Question 1

Which of the following is most likely a topic of discussion in macroeconomics?

Accepted Answer

A)  ​an increase in the price of a pizza
B)  ​a decrease in the production of DVD players by a consumer electronics company
C)  ​an increase in the wage rate paid to automobile workers
D)  ​a decrease in the unemployment rateE) B) and D)
F) None of the above

Question 2

Which of the following is an example of microeconomic analysis?

Accepted Answer

A)  ​impact of taxation on national income
B)  ​rate of increase in the national debt
C)  ​relationship between inflation and interest rates set by the Federal Reserve
D)  ​none of the aboveE) B) and C)
F) None of the above

Question 3

Economists use the term "ceteris paribus" to indicate that:

Accepted Answer

A)  ​the analysis is true for the individual but not for the economy as a whole.
B)  ​supply and demand are in balance.
C)  ​their conclusions are based on normative rather than positive economic analysis.
D)  ​other things are assumed to remain constant.E) All of the above
F) A) and C)

Question 4

​Exhibit 1-1
​ 
-Referring to Exhibit 1-1, which point on the demand curve represents the maximum number of DVDs purchased?

Accepted Answer

A)  ​A
B)  ​B
C)  ​D
D)  ​EE) A) and C)
F) B) and C)

Question 5

When economists disagree, it is often over what type of issues?

Accepted Answer

Economists generally disagree on policy ...

Question 6

Economists believe that most people's actions are rational and purposeful, not random and chaotic.

Accepted Answer

A) True 
 B)False

Question 7

Economists assume that most individuals act as if they are motivated by self-interest and respond in predictable ways to changing circumstances.

Accepted Answer

A) True 
 B)False

Question 8

Macroeconomic topics do not generally include:

Accepted Answer

A)  ​inflation.
B)  ​aggregate demand.
C)  ​government spending and taxation.
D)  ​the production decisions of individual firms.E) None of the above
F) A) and D)

Question 9

To be a positive economic statement, an assertion must be true.

Accepted Answer

A) True 
 B)False

Question 10

Your mother tells you, "Watching ten hours of TV per day will make you stupid." This is a positive statement because:

Accepted Answer

A)  ​your mother says it with a positive tone in her voice.
B)  ​it is your mother's opinion.
C)  ​it is a proposition that can be tested.
D)  ​your mother is only thinking of your best interest.E) B) and C)
F) All of the above

Question 11

Which of the following is a statement of positive economics?

Accepted Answer

A)  ​Unemployment is a more severe problem in societies than inflation.
B)  ​Our current unemployment rate is a serious problem.
C)  ​If the overall unemployment rate is 6 percent, teenage unemployment rates will exceed 12 percent.
D)  ​An unemployment rate of 4 percent would be too low.E) C) and D)
F) A) and D)

Question 12

"Employment fell last month to its lowest level in the last six years" is an example of:

Accepted Answer

A)  ​the fallacy of composition.
B)  ​positive economics.
C)  ​normative economics.
D)  ​none of the aboveE) C) and D)
F) A) and D)

Question 13

"Ceteris paribus" means:

Accepted Answer

A)  ​if events A and B occur together, one must cause the other.
B)  ​all relevant details are included.
C)  ​what is true for the individual must be true for the whole.
D)  ​holding other things constant.E) A) and B)
F) A) and C)

Question 14

When society can not produce all the goods and services people want, it is faced with

Accepted Answer

A)  ​scarcity.
B)  ​surpluses.
C)  ​inefficiencies.
D)  ​inequalities.E) A) and B)
F) B) and D)

Question 15

Most of economic analysis assumes that most people act as if they are:

Accepted Answer

A)  ​motivated by submerged emotional needs.
B)  ​driven by magnetic forces generated by planetary movements.
C)  ​motivated primarily by concern for the well-being of others.
D)  ​motivated by self-interest.E) A) and C)
F) A) and D)

Question 16

A microeconomist would most likely study the effect of a reduction in income tax rates on:

Accepted Answer

A)  ​total output in the economy.
B)  ​the output of the steel industry.
C)  ​inflation.
D)  ​unemployment.E) None of the above
F) All of the above

Question 17

From an economists' perspective, which of the following observations is not true?

Accepted Answer

A)  ​Self-interest is purely monetary in nature.
B)  ​Self-interest can include benevolence.
C)  ​Self-interest is a good predictor of human behavior in most situations.
D)  ​Self-interest is not the same as selfishness.E) None of the above
F) A) and B)

Question 18

Economists believe that only a small part of human behavior can be explained and predicted by assuming that most people act as if they are motivated by their own self-interest in an effort to increase their expected personal satisfaction.

Accepted Answer

A) True 
 B)False

Question 19

The branch of economics that focuses on the conduct of affairs within narrowly defined units, such as households or business firms, is called:

Accepted Answer

A)  ​macroeconomics.
B)  ​microeconomics.
C)  ​socioeconomics.
D)  ​applied economics.E) A) and C)
F) A) and B)

Question 20

Measuring the rate of inflation is primarily a concern of:

Accepted Answer

A)  ​positive economics.
B)  ​normative economics.
C)  ​microeconomics.
D)  ​macroeconomics.E) C) and D)
F) B) and C)

Exam 1: The Role and Method of Economics

When economists disagree, it is often over what type of issues?

Correct AnswerverifiedEconomists generally disagree on policy ...View AnswerShow Answer

A microeconomist would most likely study the effect of a reduction in income tax rates on:

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"Ceteris paribus" means:

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The branch of economics that focuses on the conduct of affairs within narrowly defined units, such as households or business firms, is called:

Correct AnswerverifiedShow Answer

When society can not produce all the goods and services people want, it is faced with

Correct AnswerverifiedShow Answer

Which of the following is most likely a topic of discussion in macroeconomics?

Correct AnswerverifiedShow Answer

Most of economic analysis assumes that most people act as if they are:

Correct AnswerverifiedShow Answer

To be a positive economic statement, an assertion must be true.

Correct AnswerverifiedShow Answer

Economists believe that only a small part of human behavior can be explained and predicted by assuming that most people act as if they are motivated by their own self-interest in an effort to increase their expected personal satisfaction.

Correct AnswerverifiedShow Answer

Economists use the term "ceteris paribus" to indicate that:

Correct AnswerverifiedShow Answer

From an economists' perspective, which of the following observations is not true?

Correct AnswerverifiedShow Answer

Macroeconomic topics do not generally include:

Correct AnswerverifiedShow Answer

Economists believe that most people's actions are rational and purposeful, not random and chaotic.

Correct AnswerverifiedShow Answer

Measuring the rate of inflation is primarily a concern of:

Correct AnswerverifiedShow Answer

Economists assume that most individuals act as if they are motivated by self-interest and respond in predictable ways to changing circumstances.

Correct AnswerverifiedShow Answer

​Exhibit 1-1 ​ -Referring to Exhibit 1-1, which point on the demand curve represents the maximum number of DVDs purchased?

Correct AnswerverifiedShow Answer

Your mother tells you, "Watching ten hours of TV per day will make you stupid." This is a positive statement because:

Correct AnswerverifiedShow Answer

"Employment fell last month to its lowest level in the last six years" is an example of:

Correct AnswerverifiedShow Answer

Which of the following is a statement of positive economics?

Correct AnswerverifiedShow Answer

Which of the following is an example of microeconomic analysis?

Correct AnswerverifiedShow Answer

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Economists generally disagree on policy ...
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Exhibit 1-1 -Referring to Exhibit 1-1, which point on the demand curve represents the maximum number of DVDs purchased?

Correct Answer
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