question

The economic way of thinking will help you a) make decision in financing your home b) decide whether the US government should encourage or discourage immigration c) make better decisions concerning your education d) all the the above

answer

D

question

Economic analysis is used a) only in economics classrooms b) only by business people c) only by policy makers d) in all decision making

answer

D

question

Economic analysis is a tool that a) aids all decision making b) helps us understand why people make mistakes c) helps us forgive selfish people d) complicates decision making

answer

A

question

Economics is best defined as the a) study of how people make choices to satisfy their wants b) study of individual self-interests c) study of how government can most efficiently raise funds by taxation d) process by which goods are sold in free markets

answer

A

question

Economics can be described as the study of how people use _________ resources to satisfy ________ wants

answer

limited; unlimited

question

Which statement most accurately defines economics a) economics is the study of how people make money b) economics is the study of how people make choices to satisfy their wants c) economics is the study of values a society should choose d) economics is the study of how to eliminate scarcity

answer

B

question

In economic analysis, people's resources are a) limited and their wants are unlimited b) unlimited and their wants are also unlimited c) limited and their wants are also limited d) unlimited and their wants are limited

answer

A

question

In economics, items that are used to produce goods and services are known as a) wants b) aggregates c) factors of need d) resources

answer

D

question

In economics, all the items that people would consume if they had unlimited income are known as a) wants b) aggregates c) outputs d) needs

answer

A

question

Economics is the study of how a) people make money b) preferences are determined c) psychology influences preferences d) people make choices

answer

D

question

A fundamental aspect of economics s to a) ensure that every firm makes a profit b) analyze how choices are made c) satisfy all our wants d) make sure that our resources will always be unlimited

answer

B

question

Economics is the study of a) how to get rich b) how people allocate their limited resources to satisfy their unlimited wants c) how people spend their income d) why people want certain goods and services rather than other goods and servicess

answer

B

question

Economics is the study of a) nonhuman phenomena wants b) the determinants of preferences c) scare resources and unlimited wants d) the physical sciences

answer

C

question

Economics deals with a) how to profit from the stock market b) how to satisfy limited human wants c) how society allocates unlimited resources d) how individuals allocate scare resources to satisfy unlimited human wants

answer

D

question

Economics is the study of a) how to own as many resources as possible b) ceteris paribus c) the way people think rather than the way they act d) how people allocate their limited resources to satisfy their unlimited wants

answer

D

question

Economic resources are a) all the items that people would purchase with limited wants b) all the unlimited items that people would purchase with limited income c) items of value that are used to make other things that satisfy people's wants d) the total planned expenditures throughout the nation

answer

C

question

Economics is concerned with choices a) that involve the wants of individuals b) that involve the political goals of professional associations c) made by individuals only when they are consuming goods or services d) that involve making money

answer

A

question

Economics is a social science that involves the study of how individuals a) develop their tastes and preferences b) maximize their health c) define happiness d) choose among alternatives to satisfy their unlimited wants

answer

D

question

Economics is a part of the a) social science b) natural sciences c) biological sciences d) organizational sciences

answer

A

question

Wants are a) another term for needs b) the things people would consume if they had unlimited incomes c) the things people consume with their income d) all the things people really need in order to live comfortably

answer

B

question

The primary purpose of economics is to understand how people make a) money b) goods and services c) choices d) a comfortable living

answer

C

question

The primary objective of economics is a) to learn how to create more resources b) to study how people make choices with limited resources c) to learn how to make the most profits with a given amount of resources d) to study why some people are never happy with the resources they habe

answer

B

question

The basic economic problem is a situation of a) limited resources and unlimited wants b) both limited resources and limited wants c) limited incomes and unlimited choices d) unlimited incomes and limited choices

answer

A

question

Economics is the study of how people make a) judgments b) investments c) money d) choices

answer

D

question

Economics is a a) hard science b) physical science c) natural science d) social science

answer

D

question

Economics is a study of a) how to make money in the stock market b) how to run a business successfully c) the allocation of scare resources d) personal finance

answer

C

question

Economics is the study of a) the allocation of scare resources to satisfy unlimited wants b) why some people want certain goods and services c) earning the most income d) ways to use fewer resources

answer

A

question

Resources are a) unlimited b) able to be replicated in large quantities c) what people would buy if their income was unlimited d) used to produce goods and services to satisfy people's wants

answer

D

question

________ are the things that are used to produce items that satisfy people's wants a) concepts b) production possibilities curve c) resources d) costs

answer

C

question

Economics is most precisely defined as a) a study of what people need to survive b) a study of how culture evolves in different geographic areas c) the same as the study of finance and management d) the study of how people make choices

answer

D

question

Economics a) is a social science b) is concerned with limited resources c) is concerned with unlimited wants d) all of the above are correct

answer

D

question

Which of the following is NOT a focus of the study of economics a) how individual preferences are formed b) unemployment c) inflation d) prices in particular markets

answer

A

question

Because resources are scare relative to wants, the study of economics concerns a) how money is important to people b) how individuals, businesses, and government make choices c) how money is used to buy what people want d) none of the above are correct

answer

B

question

In the definition of economics, a) both resources and wants are limited b) both resources and wants are unlimited c) resources are limited and wants are unlimited d) resources are unlimited and wants are limited

answer

C

question

Microeconomics is defined as that part of economic analysis that a) studies the behavior of the economy as a whole b) includes the problems of inflation and unemployment c) studies individual decision making by households and firms d) concerns aggregate production and consumption

answer

C

question

Macroeconomics is the study of a) aggregate economic variables b) output in particular industries c) prices in particular industries d) all of the above

answer

A

question

Microeconomics is the study of a) the behavior of the economy as a whole b) how rising prices affect the level of employment in the economy c) how individuals and firms make decisions d) the effect that money has in the economy system

answer

C

question

Macroeconomics is best defined by which of the following statements a) macroeconomics is the study of how firms strive to maximize their profits b) macroeconomics is the study of the behavior of the economy as a whole c) macroeconomics is the study of individual economic units d) macroeconomics is the study of how the prices of individual goods are determined

answer

B

question

Macroeconomics deals with _______ while microeconomics deals with _____ a) choices important to people; choices not important to people b) economy-wide choices; choices of individuals c) choices that involve money; choices that does not involve money d) choices of rich people; choices of poor people

answer

B

question

Macroeconomics deals with a) aggregates within the economy b) specific sectors within the economy c) the retail industry only d) decisions made by firms

answer

A

question

Which of the following would most likely NOT be taught in a microeconomics course? a) changes in prices of automobiles b) the effects of a gas tax on gas purchases c) the effect of an increase in wheat prices on farmers' behavior d) the unemployment rate

answer

D

question

Which of the following most likely NOT be taught in a macroeconomics course? a) changes in the health care industry b) factors leading to different economic growth rates among countries c) government actions in response to a slowdown in the economy d) the relationship between the inflation rate and the unemployment rate

answer

A

question

A macro-economist would study a) the price changes at K- Mart b) the cost problems at several airlines c) the economy's unemployment level d) none of the above

answer

C

question

A micro-economist would study all the following issues EXCEPT a) the impact of a change in consumer income on the sales of corn b) the impact of a snowstorm on the sales of snow shovels c) the most efficient means for General Motors to produce an automobile d) the effect of a change in income taxes on the nation's rate of unemployment

answer

D

question

The macro-economist would most likely study a) the effects of changing apple prices on the market for oranges b) the effects of an increase in wage rates on a woman's decision to enter the labor force c) the effects of a lower income tax rates on the nation's total production of goods and services d) the effect of increased union wages on the cost of producing automobiles

answer

C

question

The impact of higher taxes would be examined by a) a micro-economist b) a macro-economist c) both a macro-economist and a micro-economist d) neither a macro-economist nor a micro-economist

answer

C

question

One topic of study for a micro-economist would be the a) causes of inflation b) causes of aggregate unemployment c) effects of a gasoline price increase on consumer behavior d) effects of an increase in government spending on overall economic activity

answer

C

question

A friend wants to learn how the unemployment rate is calculated and how inflation is measured. he asks you which economics course to take and you advise him to enroll in a) macroeconomics b) microeconomics c) either micro- and macroeconomics. They both concentrate equally on those issues d) financial accounting because economics doesn't address those topics in its courses

answer

A

question

Which of the following would likely be studied in a macroeconomics course a) the unemployment rate b) total output for an economy c) the inflation rate d) all of the above

answer

D

question

Macroeconomics is concerned with a) individual consumers b) government decision making concerning farm price supports c) aggregates d) the effects on a corporation of a strike by the United Auto Workers

answer

C

question

Macroeconomics often relies on microeconomics analysis because a) microeconomics is older than macroeconomics b) microeconomics theory can be tested and macroeconomics theory cannot be tested c) all aggregates are made up of individual and firms d) the effects of macroeconomics subjects such as inflation and unemployment are independent of individual consumers and firms

answer

C

question

Microeconomics is concerned with studying which of the following? a) the determinants of national unemployment b) the effects of monetary policy c) the study of individual markets d) all of the above

answer

C

question

Microeconomics is concerned with studying which of the following? a) the effects of inflation b) the effects of government spending c) the effects on individual producers of higher wages paid to workers d) aggregates

answer

C

question

Microeconomics focuses on a) individual decision makers within the economy b) the large parts of the economy c) changes in national income d) satisfying the needs of the economy

answer

A

question

Macroeconomics is concerned with a) individual business firms b) specific industries c) individual consumers d) a nation's entire economy

answer

D

question

Microeconomics examines the a) total household expenditures b) behavior of the economy as a whole c) aggregate business spending d) decision making undertaken by individual households

answer

D

question

Macroeconomics is concerned with studying the a) behavior of individual decision makers b) behavior of the economy as a whole c) prices of specific companies stocks d) wants of individuals

answer

B

question

Macroeconomics would be concerned with a) implications of changes in unemployment and inflation b) the effects on individual consumers of changes in the price of gasoline for a business c) the effect of a tax on beer d) the effects of wage increase on steel manufactures

answer

A

question

The study of an individual's choice about what type of computer to buy is a subject of a) macroeconomics b) microeconomics c) an aggregate concept d) not a concern for economic analysis

answer

B

question

The study of the aggregate economic variables is a) macroeconomics b) microeconomics c) positive economics d) normative economics

answer

A

question

Another word for "aggregate" is a) government b) partial c) public d) total

answer

D

question

The distinction between microeconomics and macroeconomics is a) clearly drawn, and there is no overlap between them b) determined by economists in a clear and concise manner c) narrowly drawn, and microeconomic analysis often often relies on macroeconomic tools d) often blurred because aggregates are made up of individual and firms

answer

D

question

Modern economists are increasingly using microeconomic analysis in macroeconomics because a) microeconomic theory is more scientific b) aggregate outcomes stem from decisions made by individuals, business firms and government c) macroeconomic subjects such as inflation affect all individuals d) macroeconomics is older and more outdated

answer

B

question

Which of the following is NOT studied in microeconomics? a) the effect of an increase in gasoline taxes on the purchase of gasoline b) the impact of firms' collective hiring choices on the aggregate unemployment rate c) the impact of an increase in the unemployment rate on economic production d) the impact of higher fuel prices on the cost of airline tickets

answer

C

question

All the following are examples of macroeconomic problems EXCEPT a) inflationary pressures caused by an increase in the cost of petroleum b) unemployment caused by a fall off in the level of residential construction c) a decline in the rate of overall economic growth d) consumers deciding to buy more fish and less beef because of concerns about a healthier diet

answer

D

question

Macroeconomics is concerned primarily with a) positive economics b) production and prices in particular markets c) aggregate economic variables d) normative issues

answer

C

question

Microeconomics studies a) decisions made by individual consumers and firms b) the changes in economic theory brought about by real- world events c) how small changes in the unemployment rate can have far- reaching effects d) how small changes in the money supply can have far- reaching effects

answer

A

question

Which of the following terms identifies something that macro-economists would study but that micro-economists would NOT? a) incentives b) resources c) rationality d) aggregates

answer

D

question

Which of the following is a characteristic or focus of economics? a) allocation of limited resources in an effort to satisfy potentially unlimited wants b) positive economic analysis c) empirical analysis d) all of the above

answer

D

question

Which of the following would likely be considered as falling into the domain of microeconomics? a) the US unemployment rate b) the Gross Domestic Product c) the price of apples d) the effects of fiscal policy on the US economy

answer

C

question

Macroeconomics might study which of the following? a) the causes of domestic unemployment b) decision making undertaken by firms c) decision making undertaken by households d) determinants of the prices of rare goods

answer

A

question

Which of the following is NOT a characteristic or focus of microeconomics? a) normative analysis b) analysis of aggregate economic variables c) empirical analysis d) empirical analysis

answer

B

question

Which of the following is a microeconomic concern? a) the rate of economic growth in the US b) the current unemployment rate in the US c) consumer behavior d) national output of the US

answer

C

question

Which of the following is a macroeconomic concern? a) the unemployment rate in a specific industry b) the national output of the US c) wage levels in specific industries d) the operation of an individual firm

answer

B

question

The study of how a particular firm might choose to maximize its profits would fall into what type of analysis? a) macroeconomics b) microeconomics c) labor economics d) aggregate economics

answer

B

question

What type of economics would most typically deal with aggregates? a) macroeconomics b) microeconomics c) labor economics d) environmental economics

answer

A

question

Which of the following is a microeconomic topic? a) the unemployment rate of the US economy as a whole b) the rate a which prices increase in Brazil c) the advertising strategy of a particular company d) the increase in the national income of the US over the past 3 months

answer

C

question

Which of the following topics is a macroeconomic subject? a) a proposed merger between 2 companies b) the level of Christmas sales at a particular department store c) the unemployment rate of the US economy as a whole d) the advertising strategy of a particular automoble firm

answer

C

question

Which of the following is an aggregate? a) the number of shoes in one man's closet b) the bushels of apples one farmer sells c) the price of a particular textbook d) the total production of all goods and services

answer

D

question

All of the following are aspects of microeconomics EXCEPT a) monopolies b) a firm maximizing profit c) a worker choosing one job over another d) the average level of prices of all goods and services produced in a country in a year

answer

D

question

The impact of an increase in the gasoline tax on SUB sales is a) a macroeconomics topic because it deals with taxes b) a microeconomics topic because it deals with one industry c) not an economic issue, but rather a political issue d) insignificant

answer

B

question

Which of the following would most likely be part of the study of microeconomics? a) how General Motors makes decisions regarding its production goals b) national income c) the total economic output of our domestic economy d) overall price stability in the US

answer

A

question

All of the following are aspects of macroeconomics EXCEPT a) the US unemployment rate b) the production decisions of a pharmaceutical firm c) the budget deficit of the US d) foreign trade

answer

B

question

Individual decision making by consumers and producers is the focus of a) macroeconomics b) microeconomics c) aggregate measures d) any economic model

answer

B

question

Microeconomics is the study of a) aggregate measures of the economy b) foreign policy economic issues c) federal budget details d) individual decision making

answer

D

question

An example of a macroeconomic decision is a situation in which a) the Federal Reserve considers how much to increase the money supply during the coming month in an effort to constrain the rate of inflation b) Congress and the president seek to reach a compromise on how much to increase government spending in an effort to influence national expenditures c) a firm evaluates how much to reduce the price of its product in an effort to influence sales and boost its profits d) the US Treasury contemplates buying foreign currencies in an effort to influence exchange rates with an aim to boosting demand for US goods and services

answer

C

question

An economic system is a) the universe of all resources b) a way to create new resources c) a mechanism to allocate scare resources d) an organization that generates profits

answer

C

question

The way that a society uses to allocate resources to satisfy human wants is called a) an economic system b) an assumption c) realism d) a physical science

answer

A

question

The issues that an economic system attempts to solve include a) what to produce b) how to produce items c) for whom items are produced d) all the above

answer

D

question

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

answer

A

question

What is the type of economic system that relies on one central authority to make economic decisions a) free market b) price system c) command and control d) mixed economic system

answer

C

question

What is the type of mechanism that answers the basic economic questions through a decentralized decision making process a) market system b) dictatorship c) command and control d) mixed economic system

answer

A

question

Central planning is a key characteristic of which economic system a) free market b) price system c) command and control d) mixed economic system

answer

C

question

Under a pure price system, the decision of resource allocation is made by a) the head of the government b) a queen or king c) individuals who own the resources d) no one

answer

C

question

In a market system, the what, how and for whom questions in economics are determined by a) those who are not in the market b) buyers and sellers together c) the central authority d) no one

answer

B

question

In a market system,_______ provide signals about whether resources are relatively scare or abundant a) prices b) economists c) government officials d) scientists and engineers

answer

A

question

The United States is best known as a a) pure price system b) dictatorship c) command and control system d) mixed economic system

answer

D

question

A mixed economic system is best described an economy with a mix of a) state and federal governments b) domestic and foreign buyers c) free markets and government control d) for profit organizations and not for profit organizations

answer

C

question

In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, economist Adam Smith argue that individuals a) always tend to act in an altruistic manner b) always consider the impact of their actions on the welfare of others c) are motivated by self-interested d) are generally not concerned with economic questions

answer

C

question

Economists assume that people are motivated by a) behavior b) altruism c) greed d) rational self-interested

answer

D

question

One major assumption of economics is that people a) act as if they systematically pursue self-interested b) behave randomly without any predictable pattern c) are sometimes rational and sometimes irrational d) always pursue the interests of others

answer

A

question

If people act as if they systematically pursue their own self-interest, then they will most likely a) respond irrationally to any incentive b) respond to a given incentive in a random manner c) respond predictably to a given incentive d) not respond to any incentivve

answer

C

question

When studying individuals' economic behavior, economists assume that a) individuals understand the rational for all their actions b) individuals act as if they were rational c) only educated people act as if they were rational d) self-interest is of limited relevance in predicting an individuals' actions

answer

B

question

The assumption that people do not intentionally make decisions that would leave them worse off is known as a) the rationally assumption b) the microeconomic assumption c) the ceteris paribus assumption d) the normative assumption

answer

A

question

When the text refers to rational self-interest, it means a) your looking out for what is best for you as an individual b) your focus on your own contributions to society c) behavior that makes society better off d) behavior that helps your employer earn higher profits

answer

A

question

In economic, the concept that individuals are motivated by self-interest respond predictably to opportunities for gain is known as a) rational self-interest b) altruism c) sufficiency d) empiricism

answer

A

question

Economists assume people behave rationally, which means that people a) never make a mistake b) do not intentionally make decisions that make themselves worse off c) have the necessary information to always make correct decisions d) always understand the consequences of their decisions

answer

B

question

Sara looks into her closet and discovers a pair of like- new shoes she no longer wears because they give her blisters. From the economist's perspective, was Sara behaving rationally when she bought those shoes? a) no. If any of a person's decisions have poor results, that person is irrational b) yes, as long as Sara didn't intentionally purchase blister- causing shoes c) no. the rationality assumption states that rational people never make mistakes d) it's not clear because psychology, not economics, deals with the rationality assumption

answer

B

question

Do economists analyze people's thought processes or do they look at what people actually do? a) economists focus only on people's thought processes b) economists focus on what people do, not their thought processes c) an economist's focus is about half-and-half between actions and thought processes d) macroeconomists focus on thought processes while microeconomists focus on actions

answer

B

question

When people donate money to a charity, they behave a) rationally if the act gives them satisfaction b) irrationally because the act does not benefit anyone c) in an unpredictable manner because the act involves no incentive d) in a way that only makes themselves worse off

answer

A

question

The potential rewards that are available to an individual if a particular activity is undertaken are known as a) premiums b) gifts c) incentives d) intrinsic values

answer

C

question

Father says, "Earn a B-average on your next report card and I'll help you buy a car." An economist would say that this parent is providing his child a(n) a) study disincentive b) reason to slack off and not worry about her grades c) bribe d) incentive

answer

D

question

Some pet owners are using an "invisible fence" to keep their animals from straying. Every time the animal steps over the edge of the property, it gets a mild shock. A social scientist would call the shock a) a bribe b) a reward c) a disincentive d) a normative incentive

answer

C

question

Which of the following is true of incentives? a) different people are motivated by different incentives b) money is the only measure of incentives c) all of the people in a particular nation are motivated by the same incentives d) In economics, people are assumed to respond to disincentives instead of incentives

answer

A

question

Economists assume people are motivated by a) unlimited resources b) pride c) self-interest d) social justice

answer

C

question

Self-interest relates to a) only monetary objectives b) both monetary and nonmonetary objectives c) the ceteris paribus assumption d) normative economic analysis and not positive economic analysis

answer

B

question

Economists assume people behave a) instinctively b) rationally c) irrationally d) greedily

answer

B

question

Which of the following is always true of rational behavior? 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

answer

A

question

John has an economics test tomorrow. He must study and has planned the rest of his day so that he can fit some study time in. He has decided to go to the gym and then study for several hours. Which of the following statements is true? a) John did not use the economic way of thinking because his decision on how to allocate his time did not involve money b) John's decision on how to allocate his time is inconsistent with the rationality assumption since he has decided to go to the gym c) John's decision on how to allocate his time is consistent with the rationality assumption since the decision is intended to make himself better off d) John's decision does not involve his pursuit of self-interest

answer

C

question

People behave rationally when they a) follow the advice of government leaders b) never have regrets about their decisions c) make decisions they think will make themselves better off d) make decisions solely based on financial outcomes

answer

C

question

Which of the following is a true statement about the economic assumption of rationality? a) individuals who are rational necessarily ignore the interests of others b) individuals generally act as though they are rational c) individual behavior may be irrational but group behavior is always rational d) people make decision as if they are consistent

answer

B

question

A decision made by a rational person a) is intended to make the person worse off b) would always make the person wealthier c) is identical to a decision that would be made by any other person facing the same choices d) is intended to make the person better off

answer

D

question

The assumption that individuals will not intentionally make decisions that will leave them worse off is known as a) microeconomic analysis b) macroeconomic analysis c) a model or theory d) the rationality assumption

answer

D

question

The rationality assumption says that a) people do not intentionally make decisions that would leave them worse off b) people never make decisions that would them worse off c) people do not respond to incentives since incentives require scare resources d) all economic analysis must be normative

answer

A

question

Jose is rational if he a) does not intentionally make decisions that would leave him worse off b) never makes a mistake in his life c) only responds to rewards that involve money d) always uses a model or mathematical formula to help him make a deciosn

answer

A

question

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

answer

C

question

Incentives are a) potential rewards available if a particular activity is undertaken b) ineffective as a device to get people to behave in a certain fashion c) inappropriate ways to obtain a certain kind of behavior d) useless when people behave rationally

answer

A

question

Which of the following would NOT provide an incentive to reduce the amount of beef consumed? a) an increase in the price of beef b) a subsidy to buyers of beef c) a decrease in the price of chicken d) a ban on beef sales by the Food and Drug Administration

answer

A

question

People respond to incentives a) by ignoring negative incentives and responding to positive incentives only b) only when they are irrational c) by calculating their individual costs and benefits and determining which is greater d) when they have low incomes

answer

C

question

The threat of a large fine for failure to pay income taxes is an example of a) the excessive power of the Internal Revenue Service b) the ineffectiveness of incentives to get people to pay their taxes c) a negative incentive to get all people to pay taxes d) people failing to consider all the benefits the government provides them

answer

C

question

A politician says that the government should tax behavior they want less of and subsidize behavior they want more of. This is an example of a) cynical behavior in modern democracies b) failing to consider the alternatives available to the government c) a concern that people are not rational when they make decision d) using incentives to alter behavior

answer

D

question

Which of the following ways to recruit soldiers utilizes incentives a) a draft b) universal service c) higher salaries d) longer length of service

answer

C

question

Self-interest a) implies that a person must try to increase wealth at all times b) implies that people will not give away wealth c) is consistent with many goals that people pursue, including betterment of others d) applies only to people in market settings

answer

C

question

Self-interest a) relates strictly to material well-being, such as a person's stock of wealth at a point in time b) is measure entirely based on an individual's income, whether earned from labor or inherited c) is inconsistent with economic analysis, which suggests that self-interest is irrational d) can involve any action that makes a person feel better off, such as charitable contributions

answer

D

question

Shelley's grandmother gave her a sweater for her birthday, but Shelly wanted a DVD. This implies that a) Shelley's grandmother is not acting out of self-interest because she knows tat Shelley really wanted a DVD b) Shelley's grandmother is acting out of self-interest because she wanted to give Shelly something useful c) it is in Shelley's self-interest to refuse to wear the sweater d) Shelly should exchange the sweater for a DVD

answer

B

question

Charitable donations to the Red Cross a) can be explained by the rational ignorance theory b) can be explained by the rational self-interest theory c) cannot be explained by the rational self-interest theory d) prove that there is no scarcity in the United States

answer

B

question

A five-cent deposit on beer bottles a) provides a positive incentive because it rewards people for recycling b) provides a negative incentive because it punishes people who do not recycle c) is an irrational policy, because it fails to take into account incentives d) is an irrational policy, because it fails to take into account self-interest

answer

A

question

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

answer

A

question

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 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

answer

B

question

If the government offers to reduce your property taxes by 10 percent if you install solar heating for your home, this would be an example of a) police power b) incentives c) disincentives d) ceteris paribus

answer

B

question

Economists assume that people are motivated by a) a desire to please others b) the interests of the community at large c) self-interest d) morally correct behavior

answer

C

question

When we say that an individual behaves according to "rational self-interest," we mean that this individual a) is motivated by greed b) will always buy the most fashionable items available c) will always buy the cheapest products available on the market d) is making choices that he or she believes will leave him or her better off

answer

D

question

Rational behavior for an economist means that individuals a) are motivated by self-interest b) never change their minds c) always make positive choices d) are self-sacrificing

answer

A

question

According to economists, when two people make exactly the opposite decision, a) one of them is acting irrationally b) each person evaluates the situation according to his/ her individual self-interest c) one of them is acting out of spite d) one of them should compromise

answer

B

question

It is assumed in economists that people make decisions based upon a) altruism b) rational self-interest c) tradition d) governmental persuasion

answer

B

question

An incentive is a a) need b) want c) reward for desired behavior d) resource

answer

C

question

The assumption that individuals do NOT intentionally make decisions that would leave them worse off is referred to as a) the premium assumption b) the law of comparative advantage c) the rationality assumption d) the law of demand

answer

C

question

The author of the book An Inquiry into the Nature and Causes of the Wealth of Nations is a) Thorstein Veblen b) Adam Smith c) Milton Friedman d) Alan Greenspan

answer

B

question

Rational self-interest means a) always increasing your wealth b) pursuing what makes you better off c) pursuing activities that maximize income d) always pursuing activities that are consistent with your faith

answer

B

question

The rationality assumption states that a) all actions taken by consumers are based on what is good for society b) people make decisions regardless of how the outcome will affect them c) people make decisions to buy only those goods that they need rather than goods that they want d) people do not intentionally make decisions that would leave them worse off

answer

D

question

Economic theory predicts that people make choices in a manner that a) makes them well liked by others b) makes them better off c) reflects the fact that resources are unlimited d) shows that they do not respond to monetary incentives

answer

B

question

How could Adam Smith's comment about the butcher, the brewer, and the baker be accurately rephrased in modern terms? a) the butcher, the brewer, and the baker give us our dinner because they want to be well liked in the community b) the butcher, the brewer, and the baker give us our dinner because they will be sued if they don't do so c) the butcher, the brewer, and the baker give us our dinner because they each earn a living by doing so d) the butcher, the brewer, and the baker give us our dinner because they view doing so as a public service

answer

C

question

According to economic theory, how do people make choices? a) they make decisions in the same manner as their parents did b) they make decisions by looking at what others have done in the same situation and then doing the opposite c) they make decisions by looking at what others have done in the same situation and then doing the same d) they make decisions based on their own self-interest

answer

D

question

Underlying economic theory is the idea that a) people respond only to negative incentives, not to positive ones b) choices are affected by both positive and negative incentives c) value judgments do not play a role in the economic decisions people make d) money is the only incentive that matters

answer

B

question

High gasoline prices give people all of the following incentives EXCEPT a) to drive less b) to car pool c) to buy a hybrid car d) to take vacations that require driving more miles

answer

D

question

The idea that people will not consciously make decisions that make them worse off is known as a) rationality assumption b) the decision duality c) Adam Smith's doctrine d) incentive assumption

answer

A

question

Another term for "economic models" is a) economic designs b) economic theories c) economic science d) economic maps

answer

B

question

A simplified representation of the real world that is used to explain economic phenomena is a(n) a) map b) model c) assumption d) implication

answer

B

question

Economics is an empirical science, which means that economists a) must use laboratory experiments to test their theories b) evaluate a model or theory by whether its assumptions are consistent with the real world c) try to prove their models are true by referring to logic d) look for evidence to determine whether the model is useful or not

answer

D

question

Both the social sciences and the natural sciences employ______ to help them understand the world around them a) models b) designs c) traditional thinking d) implications

answer

A

question

Which is NOT true about the use of economic models a) economic models are simplified representations of the real world b) economists sometimes use laboratory experiments to test their theories c) economists use what has already happened in the real world to test their theories d) economists are employed to explain economic phenomena but are never used to predict what might happen next

answer

D

question

Which of the following statements is FALSE a) Economists empirically test their models b) economic models are not used to forecast c) an economic model should capture only the essential relationships that are sufficient to analyze the particular problem being studied d) economic models relate to behavior rather than to individual thought processes

answer

B

question

Economists develop models to a) capture every detail of the real world b) make their arguments more realistic c) justify the assumption they make about people's behavior d) help us understand economic phenomena in the real world

answer

D

question

Which of the following statements concerning economic models is FALSE a) economic models must provide usable predictions b) economic models are based on pure fact and no assumption c) economic models are test empirically d) economic models relate to how people behave

answer

B

question

Which of the following statements about economic models is true a) economic models are not empirically testable b) the predictive power of models is not important c) economic models are designed so that every detail of the real world can be analyzed d) every economic model is based on a set of assumption

answer

D

question

Economic models a) are used to explain how people think b) are used to explain how people behave c) are essential representations of the real world d) are never used for making economic projections or predictions

answer

B

question

One reason why economists often use models in their analysis is that a) a model helps us to understand, explain, and predict economic phenomena in the real world b) a model accurately pictures every detail of the real world economy c) a model relates to individual thought processes rather than behavior d) it is relatively easy to perfectly specify a model

answer

A

question

An economic model should capture a) the essential relationships that help to analyze the problem b) all possible variables that apply to the problem c) only social value related variables d) all the above

answer

A

question

One problem with constructing a perfectly complete realistic economic model is that a) it would be too simplistic to have any value b) it would be far too complicated to analyze c) politicians see little value in such a model d) none of the above is true

answer

B

question

Which of the following statements is true? a) no economic model captures every detail that affects a problem b) economic models always make accurate predictions about behaviors c) economic models must fully reflect reality d) economic models use economists' opinions with no use of dât

answer

A

question

A map is an example of a model because a map a) realistically describes an area b) is always as complex as space will permit c) is two- dimensional d) is a simplified representation of reality

answer

D

question

Holding all variables constant but one and assessing the impact of the one variable that has changed is an example of using a) the ceteris paribus assumption b) an economic model based on unrealistic assumptions c) a flawed economic model d) an untestable proposition

answer

A

question

The term ceteris paribus means a) the greatest good for all b) the study of scarcity and choice c) all other things remaining constant or equal d) value- free and testable

answer

C

question

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 known as a) rationality b) ceteris paribus c) normative economics d) behavioral economics

answer

B

question

Which of the following is an example of an application of the ceteris paribus assumption? 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) after reading an article on the dangers of high-fat diets, an individual buys less red meat when prices increase d) an analysis of how worker productivity increases when a firm invests in new machines and training programs

answer

A

question

Ceteris paribus means a) making all the necessary changes b) other things constant c) for certain parameters d) let the buyer beware

answer

B

question

The ceteris paribus assumption is important in economics because a) all empirical data are equal b) it would be impossible to relate the effects of changes in one variable on another without holding some variables constant c) economic data move very slowly over time and so they can always be considered constant d) models are always complex and require as many variables as possible

answer

B

question

The assumption that "other things are constant" is also known as the a) ceteris paribus assumption b) rational self- interest assumption c) distinguishing characteristic of economics as a science d) relationships assumption

answer

A

question

Mary says she plans to return to college next semester assuming her car keeps running, tuition fees don't go up, and her daycare provider continues to be dependable. An economist would say that Mary plans to return to college next semester,______ a) caveat emptor b) ceteris paribus c) laissez faire d) ipso facto

answer

B

question

Professor's economics students are constructing models for how gasoline prices change. Maria's model has very realistic assumptions and is quite complex. Anna's model is less complicated and less realistic. Maria's model correctly predicts gas price increases 5% of the time. Anna's model predicts correctly 15% of the time. On the basis of usefulness or "goodness," Professor will give which students's model the higher grade and why? a) Maria's model gets the higher grade because it is more complex b) Anna's model gets the higher grade because it is simpler c) Maria's model gets the higher grade because it is more realistic d) Anna's model gets the higher because it predicts accurately more often

answer

D

question

Why is economics called an empirical science? a) because economics has been used to both create and destroy empires b) because economics uses impressions to evaluate the usefulness of its models c) because economics relies on real-world data to determine the usefulness of a model d) because economics utilizes intuition rather than data to evaluate a model's worth

answer

C

question

An appropriate test of the effectiveness of an economic model is a) the number of variables contained within the model b) the model's ability to predict future economic activity c) the number of economists who have worked on the model d) the number of assumption which the economist has made

answer

B

question

A good economic model a) utilizes only the two most important factors to analyze the problem under consideration b) generates statements that are incapable of refutation c) represents every detail of the real world d) yields usable predictions and implications for the real world

answer

D

question

The usefulness of a model is determined by a) whether it helps to explain or predict real world phenomena b) whether it possesses realistic assumptions c) how well it uses the ceteris paribus assumption d) how many of the possible relationships that exist are included in the model

answer

A

question

The use of data in economic models is important because a) the model's predictive value rests on supportive evidence from real-world data b) the models are always complex in nature c) models must analyze every possible angle of the problem d) social problems analyzed by economists require long streams of data

answer

A

question

If two competing models are offered to explain a certain economic phenomenon, the better model is the one a) that is the newest since newer models are better than old models b) with the fewest unrealistic assumptions c) that more often predicts with most accuracy d) that is not subject to empirical verification

answer

C

question

To be useful, a model must a) predict accurately all of the time b) predict more accurately than other models that have been developed c) have assumptions that have been verified by empirical testing d) explain and predict the behavior of every individual

answer

B

question

Economics is called an empirical science because a) economics study real-world evidence to test their models b) economists use assumption in their models c) economic models have no predictive power d) economic analysis is only useful in a capitalistic society

answer

A

question

Which of these social science deals most with models of behavior rather than with thought processes? a) psychology b) sociology c) psychiatry d) economics

answer

D

question

Which of the following best describes how economists test the empirical predictions of economic models a) economists survey individuals to learn about how people think through decisions about how much to purchase or to produce b) economists collect and analyze real-world observation of people's actions to discern if those actions accord with theories' predictions c) based on theories about thought processes, economists seek to determine which thought processes predominate in determining how a person decides what actions to take d) recognizing that people always do what they say they will do, economists rely exclusively on information gleaned from polls and surveys conducted by poll takers and market researchers

answer

B

question

When constructing economic models, economists are more concerned with a) what people say than what they do b) what people think than what they say c) what people do than what they say d) what people say than what they do or think

answer

C

question

Behavioral economics is an approach to the study of consumer behavior a) that emphasizes psychological limitations and complications that potentially interfere with rational decision making b) that emphasizes the capabilities of individuals to succeed to attaining all their unlimited wants utilizing resources c) that, in contrast to standard approaches in economics, utilizes the ceteris paribus assumption d) that, in contract to standard approaches in economics, relies on real-world data to evaluate the usefulness of economic models

answer

A

question

The hypothesis that people are nearly, but not fully rational, cannot possibly fully examine every available choice, and utilize simple rules of thumb in making decisions is known as the a) irrationality hypothesis b) ceteris paribus hypothesis c) individual aggregation hypothesis d) bounded rationality hypothesis

answer

D

question

According to the bounded rationality hypothesis, an individual confronting a large number of complicated choices is most likely to respond by a) using a simple rule to thumb to choose among a subset of easiet-to-evaluate options b) using the ceteris paribus assumption to assist in simplifying and examining each of the possible options c) utilizing readily available empirical evidence to assist in evaluating every option d) assessing every available choice by developing sophisticated theories regarding each option

answer

A

question

An economic theory is also known as an economic a) model b) art c) miracle d) assumption

answer

A

question

Economic models are a) always based on laboratory methods similar to natural sciences b) a simplified representation of the real world c) used only in microeconomic analysis by households d) used only in macroeconomic analysis by business firms

answer

B

question

Economic models are NOT used in a) explain economic phenomena b) predict economic phenomena c) understand economic phenomena d) describe all economic phenomena in minute detail

answer

D

question

To test their theories, economists usually have to a) set up careful laboratory experiments with all variables controlled b) first examine theory and what has happened in the past in the real world c) use only models that have a proven record of success d) anticipate every factor with 100 percent accuracy

answer

B

question

A difference between biology and economics is that a) economists use models and biologists use theories b) biologists often use laboratory methods and economists do less often c) economics explains events while biology predict events d) biologists use the scientific method while economists do not

answer

C

question

Models must a) be able to yield useable predictions b) be totally realistic in every detail c) be a complete reproduction of the real world d) include every relationship that exists

answer

A

question

A good economic model a) cannot be refuted b) describes the real world completely and in detail c) captures the essential relationships of the problem under consideration d) captures all relationships about the problem under consideration

answer

C

question

Which of the following statement is NOT true? a) economics is a social science b) economics is an empirical science c) economics does not use theories d) economics is the study of how people allocate their limited sources to satisfy their unlimited wants

answer

C

question

A characteristic of a good model is that a) its predictions can be tested using real-world data b) it is useful for making irrefutable predictions c) it applies to all situations d) it predicts perfectly

answer

A

question

In an economic model, assumptions a) must be applicable to all real-world situations b) must be eliminated before being used to make sure the model is realistic c) are not important in determining the useful of the model d) define the set of circumstances in which the model is most likely to be applicable in the real world

answer

D

question

A model is used to explain behavior. Therefore, a) the assumption must be complex while the model itself is simple b) the model must be complex c) the model must be simple d) the model can be either simple or complex so long as it explains economic behavior

answer

D

question

"Ceteris paribus" assumption means a) the role of rational self-interest in the economy b) that nothing else changes the variable under consideration c) relying on real-world data in evaluating the usefulness of a model d) analysis that is strictly limited to making either purely descriptive statements or scientific predictions

answer

B

question

If economists are making the assumption that business people try to maximize profits, the best way to determine whether this assumption is useful or not is to a) see whether it generates accurate predictions about the choices of business people b) ask business people whether it is true or not c) find out whether US business are more profitable than European business d) take a survey of people and see if they agree with this assumption

answer

A

question

The assumption that nothing changes except the factor being studied is a) the ceteris paribus assumption b) the rationality assumption c) positive economic analysis d) normative economic analysis

answer

A

question

"Ceteris paribus" means a) "invisible hand" b) "other things constant" c) "making all the necessary changes"' d) "individual"

answer

B

question

A scientist who is studying earthquakes includes the impact of wind when performing some tests of damages to structures. This is an example of a) failing to understand how to do scientific methodology b) irrational behavior in noneconomic situations c) accounting for every possible phenomena that may effect the problem under examination d) failing to hold all other things constant

answer

D

question

Economics is an empirical science, which means that economists a) look at evidence to see whether or not the model is applicable b) test their models by utilizing unknown variables c) do only laboratory experiments d) refuse to test their models since the usefulness of a model is determined by whether it is logical or ot

answer

A

question

Which expression below matches most closely the way economists go about testing their models? a) "consistency is the hobgoblin of small minds" b) "seeing the results is the only way to know if you are right" c) "a bird in the hand is worth two in the bush" d) " in the long run we are all dead"

answer

B

question

Economic models relate to a) people's choices b) how people think about something c) group opinions d) the reasons people give for donating to charity

answer

A

question

A poll conducted by a national firm finds that most Americans say they care more about safety when buying a car than about fuel efficiency. As a result, a car maker produces a car with many safety features, but it doesn't sell well. This behavior a) contradicts economic theory because the people didn't do what they said they would do b) contradicts economic theory because it is irrational not to purchase safer cars c) does not contradict economic theory because economists focus on what people do rather than on what they say d) does not contradict economic theory because economic theory only relates to prices and not to features such as safety

answer

C

question

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 a) rules of thumb b) rational options c) irrational choices d) normative decisions

answer

A

question

Which of the following is NOT an alleged "unrealistic" assumption that proponents of behavioral economics suggest are commonly utilized in traditional economic models based on the rationality assumption? a) unbounded selfishness b) unbounded rationality c) unbounded will power d) unbounded resources

answer

D

question

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 individual exhibit: a) unbounded rationality b) normative thinking c) bounded rationality d) positive thinking

answer

C

question

A theory or a model a) is a simplified, abstract view of reality b) is based on each economist's value judgments c) is a detailed analysis of what ought to be d) captures all aspects of the real world

answer

A

question

Ceteris paribus means a) "all variables are independent" b) "other things being equal" c) "some assumptions must be accepted without proof" d) "some theories are not rational"

answer

B

question

The ceteris paribus assumption means a) favors are returned in kind b) this is the proof of the matter c) from many, one d) other things are equal

answer

D

question

In building a model the assumption that allows economists to study only the factors being analyzed is the a) rationality assumption b) ceteris paribus assumption c) the self-interest assumption d) the scarcity assumption

answer

B

question

Ceteris paribus means a) other variables are held constant b) almost certainly c) only if everything works just right d) perhaps

answer

A

question

In constructing modes, economists a) include all independent variables b) include all available information c) attempt to duplicate the real world d) make simplifying assumptions

answer

D

question

In building a model to analyze economic situations, one of the important assumptions is a) ceteris paribus b) scarcity c) conversion abstraction d) cognitive dissonance

answer

A

question

Assumption are necessary to a) make economics a social science b) define a set of circumstances where a model is most likely to apply c) define the relationship between wants and resources under all circumstances d) define the specific cause and effect relationship that is being explained by social science

answer

B

question

Ceteris paribus means a) all men are created equal b) wage parity between men and women is a worthy goal c) there are an infinite number of factors affecting each human decision and they change all the time d) economists isolate one or two factors that change when analyzing human decision

answer

D

question

Economic models are used to a) simplify reality to predict outcomes b) exactly replicate reality c) predict all possible outcomes of a study d) determine the thoughts of individuals

answer

A

question

Economic models a) should be designed so as to capture every detail or interrelationship that exists b) are simplified representations of the real world c) must employ the use of laboratory methods d) all of the above are correct

answer

B

question

Economics may be referred to as a(n) _________ science, meaning that data is looked at to see whether assertions are correct a) empirical b) exact c) assumptive d) soft

answer

A

question

The term ceteris paribus is an economic assumption that means a) let the buyer beware b) common sense is reality c) the detail is in the interrelationship d) other things being equal

answer

D

question

The value of a model is determined by a) the usefulness of its predictions in the real world b) the extent of the profit earned by applying it c) the realism of its assumptions d) the model's attention to real world details

answer

A

question

Assumptions in models tend to make a) the model predict what the scientist wants the results to be b) the model more realistic c) the model more applicable to specific circumstances d) the model always predict the future accurately

answer

C

question

What would lead an economist to conclude that Theory A is superior to Theory B a) Theory A predicts real-world events better than does Theory B b) the assumption underlying Theory A are more realistic than are the assumptions underlying Theory B c) Theory A explains how people think, whereas Theory B only explains what they do d) Theory A is based on the assumption that an individual typically cannot determine what is in his or her own best interest, whereas Theory B assumes that each person knows what is in his or her own best interst and acts accordingly

answer

A

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