Question 1

Each of the following statements about the use of models in the study of economics is true EXCEPT:

Accepted Answer

A)  models fit the observed facts exactly.
B)  models are sometimes revised in light of new research findings.
C)  models are easier to manipulate than the reality they represent.
D)  models contain the essential features of the economic behavior being studied.

Question 2

The use of controlled experiments using particular substances to test hypotheses is most likely to be found in:

Accepted Answer

A)  chemistry.
B)  economics.
C)  history.
D)  the humanities.

Question 3

A(n) _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.

Accepted Answer

A)  free good
B)  scarce good
C)  economic good
D)  monetary good

Question 4

The economic way of thinking includes:

Accepted Answer

A)  more attention paid to benefits rather than the costs involved in any choice.
B)  the assumption that individuals choose to maximize some objective.
C)  emphasis on how choices affect total values rather than marginal values.
D)  the notion that the world has solved the problem of scarcity.

Question 5

The current rate of unemployment is 5 percent.This statement:

Accepted Answer

A)  is positive.
B)  is normative.
C)  involves a value judgment.
D)  is a personal reflection and has no value in economics.

Question 6

The three fundamental economic questions of what, how, and for whom:

Accepted Answer

A)  exist because of scarcity.
B)  are much more serious in a socialist system.
C)  are not serious in a capitalistic system.
D)  are not relevant in the industrialized world of today.

Question 7

The branch of economics that examines the impact of choices on aggregates in the economy is:

Accepted Answer

A)  positive economics.
B)  normative economics.
C)  macroeconomics.
D)  microeconomics.

Question 8

Economics is a:

Accepted Answer

A)  social science that deals with making choices among alternatives.
B)  natural science that concerns itself with allocating relatively scarce resources among alternative ends.
C)  science that has no theories or models based on the scientific method.
D)  humanities course that mainly concerns itself with limited wants versus unlimited resources.

Question 9

The answer to, "What goods are to be produced ?" deals with:

Accepted Answer

A)  who gets the goods.
B)  how tastes and preferences are determined.
C)  how resources are combined to produce goods and services.
D)  the kinds and quantities of goods and services produced.

Question 10

An example of a normative statement is:

Accepted Answer

A)  The rate of unemployment is 4 percent.
B)  A high rate of economic growth creates more jobs for the country.
C)  The federal government spends half of its budget on national defense.
D)  Everyone in the country needs to be covered by national health insurance.

Question 11

A variable that induces a change in another variable is a(n) :

Accepted Answer

A)  dependent variable.
B)  independent variable.
C)  codependent variable.
D)  constant variable.

Question 12

Which of the following statements is (are) true?

Accepted Answer

A)  A model is a set of simplifying assumptions about some aspect of the real world.
B)  Models are based on assumed conditions that are simpler than those of the real world.
C)  A model cannot be a complete representation of the real world.
D)  All of the above are true.

Question 13

When we are forced to make choices we are facing the concept of:

Accepted Answer

A)  ceteris paribus.
B)  free goods.
C)  scarcity.
D)  the margin.

Question 14

Economists attempt to discover explanations for events that are observed.

Accepted Answer

A) True 
 B)False

Question 15

Unemployment and inflation are:

Accepted Answer

A)  not relevant in the U.S.economy today.
B)  major topics in macroeconomics.
C)  unique only to capitalistic economies.
D)  very important in the study of microeconomics.

Question 16

According to the textbook, economics is a:

Accepted Answer

A)  social science.
B)  study of business decisions, not social decisions.
C)  part of operations and management science.
D)  part of humanities.

Question 17

The study of how people choose among the alternatives available to them is the:

Accepted Answer

A)  definition of economics.
B)  model of demand.
C)  theory of opportunity costs.
D)  method of distinguishing between microeconomics and macroeconomics.

Question 18

A model or theory in economics is:

Accepted Answer

A)  based mostly on value judgments.
B)  built using relevant observations, assumptions, and abstractions.
C)  only useful if it correctly portrays the real world and its complexities.
D)  useful only if it is based on normative economic statements.

Question 19

Economists concerned about the behavior of individual households, firms, and industries are studying:

Accepted Answer

A)  microeconomics.
B)  macroeconomics.
C)  neither macroeconomics nor microeconomics.
D)  the "forest" of economic behavior, rather than the "trees."

Question 20

Positive statements:

Accepted Answer

A)  imply value judgments must be made.
B)  are factual and can be tested.
C)  deal with what ought to be.
D)  are dealt with primarily in microeconomics.

Exam 1: Economics: the Study of Choice

The current rate of unemployment is 5 percent.This statement:

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A variable that induces a change in another variable is a(n) :

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When we are forced to make choices we are facing the concept of:

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The branch of economics that examines the impact of choices on aggregates in the economy is:

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The use of controlled experiments using particular substances to test hypotheses is most likely to be found in:

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Economists attempt to discover explanations for events that are observed.

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The answer to, "What goods are to be produced ?" deals with:

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Positive statements:

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Which of the following statements is (are) true?

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Unemployment and inflation are:

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The economic way of thinking includes:

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Economics is a:

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The three fundamental economic questions of what, how, and for whom:

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The study of how people choose among the alternatives available to them is the:

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According to the textbook, economics is a:

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An example of a normative statement is:

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A(n) _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use.

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Economists concerned about the behavior of individual households, firms, and industries are studying:

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Each of the following statements about the use of models in the study of economics is true EXCEPT:

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A model or theory in economics is:

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