Question 1

In economics, all the items that people would consume if they had unlimited income are known as

Accepted Answer

A)   wants.
B)   aggregates.
C)   outputs.
D)   needs.

Question 2

Which of the following statements is a positive economic statement?

Accepted Answer

A)   The Congress should pass the president's tax package.
B)   Tax rebates always give too much favor to rich people.
C)   The President's budget included an increase in unemployment insurance payments.
D)   none of the above

Question 3

If a teacher tells a student that those who attend the study session typically score higher on the final exam,

Accepted Answer

A)   the student has a positive incentive to attend the study session because she may get a higher grade.
B)   the student has a negative incentive to attend the study session because she will be punished if she does not go.
C)   the student has no greater incentive to attend because there is no guarantee she will get a higher grade on the exam.
D)   a "C" student will be making an irrational decision if she decides to skip the study session since she has plenty of time to go.

Question 4

High gasoline prices give people all of the following incentives EXCEPT

Accepted Answer

A)   to drive less.
B)   to car pool.
C)   to buy a hybrid car.
D)   to take vacations that require driving more miles.

Question 5

A negative slope

Accepted Answer

A)   represents an inverse relationship, such as beers consumed and test score.
B)   represents a direct relationship, such as snow fall and car accidents.
C)   indicates that there is no relationship between two variables, such as women's wages and likelihood of sunshine.
D)   means that the line crosses below the x-axis.

Question 6

The headline in the local paper today is "College tuition next fall will be raised by 3 percent." This statement is an example of

Accepted Answer

A)   a normative statement.
B)   a positive statement.
C)   a macroeconomic statement.
D)   ceteris paribus.

Question 7

Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using

Accepted Answer

A)   the ceteris paribus assumption.
B)   an economic model based on unrealistic assumptions.
C)   a flawed economic model.
D)   an untestable proposition.

Question 8

Economics is most precisely defined as

Accepted Answer

A)   a study of what people need to survive.
B)   a study of how culture evolves in different geographic areas.
C)   the same as the study of finance and management.
D)   the study of how people make choices.

Question 9

Explain the study of economics.

Accepted Answer

Economics is the study of how people all...

Question 10

Microeconomics is the study of

Accepted Answer

A)   aggregate measures of the economy.
B)   foreign policy economic issues.
C)   federal budget details.
D)   individual decision making.

Question 11

A simplified representation of the real world that is used to explain economic phenomena is a(n)

Accepted Answer

A)   map.
B)   model.
C)   assumption.
D)   implication.

Question 12

In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as

Accepted Answer

A)   rationality.
B)   ceteris paribus.
C)   normative economics.
D)   behavioral economics.

Question 13

-In the above graphs a direct relationship is shown by

Accepted Answer

A)   Graph A.
B)   Graph B.
C)   Graph C.
D)   Graph D.

Question 14

Which of the following is NOT one of the basic questions that an economic system attempts to answer?

Accepted Answer

A)   How to eliminate choices?
B)   What to produce?
C)   How much will goods and services be produced?
D)   For whom will goods and services be produced?

Question 15

The slope of a nonlinear curve is ________ when the curve is rising, and ________ when the curve is falling.

Accepted Answer

A)   negative, positive
B)   negative, negative
C)   positive, negative
D)   positive, positive

Question 16

An appropriate test of the effectiveness of an economic model is

Accepted Answer

A)   the number of variables contained within the model.
B)   the model's ability to predict future economic activity.
C)   the number of economists who have worked on the model.
D)   the number of assumptions which the economist has made.

Question 17

If psychological limitations and other complications cause people to be unable to examine and think through every possible choice available to them and rely instead on rules of thumb, then these individuals exhibit

Accepted Answer

A)   unbounded rationality.
B)   normative thinking.
C)   bounded rationality.
D)   positive thinking.

Question 18

Based on your understanding of your roommate's preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. How do you describe this event in terms of economic theory?

Accepted Answer

A)   Your roommate is irrational.
B)   Your roommate does not know what is in his own best interests.
C)   You roommate does not know his own preferences as well as you do.
D)   You constructed a model that made a prediction, and the prediction was refuted.

Question 19

A positive economic statement is one that

Accepted Answer

A)   can be refuted.
B)   is free of the ceteris paribus assumption.
C)   is based on a value judgment.
D)   asserts something about the role of moral behavior in building a strong economy.

Question 20

The ceteris paribus assumption is important in economics because

Accepted Answer

A)   all empirical data are equal.
B)   it would be impossible to relate the effects of changes in one variable on another without holding some variables constant.
C)   economic data move very slowly over time and so they can always be considered constant.
D)   models are always complex and require as many variables as possible.

Exam 1: The Nature of Economics

In economics, all the items that people would consume if they had unlimited income are known as

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A positive economic statement is one that

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If a teacher tells a student that those who attend the study session typically score higher on the final exam,

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Which of the following statements is a positive economic statement?

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Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using

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The headline in the local paper today is "College tuition next fall will be raised by 3 percent." This statement is an example of

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The ceteris paribus assumption is important in economics because

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Microeconomics is the study of

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A simplified representation of the real world that is used to explain economic phenomena is a(n)

Correct AnswerverifiedShow Answer

Economics is most precisely defined as

Correct AnswerverifiedShow Answer

The slope of a nonlinear curve is ________ when the curve is rising, and ________ when the curve is falling.

Correct AnswerverifiedShow Answer

If psychological limitations and other complications cause people to be unable to examine and think through every possible choice available to them and rely instead on rules of thumb, then these individuals exhibit

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High gasoline prices give people all of the following incentives EXCEPT

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In order to study how changing price affects consumer decisions, we must assume all other factors, such as income and the prices of other goods are constant. This assumption is best know as

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An appropriate test of the effectiveness of an economic model is

Correct AnswerverifiedShow Answer

A negative slope

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Explain the study of economics.

Correct AnswerverifiedEconomics is the study of how people all...View AnswerShow Answer

Which of the following is NOT one of the basic questions that an economic system attempts to answer?

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Based on your understanding of your roommate's preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. How do you describe this event in terms of economic theory?

Correct AnswerverifiedShow Answer

-In the above graphs a direct relationship is shown by

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The slope of a nonlinear curve is when the curve is rising, and when the curve is falling.

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Economics is the study of how people all...
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