Question 1

Based on your understanding of your roommate's preferences,you predict that he will select the spaghetti for his lunch at the cafeteria,but instead he chooses the gyros.How do you describe this event in terms of economic theory?

Accepted Answer

A)  Your roommate is irrational.
B)  Your roommate does not know what is in his own best interests.
C)  You roommate does not know his own preferences as well as you do.
D)  You constructed a model that made a prediction,and the prediction was refuted.E) B) and D)
F) C) and D)

Question 2

A possible rational reason why older people,on average,show less interest in learning how to use new technologies is because

Accepted Answer

A)  older people are not as smart as (today's) young people.
B)  they are acting irrationally.
C)  they have fewer years to gain a return from learning how to use new technologies.
D)  the financial cost for older people is greater than the cost to younger people.E) All of the above
F) A) and C)

Question 3

In order to study how changing price affects consumer decisions,we must assume all other factors,such as income and the prices of other goods are constant.This assumption is best know as

Accepted Answer

A)  rationality.
B)  ceteris paribus.
C)  normative economics.
D)  behavioral economics.E) B) and D)
F) All of the above

Question 4

The relationship between beers consumed the night before an exam and test grade will be graphed as

Accepted Answer

A)  a line sloping down from upper right to lower left.
B)  a line sloping down from upper left to lower right.
C)  a circle.
D)  a u-shaped curve.E) B) and D)
F) B) and C)

Question 5

When a U.S.Senator tells a campaign crowd that "High inflation rates are a much more serious economic problem than high unemployment rates," it is an example of

Accepted Answer

A)  a normative statement.
B)  an empirically proven fact.
C)  a positive statement.
D)  a microeconomic argument.E) C) and D)
F) B) and C)

Question 6

Consider the case of a teacher who tells students that those who miss more than three classes for any reason will automatically receive a lower grade.

Accepted Answer

A)  This is an example of a positive incentive for students to attend class.
B)  This is an example of a negative incentive for students to attend class.
C)  The teacher is assuming that students are irrational,and she must force them to attend class.
D)  Students who miss more than three classes are irrational.E) B) and D)
F) None of the above

Question 7

A relationship between two variables in which one variable increases at the same time as the other decreases is called

Accepted Answer

A)  nonlinear.
B)  constant.
C)  inverse.
D)  direct.E) A) and D)
F) A) and C)

Question 8

Ceteris paribus means

Accepted Answer

A)  other variables are held constant.
B)  almost certainly.
C)  only if everything works just right.
D)  perhaps.E) A) and B)
F) B) and C)

Question 9

If a teacher tells a student that those who attend the study session typically score higher on the final exam,

Accepted Answer

A)  the student has a positive incentive to attend the study session because she may get a higher grade.
B)  the student has a negative incentive to attend the study session because she will be punished if she does not go.
C)  the student has no greater incentive to attend because there is no guarantee she will get a higher grade on the exam.
D)  a "C" student will be making an irrational decision if she decides to skip the study session since she has plenty of time to go.E) All of the above
F) A) and B)

Question 10

Positive analysis can be described as

Accepted Answer

A)  the study of whether people respond to positive incentives.
B)  the study of whether people respond to negative incentives.
C)  a value-free approach to inquiry.
D)  a study that is not tested empirically.E) All of the above
F) C) and D)

Question 11

What type of economics would most typically deal with aggregates?

Accepted Answer

A)  macroeconomics
B)  microeconomics
C)  labor economics
D)  environmental economicsE) A) and D)
F) B) and C)

Question 12

Which of the following is a positive statement?

Accepted Answer

A)  An unemployment rate of 5.8 percent is too high.
B)  The unemployment rate is 5.8 percent.
C)  The unemployment rate should be below 5.8 percent.
D)  The unemployment rate should never be above 5.8 percent.E) None of the above
F) All of the above

Question 13

Which of the following is an example of a positive economic statement?

Accepted Answer

A)  The unemployment rate last month was 5.4 percent.
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 should be measured differently because it doesn't include students who can't find jobs.E) B) and D)
F) None of the above

Question 14

Economics is the study of how

Accepted Answer

A)  people make money.
B)  preferences are determined.
C)  psychology influences preferences.
D)  people make choices.E) All of the above
F) A) and B)

Question 15

Which of the following is an example of an inverse relationship?

Accepted Answer

A)  hours of study and test grade
B)  calories eliminated from diet and weight loss
C)  beers consumed while studying and test grade
D)  amount of snowfall and profits of ski resortsE) All of the above
F) A) and C)

Question 16

Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

Accepted Answer

A)  incentives
B)  resources
C)  rationality
D)  aggregatesE) C) and D)
F) A) and C)

Question 17

Normative economic statements

Accepted Answer

A)  are statements of "what ought to be."
B)  are statements of "what is."
C)  are statements that may be tested by referring to facts and data.
D)  do not involve value judgments.E) C) and D)
F) B) and D)

Question 18

Which of the following is NOT one of the basic questions that an economic system attempts to answer?

Accepted Answer

A)  How to eliminate choices?
B)  What to produce?
C)  How much will goods and services be produced?
D)  For whom will goods and services be produced?E) C) and D)
F) B) and C)

Question 19

Which of the following is always true of rational behavior?

Accepted Answer

A)  It always entails pursuing one's own best interest.
B)  It always yields the best possible outcome for all individuals.
C)  It never involves the pursuit of greedy self-interest.
D)  It never involves taking into account the interests of others.E) A) and C)
F) A) and B)

Question 20

Self-interest relates to

Accepted Answer

A)  only monetary objectives.
B)  both monetary and nonmonetary objectives.
C)  the ceteris paribus assumption.
D)  normative economic analysis and not positive economic analysis.E) B) and D)
F) A) and D)

Exam 1: The Nature of Economics

Normative economic statements

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Based on your understanding of your roommate's preferences,you predict that he will select the spaghetti for his lunch at the cafeteria,but instead he chooses the gyros.How do you describe this event in terms of economic theory?

Correct AnswerverifiedShow Answer

Consider the case of a teacher who tells students that those who miss more than three classes for any reason will automatically receive a lower grade.

Correct AnswerverifiedShow Answer

What type of economics would most typically deal with aggregates?

Correct AnswerverifiedShow Answer

A possible rational reason why older people,on average,show less interest in learning how to use new technologies is because

Correct AnswerverifiedShow Answer

In order to study how changing price affects consumer decisions,we must assume all other factors,such as income and the prices of other goods are constant.This assumption is best know as

Correct AnswerverifiedShow Answer

Which of the following is NOT one of the basic questions that an economic system attempts to answer?

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Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

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Ceteris paribus means

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Which of the following is an example of an inverse relationship?

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Positive analysis can be described as

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Which of the following is an example of a positive economic statement?

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A relationship between two variables in which one variable increases at the same time as the other decreases is called

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Self-interest relates to

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Which of the following is always true of rational behavior?

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Economics is the study of how

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Which of the following is a positive statement?

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When a U.S.Senator tells a campaign crowd that "High inflation rates are a much more serious economic problem than high unemployment rates," it is an example of

Correct AnswerverifiedShow Answer

The relationship between beers consumed the night before an exam and test grade will be graphed as

Correct AnswerverifiedShow Answer

If a teacher tells a student that those who attend the study session typically score higher on the final exam,

Correct AnswerverifiedShow Answer

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