The knowledge that students gain while in college is referred to by economists as human capital.

Question 37

Suppose you start your own company making T-shirts that commemorate campus sporting events.An example of the resource capital would be

A) the factory you created in a building you are leasing
B) your time and effort used to produce T-shirts
C) the entire campus,since the demand for T-shirts is obtained from campus students
D) the athletic facilities,since the athletic teams generate sporting events advertised on the T-shirts
E) your creative designs used to commemorate different sporting events

Question 38

The term capital,as used by economists,refers to

A) money
B) the physical space in which production occurs
C) the time allocated to producing goods and services
D) financial securities such as stocks and bonds
E) machinery and equipment that is not used up during the production process

Question 39

An entrepreneur is best described as

A) someone that is hired to work in a firm
B) someone who creates human capital
C) someone with the ability to combine other resources in a productive enterprise
D) anyone who owns productive enterprise
E) anyone who produces long-lived physical capital

Question 40

Because households have limited incomes,they must

A) rarely take vacations
B) live below the poverty line
C) allocate their spending carefully
D) gamble in casinos frequently
E) save for the future

Question 41

Macroeconomics is the study of

A) how wages are determined in a specific labor market
B) how to use the fewest natural resources to produce public goods
C) what is happening in the economy as a whole
D) how consumers and producers interact in individual markets
E) the price and the quantity exchanged in a market

Question 42

Macroeconomics is the branch of economics that concerns

A) the behavior of individual actors in the economy
B) output in a specific industry
C) the overall health of the economy
D) the federal government only
E) prices in a specific industry

Question 43

The overall performance of the economic system as a whole is the focus of

A) international finance
B) labor economics
C) microeconomics
D) macroeconomics
E) public economics

Question 44

Microeconomics is the branch of economics that concerns

A) the overall health of the economy
B) the behavior of individual households,firms,and governments
C) the overall level of trade between nations
D) local governments only
E) the general level of output

Question 45

Microeconomic topics include the overall unemployment rate in the United States and the rate of inflation.

Question 46

How retail gasoline stations behave in a local market is an example of a macroeconomic issue.

Question 47

Which of the following would be studied in macroeconomics?

A) a drop in the price of personal computers
B) an individual household's decision on how to allocate its spending power
C) a rise in employment in movie theaters across the nation
D) total output in the nation
E) a local bank's increase in the interest rate offered on savings deposits

Question 48

Microeconomics is the study of

A) government decisions
B) the federal government's budget
C) the economic behavior of entire nations
D) the economic behavior of individual decision makers
E) the overall economy

Question 49

Suppose that the following headlines appeared in a newspaper.Which would most clearly represent a macroeconomic issue?

A) "Central Bank Raises Interest Rates"
B) "Auto Dealership to Cut Prices"
C) "Fanny's Freeze Dried Prunes to Lay Off 50 Workers"
D) "United Workers Union to Strike April 15"
E) "Brazilian Coffee Bean Crop Falls by 10 Percent"

Question 50

A microeconomist might study which of the following?

A) how inflation changes over time for several countries
B) how money supply aggregates are measured
C) economic growth in less-developed countries in Africa
D) the relationship between aggregate income and aggregate personal consumption
E) why wages for females are lower than for males in a particular labor market

Question 51

Macroeconomics focuses on the behavior of economic agents such as the consumer,a business firm,or a specific market.

Question 52

Macroeconomics is the study of

A) how the price of gasoline is determined
B) large objects
C) the economic behavior of individual decision makers
D) the behavior of the economy as a whole
E) the economic behavior of individual firms

Question 53

Which of the following would be strictly a microeconomic topic?

A) a general rise in interest rates
B) a drop in inflation
C) an increase in total production in the United States
D) a drop in the nation's unemployment rate
E) an increase in the price of the Ford Taurus

Question 54

Macroeconomics focuses on the economy as a whole.

Question 55

Macroeconomics studies the determination of

A) total output,total employment,the general price level,and the general level of interest rates
B) total output and the general level of interest rates only
C) total employment and the general level of prices only
D) the interaction of individual economic actors in specific markets and industries
E) the levels of employment and prices in specific markets and industries

Question 56

Microeconomics deals with which of the following?

A) the total output of an economy
B) the measurement of a nation's inflation rate
C) how producers and consumers interact in individual markets
D) how tax policies influence economic growth
E) whether wage growth will outpace inflation in the coming year

Question 57

Microeconomics analyzes individual parts of the economy rather than broad economic aggregates.

Question 58

Microeconomics

A) addresses scarcity from a global perspective
B) examines how individuals,households,and firms make economic decisions
C) is purely theoretical and has little value in explaining real-world phenomena
D) focuses on what is happening in the economy as a whole
E) answers the fundamental economic questions of how,when,where,and why

Question 59

The study of how consumers and producers interact in individual markets is

A) macroeconomics
B) labor economics
C) microeconomics
D) econometrics
E) development economics

Question 60

The study of how firms interact in a market is a

A) waste of time
B) normative subject
C) microeconomic topic
D) topic in political science
E) macroeconomic topic

Question 61

Positive economics deals with

A) value judgments
B) how the economy does work
C) how the economy should work
D) how the federal government should operate
E) what the price level should be

Question 62

The price that a firm's only competitor charges would be a

A) topic in microeconomics
B) topic in finance
C) macroeconomic topic
D) topic in public finance
E) normative issue

Question 63

When economists disagree about whether legislation is a good idea,even when they agree about its impacts,the disagreements are usually over

A) normative issues
B) positive issues
C) the mathematical calculations in an economic model
D) whether microeconomics or macroeconomics is more important
E) whether economic theory is useful in explaining the behavior of actors in the economy

Question 64

Suppose two economists agree about who would be helped or hurt by certain legislation,but disagree about whether the legislation would be a good idea.These disagreements

A) are positive in nature
B) are minor and rarely lead to different policies or conclusions
C) are normative in nature
D) occur as the result of a mistake made by an economist
E) occur because economic models are more complex,and subject to error,than the real world

Question 65

If the president of Chile commented that "the crime rate in Chile is currently too high," this would be an example of a normative statement.

Question 66

The unemployment rate for the economy as a whole is a(n)

A) normative value judgment
B) positive value judgment
C) microeconomic statistic
D) macroeconomic statistic
E) example of an economic model

Question 67

The Congressional Budget Office and the Office of Management and Budget each produce deficit forecasts for a fiscal year.They use models that are mostly similar but have notable differences.As such,the disagreements are likely usually over

A) normative issues
B) positive issues
C) the mathematical calculations in an economic model
D) whether microeconomics or macroeconomics is more important
E) whether economic theory is useful in explaining the behavior of actors in the economy

Question 68

The price of apples in Denver,Colorado is

A) a normative value judgment
B) an example of a factor of production
C) a microeconomic variable
D) a macroeconomic variable
E) not the sort of thing that economists would try to explain

Question 69

The distinction between positive and normative economics

A) is that positive economics applies only to microeconomic problems
B) is that normative economics applies only to microeconomic problems
C) is the difference between an assumption and a conclusion
D) helps us understand why economists sometimes disagree with one another
E) explains why economics is not a social science

Question 70

"The Consumer Price Index increased by 4.2 percent in the first quarter of this year." What type of statement is this?

A) normative
B) negative
C) positive
D) subjective
E) biased

Question 71

Economists disagree about whether increasing the minimum wage is a good idea,because they put different weight on the importance that the negative impacts have relative to the positive impacts.As such,the disagreements are usually over

A) normative issues
B) positive issues
C) the mathematical calculations in an economic model
D) whether microeconomics or macroeconomics is more important
E) whether economic theory is useful in explaining the behavior of actors in the economy

Question 72

Understanding the distinction between positive and normative economic statements is important because it

A) enables us to derive better forecasts of macroeconomic aggregates such as GDP
B) explains why economics is not a physical science
C) is the primary distinction between macroeconomics and microeconomics
D) provides a framework for understanding differences among economists
E) enables us to see the rationale behind economic models

Question 73

An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of

A) positive economics
B) normative economics
C) negative economics
D) a simplifying assumption
E) microeconomic analysis

Question 74

Positive economic statements are usually easier to refute with data than normative economic statements are.

Question 75

The inflation rate for the economy as a whole is a

A) normative value judgment
B) positive value judgment
C) macroeconomic statistic
D) microeconomic statistic
E) critical assumption

Question 76

Which of the following is the study of economic policy recommendations?

A) positive economics
B) law and economics
C) microeconomics
D) development economics
E) normative economics

Question 77

Economists disagree about many things.When those disagreements are about which model best explains the economy,these disagreements are primarily over "positive" statements.

Question 78

Macroeconomic models focus on the behavior of

A) individual households,business firms,and government agencies
B) individual nations in the foreign trade sector
C) the entire economy
D) large industrial sectors,such as manufacturing
E) individual business firms and government agencies

Question 79

Microeconomic models focus on the behavior of

A) all households,businesses,and government sectors at the same time
B) the household sector as a whole
C) individual households and business firms
D) individual households,business firms,and government agencies
E) the business and government sectors

Question 80

Suppose two economists disagree about who would be helped or hurt by certain legislation.These disagreements

A) are positive in nature
B) are minor and rarely lead to different policies or conclusions
C) are normative in nature
D) occur as the result of a mistake made by an economist
E) occur because economic models are more complex,and subject to error,than the real world