Question 1

The slope of a nonlinear curve

Accepted Answer

A)  is constant.
B)  is always negative.
C)  changes along the various points of the curve.
D)  is always equal to 1.

Question 2

Normative economic analysis involves

Accepted Answer

A)  positive analysis.
B)  value judgments.
C)  if-then statements.
D)  objective descriptions of the way things are.

Question 3

One reason why economists often use models in their analysis is that

Accepted Answer

A)  a model helps us to understand, explain, and predict economic phenomena in the real world.
B)  a model accurately pictures every detail of the real world economy.
C)  a model relates to individual thought processes rather than behavior.
D)  it is relatively easy to perfectly specify a model.

Question 4

Which of the following statements is true?

Accepted Answer

A)  No economic model captures every detail that affects a problem.
B)  Economic models always make accurate predictions about behaviors.
C)  Economic models must fully reflect reality.
D)  Economic models use economists' opinions with no use of data.

Question 5

An economic model should capture

Accepted Answer

A)  the essential relationships that help to analyze the problem.
B)  all possible variables that apply to the problem.
C)  only social value related variables.
D)  all of the above.

Question 6

The rationality assumption says that

Accepted Answer

A)  people do not intentionally make decisions that would leave them worse off.
B)  people never make decisions that would leave them worse off.
C)  people do not respond to incentives since incentives require scarce resources.
D)  all economic analysis must be normative.

Question 7

Economic models are used to

Accepted Answer

A)  simplify reality to predict outcomes.
B)  exactly replicate reality.
C)  predict all possible outcomes of a study.
D)  determine the thoughts of individuals.

Question 8

Which of the following would most likely NOT be taught in a macroeconomics course?

Accepted Answer

A)  changes in the health care industry
B)  factors leading to different economic growth rates among countries
C)  government actions in response to a slowdown in the economy
D)  the relationship between the inflation rate and the unemployment rate

Question 9

Economics is the study of

Accepted Answer

A)  how to get rich.
B)  how people allocate their limited resources to satisfy their unlimited wants.
C)  how people spend their income.
D)  why people want certain goods and services rather than other goods and services.

Question 10

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.

Question 11

Central planning is a key characteristic of which economic system?

Accepted Answer

A)  Free market
B)  Price system
C)  Command and control
D)  Mixed economic system

Question 12

Economists develop models to

Accepted Answer

A)  capture every detail of the real world.
B)  make their arguments more realistic.
C)  justify the assumptions they make about people's behavior.
D)  help us understand economic phenomena in the real world.

Question 13

Economic analysis is a tool that

Accepted Answer

A)  aids all decision making.
B)  helps us understand why people make mistakes.
C)  helps us forgive selfish people.
D)  complicates decision making.

Question 14

A good economic model

Accepted Answer

A)  utilizes only the two most important factors to analyze the problem under consideration.
B)  generates statements that are incapable of refutation.
C)  represents every detail of the real world.
D)  yields usable predictions and implications for the real world.

Question 15

According to economic theory, how do people make decisions?

Accepted Answer

A)  They make decisions in the same manner as their parents did.
B)  They make decisions by looking at what others have done in the same situation and then doing the opposite.
C)  They make decisions by looking at what others have done in the same situation and then doing the same.
D)  They make decisions based on their own self-interest.

Question 16

Wants are

Accepted Answer

A)  another term for needs.
B)  the things people would consume if they had unlimited incomes.
C)  the things people consume with their income.
D)  all the things people really need in order to live comfortably.

Question 17

Which of the following is a positive economic statement?

Accepted Answer

A)  We should strive to achieve full employment in the United States.
B)  The President of the United States should promote stable prices in the United States.
C)  If the price of eggs increases, the quantity demanded of bacon will fall.
D)  We should try to eliminate poverty in the United States.

Question 18

Rational behavior for an economist means that individuals

Accepted Answer

A)  are motivated by self-interest.
B)  never change their minds.
C)  always make positive choices.
D)  are self-sacrificing.

Question 19

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

Accepted Answer

A)  positive economics.
B)  normative economics.
C)  microeconomics.
D)  macroeconomics.

Question 20

Which of the following would most likely be part of the study of microeconomics?

Accepted Answer

A)  how General Motors makes decisions regarding its production goals
B)  national income
C)  the total economic output of our domestic economy
D)  overall price stability in the United States

Exam 1: The Nature of Economics

Which of the following is a positive economic statement?

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Which of the following statements is true?

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Economic analysis is a tool that

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Central planning is a key characteristic of which economic system?

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Microeconomics is concerned with the study of

Correct AnswerverifiedShow Answer

The rationality assumption says that

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Rational behavior for an economist means that individuals

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A good economic model

Correct AnswerverifiedShow Answer

Economic models are used to

Correct AnswerverifiedShow Answer

The slope of a nonlinear curve

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

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According to economic theory, how do people make decisions?

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Wants are

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One reason why economists often use models in their analysis is that

Correct AnswerverifiedShow Answer

Which of the following would most likely be part of the study of microeconomics?

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Normative economic analysis involves

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Economics is the study of

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Which of the following would most likely NOT be taught in a macroeconomics course?

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An economic model should capture

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Economists develop models to

Correct AnswerverifiedShow Answer

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