Question 1

Normative economic statements refer to what should be.

Accepted Answer

A) True 
 B)False

Question 2

As a scientist, an economist's main professional objective is to become wealthy.

Accepted Answer

A) True 
 B)False

Question 3

The problem of scarce resources

Accepted Answer

A)  means that in some cities there are not enough jobs
B)  could be solved if the unemployment rate fell
C)  is that there are not enough resources to satisfy people's unlimited wants
D)  is that resources are used inefficiently
E)  can be solved by lowering taxes

Question 4

Which of the following is not a part of the scientific method in economics?

Accepted Answer

A)  normative statements
B)  comparing predictions to evidence
C)  formulating a hypothesis
D)  a hypothesis
E)  behavioral assumptions

Question 5

One problem with rent controls is that policy makers often ignore its secondary effects.

Accepted Answer

A) True 
 B)False

Question 6

Goods and services are scarce because

Accepted Answer

A)  people are greedy
B)  they are produced using scarce resources
C)  firms keep production low in order to earn higher profits
D)  they are produced by firms that seeks profits
E)  government wants to maintain its power over the economy

Question 7

An economic model

Accepted Answer

A)  always has a mathematical foundation
B)  can never be proven wrong
C)  can be constructed for an individual economic unit but not for the economy as a whole
D)  is a simplification of the real world
E)  can be constructed for the economy as a whole but not for an individual economic unit

Question 8

Which of the following is an accurate list, in order, of the steps of the scientific process?

Accepted Answer

A)  define variables; state assumptions; form a hypothesis; test
B)  state assumptions; define variables; form a hypothesis; test
C)  identify variables; state assumptions; test; form a hypothesis
D)  identify variables; form "other things equal" assumptions; form behavioral assumptions; test
E)  form "other things equal" assumptions; form behavioral assumptions; form hypothesis; test

Question 9

Economic theory

Accepted Answer

A)  expresses normative values
B)  invents imaginative and interesting stories
C)  predicts the behavior of a specific economic decision maker after an economic change
D)  predicts the average behavior of a group of similar economic decision makers after an economic change
E)  uses only perfect and complete information

Question 10

"Natural resources" refers to

Accepted Answer

A)  bodies of water
B)  trees
C)  oil reserves
D)  minerals
E)  All of the answers are correct.

Question 11

Most economists consider a theory a good one if it predicts well.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an example of a normative statement?

Accepted Answer

A)  If the money supply falls, interest rates will rise.
B)  Teenage unemployment would be lower if there were no minimum wage.
C)  The quantity of shirts sold increases as the price of shirts decreases.
D)  The federal government's total spending should be reduced.
E)  If interest rates go up, then construction activity will fall.

Question 13

Which of the following is true about entrepreneurs?

Accepted Answer

A)  They have the talent required to dream up a new product or find a better way to produce an existing one.
B)  They are rewarded by profits.
C)  They sometimes suffer losses.
D)  They benefit from what's left over after paying other resource suppliers.
E)  All of the answers are correct.

Question 14

A good economic theory

Accepted Answer

A)  has realistic assumptions
B)  contains as much detail as possible
C)  cannot be proven false
D)  predicts well
E)  can only be presented in mathematical terms

Question 15

Economics studies how decision makers use scarce resources to satisfy unlimited wants.

Accepted Answer

A) True 
 B)False

Question 16

A normative economic statement

Accepted Answer

A)  is a hypothesis used to test economic theory
B)  is a statement of fact
C)  is a statement of what ought to be, not what is
D)  indicates what will occur if certain assumptions are true
E)  enables economists to test hypotheses

Question 17

Unlike a "service," a "good"

Accepted Answer

A)  is desirable
B)  uses resources to satisfy wants
C)  is physical and tangible
D)  is abundant and free
E)  is a resource

Question 18

Theory seeks to

Accepted Answer

A)  simplify a complex reality
B)  confront reality in all its complexity by focusing on the unique aspects of each phenomenon
C)  explain phenomena without predicting them
D)  predict phenomena without explaining them
E)  distort reality in order to improve forecasting ability

Question 19

It is always rational to acquire more information before making a decision.

Accepted Answer

A) True 
 B)False

Question 20

The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

Accepted Answer

A)  microeconomics
B)  macroeconomics
C)  positive economics
D)  normative economics
E)  disequilibrium economics

Exam 1: The Art and Science of Economic Analysis

Normative economic statements refer to what should be.

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Which of the following is an example of a normative statement?

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The economic behavior of individual decision makers and the determination of price and output in specific markets are both studied in

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A normative economic statement

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Economic theory

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Which of the following is an accurate list, in order, of the steps of the scientific process?

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Unlike a "service," a "good"

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The problem of scarce resources

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Most economists consider a theory a good one if it predicts well.

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An economic model

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One problem with rent controls is that policy makers often ignore its secondary effects.

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It is always rational to acquire more information before making a decision.

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Theory seeks to

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Which of the following is not a part of the scientific method in economics?

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Goods and services are scarce because

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As a scientist, an economist's main professional objective is to become wealthy.

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Which of the following is true about entrepreneurs?

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A good economic theory

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Economics studies how decision makers use scarce resources to satisfy unlimited wants.

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"Natural resources" refers to

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