Question 1

"Ceteris paribus" is a Latin expression that essentially means "holding everything else constant."

Accepted Answer

A) True 
 B)False

Question 2

If the price of a textbook rises and then students purchase fewer textbooks, an economic model can show a cause-and-effect relationship only if which of the following conditions holds:

Accepted Answer

A)  students' incomes fall. 
B)  tuition decreases. 
C)  the number of students increases. 
D)  everything else is constant. 
E)  the bookstore no longer accepts used book trade-ins.

Question 3

Which of the following is an example of a positive economic statement?

Accepted Answer

A)  The economy's real output increased at about 3 percent last year and the unemployment rate decreased. 
B)  A central bank should not print too much money because inflation could result. 
C)  Congress should stabilize the social security system by raising taxes now. 
D)  The government farm products surplus should be distributed to the needy.

Question 4

Exhibit 1A-6 Straight line 
-A change in a third variable not on either axis of a graph is illustrated with a:

Accepted Answer

A)  horizontal or vertical line. 
B)  movement along a curve. 
C)  shift of a curve. 
D)  point of intersection.

Question 5

Campaign speeches normally include normative economic statements.

Accepted Answer

A) True 
 B)False

Question 6

The slope of a line parallel to the vertical axis is:

Accepted Answer

A)  1. 
B)  0. 
C)  infinite. 
D)  undefined.

Question 7

Exhibit 1A-1 Straight line
​ 
-In Exhibit 1A-1, as X increases along the horizontal axis, corresponding to points A-B on the line, the Y values increase. The relationship between the X and Y variables is:

Accepted Answer

A)  direct. 
B)  inverse. 
C)  independent. 
D)  variable.

Question 8

A sub-discipline of economics that looks at the economy as a whole is:

Accepted Answer

A)  macroeconomics. 
B)  microeconomics. 
C)  positive economics. 
D)  normative economics. 
E)  impossible to model.

Question 9

In a congressional debate about agricultural price supports, senators, members of congress, and other experts made the following four statements. Which of these is a normative statement?

Accepted Answer

A)  "Price supports are important because America should preserve the small family farm." 
B)  "Without price supports, the price of wheat and corn will fall by over twenty percent." 
C)  "The decline in commodity prices caused by the removal of price supports will result in fewer, larger farms." 
D)  "The decline in commodity prices caused by the removal of price supports will reduce the number of tractors sold in the United States."

Question 10

The slope of a line is calculated as the ratio of the "rise" over the "run".

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 1A-6 Straight line 
-In Exhibit 1A-6, the slope of straight line A-D is:

Accepted Answer

A)  greater than 1. 
B)  equal to 1. 
C)  less than 1. 
D)  zero.

Question 12

Which of the following is used to illustrate an independent relationship between two variables?

Accepted Answer

A)  An upward-sloping curve 
B)  A downward-sloping curve 
C)  A hill-shaped curve 
D)  A horizontal or vertical line

Question 13

Economists use models to:

Accepted Answer

A)  abstract from the complexities of the world. 
B)  understand economic behavior. 
C)  explain and help predict human behavior. 
D)  do all of these.

Question 14

A downward-sloping straight line exhibits a direct relationship between two variables.

Accepted Answer

A) True 
 B)False

Question 15

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.

Question 16

When building a model, an economist must:

Accepted Answer

A)  adjust for exceptional situations. 
B)  provide a complete description of reality. 
C)  make simplifying assumptions. 
D)  develop a set of behavioral equations.

Question 17

Normative economics deals with ____ and positive economics deals with ____.

Accepted Answer

A)  what should be; what is 
B)  fiction; fact 
C)  microeconomics; macroeconomics 
D)  negative aspects; positive aspects 
E)  changing circumstances; same circumstances

Question 18

"The government should provide health care for all citizens." This statement is an illustration of:

Accepted Answer

A)  positive economic analysis. 
B)  correlation analysis. 
C)  fallacy of association analysis. 
D)  normative economic analysis.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is included in the study of macroeconomics?

Accepted Answer

A)  Wage rate of college students. 
B)  Prices of automobiles. 
C)  Unemployment in the nation. 
D)  Price of silver and gold.

Exam 1: Introducing the Economic Way of Thinking

"Ceteris paribus" is a Latin expression that essentially means "holding everything else constant."

If the price of a textbook rises and then students purchase fewer textbooks, an economic model can show a cause-and-effect relationship only if which of the following conditions holds:

Which of the following is an example of a positive economic statement?

Exhibit 1A-6 Straight line -A change in a third variable not on either axis of a graph is illustrated with a:

Campaign speeches normally include normative economic statements.

The slope of a line parallel to the vertical axis is:

Exhibit 1A-1 Straight line -In Exhibit 1A-1, as X increases along the horizontal axis, corresponding to points A-B on the line, the Y values increase. The relationship between the X and Y variables is:

A sub-discipline of economics that looks at the economy as a whole is:

In a congressional debate about agricultural price supports, senators, members of congress, and other experts made the following four statements. Which of these is a normative statement?

The slope of a line is calculated as the ratio of the "rise" over the "run".

Exhibit 1A-6 Straight line -In Exhibit 1A-6, the slope of straight line A-D is:

Which of the following is used to illustrate an independent relationship between two variables?

Economists use models to:

A downward-sloping straight line exhibits a direct relationship between two variables.

Which of the following represents a positive statement?

When building a model, an economist must:

Normative economics deals with and positive economics deals with .

"The government should provide health care for all citizens." This statement is an illustration of:

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

Which of the following is included in the study of macroeconomics?

Exam 1: Introducing the Economic Way of Thinking

"Ceteris paribus" is a Latin expression that essentially means "holding everything else constant."

If the price of a textbook rises and then students purchase fewer textbooks, an economic model can show a cause-and-effect relationship only if which of the following conditions holds:

Which of the following is an example of a positive economic statement?

Exhibit 1A-6 Straight line -A change in a third variable not on either axis of a graph is illustrated with a:

Campaign speeches normally include normative economic statements.

The slope of a line parallel to the vertical axis is:

Exhibit 1A-1 Straight line ​ -In Exhibit 1A-1, as X increases along the horizontal axis, corresponding to points A-B on the line, the Y values increase. The relationship between the X and Y variables is:

A sub-discipline of economics that looks at the economy as a whole is:

In a congressional debate about agricultural price supports, senators, members of congress, and other experts made the following four statements. Which of these is a normative statement?

The slope of a line is calculated as the ratio of the "rise" over the "run".

Exhibit 1A-6 Straight line -In Exhibit 1A-6, the slope of straight line A-D is:

Which of the following is used to illustrate an independent relationship between two variables?

Economists use models to:

A downward-sloping straight line exhibits a direct relationship between two variables.

Which of the following represents a positive statement?

When building a model, an economist must:

Normative economics deals with ____ and positive economics deals with ____.

"The government should provide health care for all citizens." This statement is an illustration of:

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

Which of the following is included in the study of macroeconomics?

Exhibit 1A-1 Straight line -In Exhibit 1A-1, as X increases along the horizontal axis, corresponding to points A-B on the line, the Y values increase. The relationship between the X and Y variables is:

Normative economics deals with and positive economics deals with .