88)
In economics, the word “aggregate” refers to
88)
A)
the public sector itself.
B)
the government.
C)
how individual households differ from each other.
D)
an economy as a whole.
89)
Normative economic statements
89)
A)
are usually irrational.
B)
violate the law of ceteris paribus.
C)
contain value judgments.
D)
are easily testable.
90)
To be useful, a model must
90)
A)
predict accurately all of the time.
B)
explain and predict the behavior of every individual.
C)
have assumptions that have been verified by empirical testing.
D)
predict more accurately than other models that have been developed.
91)
Ceteris paribus means
91)
A)
almost certainly.
B)
other variables are held constant.
C)
perhaps.
D)
only if everything works just right.
92)
A simplified representation of the real world that is used to explain economic phenomena is a(n)
92)
A)
viewpoint.
B)
assumption.
C)
model.
D)
implication.
93)
Individual decision making by consumers and producers is the focus of
93)
A)
any economic model.
B)
aggregate measures.
C)
macroeconomics.
D)
microeconomics.
94)
The slope of a nonlinear curve is ________ when the curve is rising, and ________ when the curve is
falling.
94)
A)
positive, negative
B)
negative, positive
C)
positive, positive
D)
negative, negative
95)
Economics is an empirical science, which means that economists
95)
A)
look for evidence to determine whether the model is useful or not.
B)
try to prove their models are true by referring to logic.
C)
must use laboratory experiments to test their theories.
D)
evaluate a model or theory by whether its assumptions are consistent with the real world.
96)
Under a pure price system, the decision of resource allocation is made by
96)
A)
the head of the government.
B)
no one.
C)
individuals who own the resources.
D)
a queen or king.
97)
Positive economic analysis is supposed to be
97)
A)
true.
B)
just and fair.
C)
moral and honest.
D)
free of value judgments.
98)
Microeconomics is concerned with studying which of the following?
98)
A)
the effects of monetary policy
B)
the determinants of national unemployment
C)
the study of individual markets
D)
all of the above
99)
A scientist who is studying earthquakes includes the impact of wind when performing some tests
of damages to structures. This is an example of
99)
A)
failing to understand how to do scientific methodology.
B)
failing to hold all other things constant.
C)
irrational behavior in noneconomic situations.
D)
accounting for every possible phenomena that may effect the problem under examination.
100)
In the above graphs a direct relationship is shown by
100)
A)
Graph A.
B)
Graph B.
C)
Graph C.
D)
Graph D.
101)
Which of the following is an example of an inverse relationship?
101)
A)
amount of snowfall and profits of ski resorts
B)
hours of study and test grade
C)
calories eliminated from diet and weight loss
D)
beers consumed while studying and test grade
102)
A macroeconomist would study
102)
A)
the cost problems at several airlines.
B)
the price changes at K–Mart.
C)
the economy’s unemployment level.
D)
none of the above.
103)
An inverse relationship will be graphed as
103)
A)
a line that is upward sloping.
B)
a U–shaped curve.
C)
a line that is downward sloping.
D)
a loop.
C
104)
The primary objective of economics is
104)
A)
to study how people make choices with limited resources.
B)
to learn how to make the most profits with a given amount of resources.
C)
to study why some people are never happy with the resources they have.
D)
to learn how to create more resources.
A
105)
Which of the following is a macroeconomic concern?
105)
A)
the national output of the United States
B)
the unemployment rate in a specific industry
C)
wage levels in specific industries
D)
the operation of an individual firm
A
106)
When people donate money to a charity, they behave
106)
A)
irrationally because the act does not benefit anyone.
B)
in an unpredictable manner because the act involves no incentive.
C)
in a way that only makes themselves worse off.
D)
rationally if the act gives them satisfaction.
D
C
107)
Which of the following is an example of a positive economic statement?
107)
A)
The unemployment rate should be measured differently because it doesn’t include students
who can’t find jobs.
B)
The unemployment rate last month was too high.
C)
Because of the high unemployment rate last month the government should increase
government spending.
D)
The unemployment rate last month was 5.4 percent.
108)
When two variables have an inverse relationship, the slope is
108)
A)
zero.
B)
positive.
C)
infinity.
D)
negative.
109)
Which of the following statements is a normative as opposed to a positive economic statement?
109)
A)
Labor unions should be allowed to organize in every industry.
B)
Government intervention in markets is common in many countries.
C)
Consumer spending generates more jobs.
D)
If the price of gasoline goes up, people buy less.
110)
The impact of higher taxes would be examined by
110)
A)
a macroeconomist.
B)
a microeconomist.
C)
both a macroeconomist and a microeconomist.
D)
neither a macroeconomist nor a microeconomist.
111)
Which is NOT true about the use of economic models?
111)
A)
Economists are employed to explain economic phenomena but are never used to predict what
might happen next.
B)
Economists use what has already happened in the real world to test their theories.
C)
Economists always use experiments in science laboratories to test their theories.
D)
Economic models are simplified representations of the real world.
112)
The intersection of the x axis and the y axis is called the
112)
A)
origin.
B)
“zero” point.
C)
“meeting point.“
D)
corresponding point.
Explanation:
113)
What is meant by saying that economics is an empirical science?
113)
A)
Economic theories will be tested by seeing how well they correspond to real–world
phenomena.
B)
Economic theories cannot be tested because economic variables change too quickly.
C)
Economic theories cannot be tested because there is no means of measuring economic
variables with adequate precision.
D)
Economic theories will be tested by seeing how well they correspond to people’s declared
preferences.
Explanation:
114)
It has been noted that when the price of a good increases, people purchase less of the good. This is
an example of
114)
A)
irrational behavior.
B)
normative economic analysis.
C)
positive economic analysis.
D)
macroeconomic analysis.
Explanation:
Explanation:
115)
The usefulness of a model is determined by
115)
A)
how many of the possible relationships that exist are included in the model.
B)
whether it possesses realistic assumptions.
C)
whether it helps to explain or predict real world phenomena.
D)
how well it uses the ceteris paribus assumption.
116)
A decision made by a rational person
116)
A)
is intended to make the person worse off.
B)
is intended to make the person better off.
C)
would always make the person wealthier.
D)
is identical to a decision that would be made by any other person facing the same choices.
117)
Ceteris paribus means
117)
A)
“all variables are independent.”
B)
“other things being equal.”
C)
“some theories are not rational.”
D)
“some assumptions must be accepted without proof.”
118)
Normative economic analysis involves
118)
A)
testable hypotheses by scientists.
B)
true statements of facts only.
C)
value judgments and opinions.
D)
purely descriptive statements.
119)
Which statement most accurately defines economics?
119)
A)
Economics is the study of values a society should choose.
B)
Economics is the study of how to eliminate scarcity.
C)
Economics is the study of how people make choices to satisfy their wants.
D)
Economics is the study of how people make money.
120)
A relationship between two variables in which one variable increases at the same time as the other
decreases is called
120)
A)
constant.
B)
nonlinear.
C)
inverse.
D)
direct.
C
121)
Which of the following statements is FALSE?
121)
A)
An economic model should capture only the essential relationships that are sufficient to
analyze the particular problem being studied.
B)
Economists empirically test their models.
C)
Economic models relate to behavior rather than to individual thought processes.
D)
Economic models are not used to forecast.
D
122)
Which of the following would most likely be part of the study of microeconomics?
122)
A)
overall price stability in the United States
B)
how General Motors makes decisions regarding its production goals
C)
national income
D)
the total economic output of our domestic economy
B
123)
Normative economics involves
123)
A)
a statement that is purely descriptive.
B)
a statement of “what should be.”
C)
a statement of fact.
D)
a statement of “what is.”
B
C
124)
Microeconomics is concerned with the study of
124)
A)
aggregates.
B)
the effects of inflation.
C)
the effects on individual producers of higher wages paid to workers.
D)
the effects of government spending.
125)
Positive analysis can be described as
125)
A)
a study that is not tested empirically.
B)
the study of whether people respond to negative incentives.
C)
the study of whether people respond to positive incentives.
D)
a value–free approach to inquiry.
D
126)
The term ceteris paribus is an economic assumption that means
126)
A)
let the buyer beware.
B)
the detail is in the interrelationship.
C)
common sense is reality.
D)
other things being equal.
D
127)
Which of the following is a normative economic statement?
127)
A)
Most wait staff are women.
B)
Few auto mechanics are women.
C)
Men and women should earn the same salary if they perform the same job.
D)
Auto mechanics typically earned more than waitresses in the United States in 2004.
C
128)
The idea that people will not consciously make decisions that make them worse off is known as
128)
A)
Adam Smith’s doctrine.
B)
rationality assumption.
C)
incentive assumption.
D)
the decision duality.
B
C
129)
Positive economics
129)
A)
was not used by nineteenth century economists.
B)
always gives an optimistic spin to economic news.
C)
is concerned with the economic policies that should be implemented.
D)
is objective.
130)
Microeconomics is the study of
130)
A)
individual decision making.
B)
foreign policy economic issues.
C)
federal budget details.
D)
aggregate measures of the economy.
A
131)
Economics is most precisely defined as
131)
A)
the study of how people make choices.
B)
the same as the study of finance and management.
C)
a study of what people need to survive.
D)
a study of how culture evolves in different geographic areas.
A
132)
Which of the following is a positive economic statement?
132)
A)
The rate of unemployment of young African–Americans exceeds that of white Americans.
B)
Economic considerations are less relevant than ethical issues in deciding national policy.
C)
No individual should live in poverty.
D)
Unemployment is a more serious problem than inflation.
A
D
133)
Which one of the following is an example of a positive statement?
133)
A)
The federal government should provide economic assistance to farmers.
B)
The amount of financial assistance given to farmers is higher this year than it was 10 years
ago.
C)
State governments should provide economic assistance to farmers.
D)
Farmers need some type of government aid.
134)
An incentive is a
134)
A)
reward for desired behavior.
B)
need.
C)
resource.
D)
want.
135)
Ceteris paribus means
135)
A)
all men are created equal.
B)
economists isolate one or two factors that change when analyzing human decisions.
C)
there are an infinite number of factors affecting each human decision and they change all the
time.
D)
wage parity between men and women is a worthy goal.
136)
When studying individuals’ economic behavior, economists assume that
136)
A)
individuals act as if they were rational.
B)
self–interest is of limited relevance in predicting an individual’s actions.
C)
individuals understand the rationale for all their actions.
D)
only educated people act as if they were rational.
137)
Macroeconomics might study which of the following?
137)
A)
determinants of the prices of rare goods (e.g., diamonds)
B)
decision making undertaken by households
C)
decision making undertaken by firms
D)
the causes of domestic unemployment
138)
Economic resources are
138)
A)
the total planned expenditures throughout the nation.
B)
all the unlimited items that people would purchase with limited income.
C)
all the items that people would purchase if they had limited wants.
D)
items of value that are used to make other things that satisfy people’s wants.
139)
Macroeconomics would be concerned with
139)
A)
the effects of a tax on beer.
B)
the effects of wage increases on steel manufacturers.
C)
the effects on individual consumers of changes in the price of gasoline for a business.
D)
implications of changes in unemployment and inflation.
140)
Economists assume people behave
140)
A)
rationally.
B)
greedily.
C)
irrationally.
D)
instinctively.
141)
A mixed economic system is best described as an economy with a mix of
141)
A)
state and federal governments.
B)
domestic and foreign buyers.
C)
for–profit organizations and not–for–profit organizations.
D)
free markets and government control.
142)
Microeconomics studies
142)
A)
the changes in economic theory brought about by real–world events.
B)
decisions made by individual consumers and firms.
C)
how small changes in the money supply can have far–reaching effects.
D)
how small changes in the unemployment rate can have far–reaching effects.
143)
According to proponents of behavioral economics, because every possible choice cannot be
considered, an individual will tend to fall back on methods of making decisions that are simpler
than trying to sort through every single possibility, known as
143)
A)
rules of thumb.
B)
normative decisions.
C)
rational options.
D)
irrational choices.
144)
Which of the following is a characteristic or focus of economics?
144)
A)
empirical analysis
B)
decision making
C)
allocation of limited resources in an effort to satisfy potentially unlimited wants
D)
all of the above
145)
Economic models are
145)
A)
used only in macroeconomic analysis by business firms.
B)
always based on laboratory methods similar to natural sciences.
C)
used only in microeconomic analysis by households.
D)
a simplified representations of the real world.
146)
If an increase in one variable causes a decrease in another variable, this is
146)
A)
an independent relationship.
B)
a dependent relationship.
C)
a direct relationship.
D)
an inverse relationship.
147)
“If A occurs then B will follow” is a
147)
A)
statement lacking in logic.
B)
positive statement.
C)
normative statement.
D)
non–testable statement.
B
148)
Why do economists test their hypotheses?
148)
A)
to see whether people are motivated by self–interest
B)
to determine whether government policies have effectively achieved their goals
C)
to learn what people are thinking when they make the choices they do
D)
to see whether their models predict the choices people will make
D
149)
The use of data in economic models is important because
149)
A)
the models are always complex in nature.
B)
models must analyze every possible angle of the problem.
C)
the model’s predictive value rests on supportive evidence from real–world data.
D)
social problems analyzed by economists require long streams of data.
C
150)
The slope of a nonlinear curve
150)
A)
is always equal to 1.
B)
is constant.
C)
is always negative.
D)
changes along the various points of the curve.
D
D
151)
Jaime’s father gives her a pen for her graduation from college, but Jaime wants a smartphone. This
implies that
151)
A)
Jaime is not acting out of her self–interest by wanting something different from what her
father gives her.
B)
Jaime’s father is acting out of self–interest because he wants to give her something useful.
C)
Jaime is not rational by asking for a smartphone instead of a pen.
D)
Jaime’s father is not acting out of self–interest because he knows that she really wants a
smartphone.
152)
A map is an example of a model because a map
152)
A)
is a simplified representation of reality.
B)
realistically describes an area.
C)
is always as complex as space will permit.
D)
is two–dimensional.
153)
All of the following are aspects of macroeconomics EXCEPT
153)
A)
foreign trade.
B)
the production decisions of a pharmaceutical firm.
C)
the U.S. unemployment rate.
D)
the budget deficit of the United States.
154)
The United States is best known as a
154)
A)
mixed economic system.
B)
command and control system.
C)
pure price system.
D)
dictatorship.
155)
A positive economic statement is one that
155)
A)
is based on a value judgment.
B)
can be refuted.
C)
asserts something about the role of moral behavior in building a strong economy.
D)
is free of the ceteris paribus assumption.
156)
Economics is best defined as the
156)
A)
study of individual self–interests.
B)
study of how government can most efficiently raise funds by taxation.
C)
process by which goods are sold in free markets.
D)
study of how people make choices to satisfy their wants.
157)
Macroeconomics is concerned with studying the
157)
A)
behavior of individual decision makers.
B)
performance of the economy as a whole.
C)
wants of individual consumers.
D)
prices of specific companies‘ stocks.
158)
The study of an individual‘s choice about what type of computer to buy is a subject of
158)
A)
an aggregate concept.
B)
microeconomics.
C)
macroeconomics.
D)
not a concern for economic analysis.
159)
Positive economic analysis is said to be
159)
A)
value–laden.
B)
objective.
C)
true.
D)
right.
160)
________ are the things that are used to produce items that satisfy people‘s wants.
160)
A)
Concepts
B)
Resources
C)
Costs
D)
Production possibilities curves
161)
Self–interest relates to
161)
A)
normative economic analysis and not positive economic analysis.
B)
both monetary and nonmonetary objectives.
C)
the ceteris paribus assumption.
D)
only monetary objectives.
B
162)
Which one of the following is an example of a normative statement?
162)
A)
Most digital cameras sold in the United States are imported from other countries.
B)
A camera makes a good wedding gift.
C)
More people will buy digital cameras as their prices decline.
D)
A digital camera costs more than a disposable camera.
B
163)
Economics
163)
A)
is concerned with limited resources.
B)
is concerned with unlimited wants.
C)
is a social science.
D)
All of the above are correct.
D
164)
Which of the following is a positive statement?
164)
A)
The unemployment rate should be below 5.8 percent.
B)
The unemployment rate is 5.8 percent.
C)
The unemployment rate should never be above 5.8 percent.
D)
An unemployment rate of 5.8 percent is too high.
B
B
165)
The slope of a line is the
165)
A)
change in the values along the x–axis divided by the change in the values along the y–axis.
B)
change in the values along the y–axis divided by the change in the values along the x–axis.
C)
values on the y–axis divided by the values on the x–axis.
D)
values on the x–axis divided by the values on the y–axis.
166)
The study of the aggregate economic variables is
166)
A)
normative economics.
B)
microeconomics.
C)
positive economics.
D)
macroeconomics.
167)
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
167)
A)
positive thinking.
B)
bounded rationality.
C)
unbounded rationality.
D)
normative thinking.
168)
The distinction between microeconomics and macroeconomics is
168)
A)
clearly drawn, and there is no overlap between them.
B)
often blurred because aggregates are made up of individuals and firms.
C)
determined by economists in a clear and concise manner.
D)
narrowly drawn, and microeconomic analysis often relies on macroeconomic tools.
169)
Economic analysis is a tool that
169)
A)
makes everyone rich.
B)
aids all decision making.
C)
helps us understand why people make mistakes.
D)
helps us forgive selfish people.
170)
Which of the following is an example of an application of the ceteris paribus assumption?
170)
A)
An analysis of how price changes affect how much of a good people will purchase when all
other factors are held constant
B)
An analysis of how people purchase more goods when prices decline and income increases
C)
An analysis of how worker productivity increases when a firm invests in new machines and
training programs
D)
After reading an article on the dangers of high–fat diets, an individual buys less red meat
when prices increase
171)
The assumption that “other things are constant” is also known as the
171)
A)
distinguishing characteristic of economics as a science.
B)
rational self–interest assumption.
C)
ceteris paribus assumption.
D)
relationships assumption.
172)
The basic economic problem is a situation of
172)
A)
limited resources and unlimited wants.
B)
unlimited incomes and limited choices.
C)
both limited resources and limited wants.
D)
limited incomes and unlimited choices.
173)
The rationality assumption says that
173)
A)
people never make decisions that would leave them worse off.
B)
people do not respond to incentives since incentives require scarce resources.
C)
people do not intentionally make decisions that would leave them worse off.
D)
all economic analysis must be normative.
174)
Which of the following statements is a positive economic statement?
174)
A)
The number of families living in poverty in the United States is too high.
B)
Government programs to help the poor are just making problems worse.
C)
Increases in poverty rates signify a deterioration of the U.S. economy.
D)
One in every five children in the United States is living in poverty.
175)
The “paired observation” of (14, 6) means
175)
A)
the origin is at 14 and 6.
B)
x = 14, y = 6.
C)
x = 6, y = 14.
D)
x = any multiple of 14, y = any multiple of 6.
176)
A model is used to explain economic behavior. Therefore
176)
A)
the assumptions must be complex while the model itself is simple.
B)
the model must be simple.
C)
the model must be complex.
D)
the model can be either simple or complex so long as it explains economic behavior.