41
73) Economic stability refers to the condition of steady growth in national output, with ________ inflation
and ________ employment of resources.
A) negative; low
B) low; full
C) high; full
D) no; no
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
74) The concept of equity would explain the redistribution from the rich to the poor which is achieved
from a tax system that requires taxes to
A) fall when income rises.
B) rise when income rises.
C) remain stable when income rises.
D) be unrelated to income.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
75) You always have math problems to work in class whenever you forget to bring your calculator to
school. Concluding that forgetting your calculator causes your professor to assign math problems is an
example of the
A) fallacy of logic.
B) fallacy of inductive reasoning.
C) ceteris paribus conditions.
D) post hoc, ergo propter hoc fallacy.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
42
76) Because all workers should be able to earn a living wage, the minimum wage should be raised to
$11.50 per hour in the United States. This statement is best described as
A) a normative statement.
B) a positive statement.
C) a marginal statement.
D) an implication of an efficient market.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
77) There is a high correlation between the number of automobiles on the road and the amount of carbon
emissions in the atmosphere. This statement is best described as
A) a normative statement.
B) a positive statement.
C) a marginal statement.
D) an implication of an efficient market.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
78) You have observed that every time you get a new tattoo the day before you take an exam you get an
A. You therefore conclude that to get an A on an exam, all you have to do is get a new tattoo the day
before. You have committed the
A) fallacy of division.
B) fallacy of inductive reasoning.
C) post hoc, ergo propter hoc fallacy.
D) Ockham’s fallacy.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
43
79) If you observe that Kelly Clarkson won American Idol 3 years before Carrie Underwood won, and
you conclude that Kelly Clarkson winning caused Carrie Underwood to win 3 years later, you would be
guilty of an error called the
A) fallacy of inductive reasoning.
B) fallacy of ceteris paribus.
C) fallacy of logic.
D) post hoc, ergo propter hoc fallacy.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
80) The mistake of inferring causality from ________ is called the post hoc, ergo propter hoc fallacy.
A) two events happening one after the other
B) two or more related events occurring at the same time
C) two or more unrelated events occurring at the same time
D) the same event occurring multiple times
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
81) Empirical economics refers to the
A) exclusion of irrelevant data when analyzing a model.
B) collection and use of data to test economic theories.
C) model of economics used prior to the Industrial Revolution.
D) belief that what is true for a part is necessarily true for the whole.
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
82) A change in economic output is ________ if the value of the resulting gains exceeds the value of the
resulting losses.
A) potentially efficient
B) always efficient
C) always inefficient
D) irrelevant
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
44
83) ________ economy is an economy that produces what consumers demand and does so at the least
possible cost.
A) An inefficient
B) An efficient
C) A government–controlled
D) A command
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
84) ________ market is characterized by the fact that profit opportunities are eliminated almost
instantaneously.
A) An inefficient
B) An efficient
C) A government–controlled
D) A command
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
85) Many economists argue that items such as food and clothing should be exempt from sales tax because
low–income people spend a greater percentage of their income on these goods than do high–income
individuals. This argument is motivated by concerns over
A) economic stability.
B) economic growth.
C) equity.
D) efficiency.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
86) The statement “people should pollute as little as possible” is an example of a
A) positive statement.
B) normative statement.
C) factual statement.
D) non–judgmental statement.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
45
87) The statement “the unemployment rate is 5.1%” is an example of a
A) positive statement.
B) value judgement.
C) normative statement.
D) non–verifiable statement.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
88) Related to the Economics in Practice on p. 9: Prior to joining the glee club, Anjelica spent most of her
free time studying in the library. Once she joined the glee club, Anjelica spent her free time hanging out
in karaoke bars with other glee club members. This change in behavior is best described by
A) the fallacy of logic.
B) the post hoc ergo prompter hoc fallacy.
C) the problem of peer effects.
D) the ceteris paribus error.
Topic: The Method of Economics: Economics in Practice
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
89) Related to the Economics in Practice on p. 9: Based on a study of the effects of roommates on college
grades discussed in the Economics in Practice, which of the following is true?
A) The effects of roommates on grade point average are strong.
B) The effects of roommates on effort in school are strong.
C) The effects of roommates on fraternity membership are strong.
D) all of the above
Topic: The Method of Economics: Economics in Practice
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
90) Normative economics looks at outcomes of economic behavior and evaluates them as good or bad.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
46
91) Positive economics looks at outcomes of economic behavior and evaluates them as good or bad.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
92) An efficient economy is one that produces what consumers demand and does so at the least possible
cost.
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
93) Ceteris paribus literally translated means, “buyer beware.”
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
94) Positive economics seeks to understand behavior, but not make judgments.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
95) Stability implies a steady rate of economic growth and low inflation.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
96) The collection and use of data to test economic theories is called empirical economics.
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
47
97) Positive economics questions “What ought to be?” Normative economics predicts the consequences of
alternative actions, answering the questions “What is?” or “What will be?”
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
98) Normative economics questions “What ought to be?” Positive economics predicts the consequences of
alternative actions, answering the questions “What is?” or “What will be?”
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
99) Equity is synonymous with fairness.
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
100) Post hoc, ergo propter hoc literally translated means, “all else equal.”
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
101) Normative economics seeks to understand behavior, but not make judgments.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
102) Stability implies a steady rate of economic growth with full employment of resources.
Topic: The Method of Economics
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
103) Economic growth is an increase in the total output of an economy.
Answer: TRUE
Diff: 1
Topic: The Method of Economics
Skill: Definition
Learning Outcome: Micro-1
48
Copyright © 2017 Pearson Education, Inc.
1.4 Appendix: How to Read and Understand Graphs
Refer to the information provided in Figure 1.1 below to answer the question(s) that follow.
Figure 1.1
1) Refer to Figure 1.1. There is ________ relationship between the daily temperature and the number of
gallons of ice cream purchased.
A) a negative
B) a positive
C) both a negative and a positive
D) an inverse
Topic: Appendix: How to Read and Understand Graphs
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
2) Refer to Figure 1.1. The relationship between the daily temperature and the number of gallons of ice
cream purchased demonstrates
A) an infinite slope.
B) a negative slope.
C) a positive slope.
D) a zero slope.
Topic: Appendix: How to Read and Understand Graphs
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
49
Refer to the information provided in Figure 1.2 below to answer the question(s) that follow.
Figure 1.2
3) Refer to Figure 1.2. The slope of the line between Points A and B is
A) 0.4.
B) 1.2.
C) 2.5.
D) indeterminate from this information.
Topic: Appendix: How to Read and Understand Graphs
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
4) If the slope of a straight line is –3. and if Y (the variable on the vertical axis) decreases by 6, then X (the
variable on the horizontal axis) will
A) increase by 2.
B) decrease by 2.
C) increase by 18.
D) decrease by 18.
Topic: Appendix: How to Read and Understand Graphs
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
50
Refer to the information provided in Figure 1.3 below to answer the question(s) that follow.
Figure 1.3
5) Refer to Figure 1.3. The slope of the line is
A) positive.
B) negative.
C) increasing at an increasing rate.
D) decreasing at an increasing rate.
Topic: Appendix: How to Read and Understand Graphs
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
6) Refer to Figure 1.3. The slope of the line between Points B and D is
A) –3.
B) –0.33.
C) 0.33.
D) 3.
Topic: Appendix: How to Read and Understand Graphs
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2