Question 1

The study of microeconomics and macroeconomics differ in that:

Accepted Answer

A)   microeconomics is concerned with the domestic economy and macroeconomics is concerned only with the international economy.
B)   microeconomics examines the individual markets of the economy while macroeconomics studies the whole economy.
C)   microeconomics studies the actions of households and macroeconomics studies the actions of business firms.
D)   microeconomics examines the whole economy while macroeconomics studies the individual units of the economy.E) B) and C)
F) C) and D)

Question 2

Which of the following is included in the study of macroeconomics?

Accepted Answer

A)   Salaries of college professors.
B)   Computer prices.
C)   Unemployment in the nation.
D)   Silver prices.E) A) and C)
F) All of the above

Question 3

Exhibit 1A-1 Straight line
​ 
-Straight line AB in Exhibit 1A-1 shows that:

Accepted Answer

A)   increasing values for X will decrease the values of Y.
B)   decreasing values for X will increase the values of Y.
C)   there is a direct relationship between X and Y.
D)   all of these.E) C) and D)
F) B) and D)

Question 4

Scarcity has no importance to understanding economics.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would eliminate scarcity as an economic problem?

Accepted Answer

A)   Moderation of people's competitive instincts.
B)   Discovery of sufficiently large new energy reserves.
C)   Resumption of steady productivity growth.
D)   None of these.E) C) and D)
F) None of the above

Question 6

Scarcity is a problem:

Accepted Answer

A)   measured by the amount of goods available.
B)   of the poor, but not the rich.
C)   because human wants are unlimited while resources are limited.
D)   only in industrialized economies.E) None of the above
F) B) and C)

Question 7

Which of the following is not an example of a capital input?

Accepted Answer

A)   ​A person's skills and abilities, which can be employed to produce valuable goods and services.
B)   ​Factories and offices where goods and services are produced.
C)   ​Tools and equipment.
D)   ​Computers used by a company to record inventory, sales, and payroll. ​E) All of the above
F) B) and C)

Question 8

A factor of production is the same as:

Accepted Answer

A)   the amount of a good produced.
B)   the price of a good.
C)   a profit of a firm.
D)   an opportunity cost.
E)   a resource.F) A) and D)
G) C) and E)

Question 9

Select the normative statement that completes the following sentence: If the minimum wage is raised:

Accepted Answer

A)   cost per unit of output will rise.
B)   workers will gain their rightful share of total income.
C)   the rate of inflation will increase.
D)   profits will fall.E) None of the above
F) B) and C)

Question 10

The term Ceteris paribus means that:

Accepted Answer

A)   the model includes all important variables occurring in the real world.
B)   all factors which influence the event are changing at the same time.
C)   one influence is changing and everything else is being held constant.
D)   the consumer is king.E) A) and B)
F) A) and C)

Question 11

The Latin expression Ceteris paribus means:

Accepted Answer

A)   everything else being equal.
B)   economic model.
C)   economists are partly right.
D)   partial scarcity is certain.E) C) and D)
F) A) and C)

Question 12

Which of the following is not a factor of production?

Accepted Answer

A)   A computer chip.
B)   The service of a lawyer.
C)   Dollars.
D)   All of these are factors of production.E) A) and D)
F) A) and C)

Question 13

To be valid, an economic model must:

Accepted Answer

A)   include every activity which occurs in the real world.
B)   include at least 85 percent of the activity which occurs in the real world.
C)   be able to predict events occurring in the real world.
D)   exclude any link to the real world.
E)   not be based on an abstraction of the real world.F) C) and E)
G) A) and C)

Question 14

The observation that interest rates are higher in years ending with a 1 or a 6 represents causality rather than association.

Accepted Answer

A) True 
 B)False

Question 15

Positive economics is a(n) :

Accepted Answer

A)   reflection of a country's values.
B)   judgment of the correctness of an economic outcome.
C)   statement of fact.
D)   analysis of what ought to be.
E)   analysis of all the good market outcomes.F) B) and D)
G) B) and E)

Question 16

The basic purpose of economic models is to:

Accepted Answer

A)   construct simplifying assumptions about the real world.
B)   explain reality in all its complexity.
C)   construct situations where controlled experiments can be carried out.
D)   provide explanations for, and predictions of the relationship between variables.E) A) and C)
F) All of the above

Question 17

The branch of economics that focuses on economywide variables like inflation and unemployment is called:

Accepted Answer

A)   macroeconomics.
B)   microeconomics.
C)   free-market economics.
D)   aggregate economics.E) A) and B)
F) B) and C)

Question 18

If two variables are inversely related, then they change in the same direction.

Accepted Answer

A) True 
 B)False

Question 19

When economists say scarcity, they mean:

Accepted Answer

A)   there are only a limited number of consumers who would be interested in purchasing goods.
B)   the human desire for goods exceeds the available supply of time, goods and resources.
C)   most people in poorer countries do not have enough goods.
D)   goods are so expensive that only the rich can afford it.E) B) and C)
F) A) and D)

Question 20

Capital resources include money and other financial assets.

Accepted Answer

A) True 
 B)False

Exam 1: Introducing the Economic Way of Thinking

The term Ceteris paribus means that:

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Which of the following would eliminate scarcity as an economic problem?

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Scarcity is a problem:

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The observation that interest rates are higher in years ending with a 1 or a 6 represents causality rather than association.

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Which of the following is not an example of a capital input?

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The branch of economics that focuses on economywide variables like inflation and unemployment is called:

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If two variables are inversely related, then they change in the same direction.

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Positive economics is a(n) :

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To be valid, an economic model must:

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A factor of production is the same as:

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The study of microeconomics and macroeconomics differ in that:

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Capital resources include money and other financial assets.

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When economists say scarcity, they mean:

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Which of the following is included in the study of macroeconomics?

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Select the normative statement that completes the following sentence: If the minimum wage is raised:

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Which of the following is not a factor of production?

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Exhibit 1A-1 Straight line ​ -Straight line AB in Exhibit 1A-1 shows that:

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Scarcity has no importance to understanding economics.

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The Latin expression Ceteris paribus means:

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The basic purpose of economic models is to:

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Exhibit 1A-1 Straight line -Straight line AB in Exhibit 1A-1 shows that:

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