Question 1

Which of the following statements is an example of positive economic analysis?

Accepted Answer

A)  The inflation rate is too high.
B)  The government should worry less about inflation and more about unemployment.
C)  If the government increases the rate of growth of the money supply,the inflation rate will increase,ceteris paribus.
D)  The elderly live on a fixed income,so the government has an obligation to keep inflation rates low.E) A) and B)
F) A) and C)

Question 2

Do economists analyze people's thought processes or do they look at what people actually do?

Accepted Answer

A)  Economists focus only on people's thought processes.
B)  Economists focus on what people do,not their thought processes.
C)  An economist's focus is about half-and-half between actions and thought processes.
D)  Macroeconomists focus on thought processes while microeconomists focus on actions.E) B) and D)
F) None of the above

Question 3

Models must

Accepted Answer

A)  be able to yield useable predictions.
B)  be totally realistic in every detail.
C)  be a complete reproduction of the real world.
D)  include every relationship that exists.E) All of the above
F) A) and B)

Question 4

The relationship between beers consumed the night before an exam and test grade will be graphed as

Accepted Answer

A)  a line sloping down from upper right to lower left.
B)  a line sloping down from upper left to lower right.
C)  a circle.
D)  a u-shaped curve.E) A) and C)
F) A) and B)

Question 5

What does scarcity have to do with the fact that people must make choices?

Accepted Answer

Scarcity implies that people cannot have...

Question 6

Self-interest relates to

Accepted Answer

A)  only monetary objectives.
B)  both monetary and nonmonetary objectives.
C)  the ceteris paribus assumption.
D)  normative economic analysis and not positive economic analysis.E) A) and B)
F) B) and C)

Question 7

Microeconomics is concerned with the study of

Accepted Answer

A)  the effects of inflation.
B)  the effects of government spending.
C)  the effects on individual producers of higher wages paid to workers.
D)  aggregates.E) None of the above
F) A) and C)

Question 8

Microeconomics is the study of

Accepted Answer

A)  the behavior of the economy as a whole.
B)  how rising prices affect the level of employment in the economy.
C)  how individuals and firms make decisions.
D)  the effect that money has in the economic system.E) A) and D)
F) C) and D)

Question 9

"To be useful,a model must be completely realistic." Evaluate.

Accepted Answer

This statement is incorrect.To be useful...

Question 10

Another word for "aggregate" is

Accepted Answer

A)  government.
B)  partial.
C)  public.
D)  total.E) A) and B)
F) All of the above

Question 11

Economists assume people are motivated by

Accepted Answer

A)  unlimited resources.
B)  pride.
C)  self-interest.
D)  social justice.E) A) and D)
F) B) and C)

Question 12

Economic models

Accepted Answer

A)  should be designed so as to capture every detail or interrelationship that exists.
B)  are simplified representations of the real world.
C)  must employ the use of laboratory methods.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 13

What is the purpose of knowing "the economic way of thinking"?

Accepted Answer

The economic way of thinking provides a ...

Question 14

Which of the following statements concerning economic models is FALSE?

Accepted Answer

A)  Economic models must provide usable predictions.
B)  Economic models are based on pure fact and no assumptions.
C)  Economic models are tested empirically.
D)  Economic models relate to how people behave.E) A) and D)
F) A) and B)

Question 15

Whenever statements embodying values are made,we enter the realm of

Accepted Answer

A)  positive economics.
B)  normative economics.
C)  microeconomics.
D)  macroeconomics.E) All of the above
F) C) and D)

Question 16

The assumption that individuals do NOT intentionally make decisions that would leave them worse off is referred to as

Accepted Answer

A)  the premium assumption.
B)  the law of comparative advantage.
C)  the rationality assumption.
D)  the law of demand.E) C) and D)
F) None of the above

Question 17

Macroeconomics is concerned primarily with

Accepted Answer

A)  positive economics.
B)  production and prices in particular markets.
C)  aggregate economic variables.
D)  normative issues.E) All of the above
F) B) and C)

Question 18

Which of the following describes that people cannot examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them?

Accepted Answer

A)  self-interest
B)  bounded rationality
C)  ceteris paribus
D)  normative economicsE) All of the above
F) A) and B)

Question 19

Which of the following is a normative economic statement?

Accepted Answer

A)  Few auto mechanics are women.
B)  Men and women should earn the same salary if they perform the same job.
C)  Auto mechanics typically earned more than waitresses in the United States in 2004.
D)  Most wait staff are women.E) B) and C)
F) None of the above

Question 20

A fundamental aspect of economics is to

Accepted Answer

A)  ensure that every firm makes a profit.
B)  analyze how choices are made.
C)  satisfy all our wants.
D)  make sure that our resources will always be unlimited.E) All of the above
F) A) and B)

Exam 1: The Nature of Economics

What is the purpose of knowing "the economic way of thinking"?

Correct AnswerverifiedThe economic way of thinking provides a ...View AnswerShow Answer

A fundamental aspect of economics is to

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Models must

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Macroeconomics is concerned primarily with

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Which of the following statements is an example of positive economic analysis?

Correct AnswerverifiedShow Answer

Economists assume people are motivated by

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Microeconomics is concerned with the study of

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Whenever statements embodying values are made,we enter the realm of

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The assumption that individuals do NOT intentionally make decisions that would leave them worse off is referred to as

Correct AnswerverifiedShow Answer

Microeconomics is the study of

Correct AnswerverifiedShow Answer

Which of the following describes that people cannot examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them?

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Do economists analyze people's thought processes or do they look at what people actually do?

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Economic models

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Self-interest relates to

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Which of the following statements concerning economic models is FALSE?

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The relationship between beers consumed the night before an exam and test grade will be graphed as

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Another word for "aggregate" is

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Which of the following is a normative economic statement?

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"To be useful,a model must be completely realistic." Evaluate.

Correct AnswerverifiedThis statement is incorrect.To be useful...View AnswerShow Answer

What does scarcity have to do with the fact that people must make choices?

Correct AnswerverifiedScarcity implies that people cannot have...View AnswerShow Answer

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The economic way of thinking provides a ...
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This statement is incorrect.To be useful...
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Scarcity implies that people cannot have...
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