Question 1

An economic theory is also known as an economic

Accepted Answer

A)  model.
B)  art.
C)  miracle.
D)  assumption.E) B) and C)
F) A) and D)

Question 2

Economic models relate to

Accepted Answer

A)  people's choices.
B)  how people think about something.
C)  group opinions.
D)  the reasons people give for donating to charity.E) None of the above
F) A) and C)

Question 3

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

Accepted Answer

A)  Farmers need some type of government aid.
B)  State governments should provide economic assistance to farmers.
C)  The federal government should provide economic assistance to farmers.
D)  The amount of financial assistance given to farmers is higher this year than it was 10 years ago.E) A) and C)
F) None of the above

Question 4

Professor's economics students are constructing models for how gasoline prices change.Maria's model has very realistic assumptions and is quite complex.Anna's model is less complicated and less realistic.Maria's model correctly predicts gas price increases 5% of the time.Anna's model predicts correctly 15% of the time.On the basis of usefulness or "goodness," Professor will give which student's model the higher grade and why?

Accepted Answer

A)  Maria's model gets the higher grade because it is more complex.
B)  Anna's model gets the higher grade because it is simpler.
C)  Maria's model gets the higher grade because it is more realistic.
D)  Anna's model gets the higher grade because it predicts accurately more often.E) C) and D)
F) All of the above

Question 5

Why do economists test their hypotheses?

Accepted Answer

A)  to see whether people are motivated by self-interest
B)  to see whether their models predict the choices people will make
C)  to determine whether government policies have effectively achieved their goals
D)  to learn what people are thinking when they make the choices they doE) A) and D)
F) A) and C)

Question 6

John has an economics test tomorrow.He must study and has planned the rest of his day so that he can fit some study time in.He has decided to go to the gym and then study for several hours.Which of the following statements is true?

Accepted Answer

A)  John did not use the economic way of thinking because his decision on how to allocate his time did not involve money.
B)  John's decision on how to allocate his time is inconsistent with the rationality assumption since he has decided to go to the gym.
C)  John's decision on how to allocate his time is consistent with the rationality assumption since the decision is intended to make him better off.
D)  John's decision does not involve his pursuit of self-interest.E) C) and D)
F) None of the above

Question 7

Microeconomics focuses on

Accepted Answer

A)  individual decision makers within the economy.
B)  the large parts of the economy.
C)  changes in national income.
D)  satisfying the needs of the economy.E) B) and D)
F) B) and C)

Question 8

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.E) B) and C)
F) B) and D)

Question 9

A friend wants to learn how the unemployment rate is calculated and how inflation is measured.He asks you which economics course to take and you advise him to enroll in

Accepted Answer

A)  macroeconomics.
B)  microeconomics.
C)  either micro- or macroeconomics.They both concentrate equally on those issues.
D)  financial accounting because economics doesn't address those topics in its courses.E) A) and C)
F) A) and B)

Question 10

The hypothesis that people are nearly,but not fully rational,cannot possibly fully examine every available choice,and utilize simple rules of thumb in making decisions is known as the

Accepted Answer

A)  irrationality hypothesis.
B)  ceteris paribus hypothesis.
C)  individual aggregation hypothesis.
D)  bounded rationality hypothesis.E) A) and B)
F) B) and D)

Question 11

The term or phrase most likely to indicate a normative statement is

Accepted Answer

A)  "ceteris paribus."
B)  "factual." or "what is" statement.
C)  "holding other things constant."
D)  "should" or "ought to."E) B) and C)
F) A) and B)

Question 12

Which of the following is a positive economic statement?

Accepted Answer

A)  No individual should live in poverty.
B)  The rate of unemployment of young African-Americans exceeds that of white Americans.
C)  Unemployment is a more serious problem than inflation.
D)  Economic considerations are less relevant than ethical issues in deciding national policy.E) C) and D)
F) A) and D)

Question 13

Economists assume people behave

Accepted Answer

A)  instinctively.
B)  rationally.
C)  irrationally.
D)  greedily.E) A) and B)
F) All of the above

Question 14

Distinguish between macroeconomics and microeconomics.

Accepted Answer

Macroeconomics is concerned with the beh...

Question 15

Normative economic statements

Accepted Answer

A)  violate the law of ceteris paribus.
B)  contain value judgments.
C)  are usually irrational.
D)  are easily testable.E) B) and C)
F) All of the above

Question 16

Which of the following statements is a normative as opposed to a positive economic statement?

Accepted Answer

A)  Consumer spending generates more jobs.
B)  If the price of gasoline goes up,people buy less.
C)  Labor unions should be allowed to organize in every industry.
D)  Government intervention in markets is common in many countries.E) A) and B)
F) B) and D)

Question 17

Resources are

Accepted Answer

A)  unlimited.
B)  able to be replicated in large quantities.
C)  what people would buy if their income was unlimited.
D)  used to produce goods and services to satisfy people's wants.E) B) and C)
F) C) and D)

Question 18

Which of the following is always true of rational behavior?

Accepted Answer

A)  It always entails pursuing one's own best interest.
B)  It always yields the best possible outcome for all individuals.
C)  It never involves the pursuit of greedy self-interest.
D)  It never involves taking into account the interests of others.E) B) and D)
F) B) and C)

Question 19

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.E) B) and C)
F) C) and D)

Question 20

Economics deals with

Accepted Answer

A)  how to profit from the stock market.
B)  how to satisfy limited human wants.
C)  how society allocates unlimited resources.
D)  how individuals allocate scarce resources to satisfy unlimited human wants.E) A) and B)
F) A) and C)

Exam 1: The Nature of Economics

Normative economic statements

Correct Answer
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Distinguish between macroeconomics and microeconomics.

Correct Answer
verified
Macroeconomics is concerned with the beh...
View 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

Correct Answer
verified

Which of the following statements is a normative as opposed to a positive economic statement?

Correct Answer
verified

Economic models relate to

Correct Answer
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The hypothesis that people are nearly,but not fully rational,cannot possibly fully examine every available choice,and utilize simple rules of thumb in making decisions is known as the

Correct Answer
verified

The term or phrase most likely to indicate a normative statement is

Correct Answer
verified

Resources are

Correct Answer
verified

John has an economics test tomorrow.He must study and has planned the rest of his day so that he can fit some study time in.He has decided to go to the gym and then study for several hours.Which of the following statements is true?

Correct Answer
verified

An economic theory is also known as an economic

Correct Answer
verified

Microeconomics focuses on

Correct Answer
verified

Economists assume people behave

Correct Answer
verified

Why do economists test their hypotheses?

Correct Answer
verified

High gasoline prices give people all of the following incentives EXCEPT

Correct Answer
verified

Economics deals with

Correct Answer
verified

Which of the following is always true of rational behavior?

Correct Answer
verified

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

Correct Answer
verified

A friend wants to learn how the unemployment rate is calculated and how inflation is measured.He asks you which economics course to take and you advise him to enroll in

Correct Answer
verified

Which of the following is a positive economic statement?

Correct Answer
verified

Correct Answer
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Exam 1: The Nature of Economics

Normative economic statements

Correct AnswerverifiedShow Answer

Distinguish between macroeconomics and microeconomics.

Correct AnswerverifiedMacroeconomics is concerned with the beh...View AnswerShow 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

Correct AnswerverifiedShow Answer

Which of the following statements is a normative as opposed to a positive economic statement?

Correct AnswerverifiedShow Answer

Economic models relate to

Correct AnswerverifiedShow Answer

The hypothesis that people are nearly,but not fully rational,cannot possibly fully examine every available choice,and utilize simple rules of thumb in making decisions is known as the

Correct AnswerverifiedShow Answer

The term or phrase most likely to indicate a normative statement is

Correct AnswerverifiedShow Answer

Resources are

Correct AnswerverifiedShow Answer

John has an economics test tomorrow.He must study and has planned the rest of his day so that he can fit some study time in.He has decided to go to the gym and then study for several hours.Which of the following statements is true?

Correct AnswerverifiedShow Answer

An economic theory is also known as an economic

Correct AnswerverifiedShow Answer

Microeconomics focuses on

Correct AnswerverifiedShow Answer

Economists assume people behave

Correct AnswerverifiedShow Answer

Why do economists test their hypotheses?

Correct AnswerverifiedShow Answer

High gasoline prices give people all of the following incentives EXCEPT

Correct AnswerverifiedShow Answer

Economics deals with

Correct AnswerverifiedShow Answer

Which of the following is always true of rational behavior?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A friend wants to learn how the unemployment rate is calculated and how inflation is measured.He asks you which economics course to take and you advise him to enroll in

Correct AnswerverifiedShow Answer

Which of the following is a positive economic statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Macroeconomics is concerned with the beh...
View Answer

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