Exam 1: The Nature of Economics

A) people make money.
B) preferences are determined.
C) psychology influences preferences.
D) people make choices.

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A) It is too hot to go jogging.
B) Ceteris paribus,a teacher should award a higher grade if you study more hours for an economics test.
C) When the price of an item increases,people respond by reducing their consumption of the item.
D) The government should balance the budget.

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A) In order to reduce the budget deficit,tax rates should be increased.
B) In order to increase employment,the minimum wage should be decreased.
C) If payroll taxes are raised,then the Social Security crisis will be resolved.
D) If gas prices fall,consumers should purchase more gas.

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A) macroeconomics.
B) microeconomics.
C) an aggregate concept.
D) not a concern for economic analysis.

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The automaker was relying on what people...

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A) an economic system.
B) an assumption.
C) realism.
D) a physical science.

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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.

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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.

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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.

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A) choices important to people; choices not important to people
B) economywide choices; choices of individuals
C) choices that involve money; choices that does not involve money
D) choices of rich people; choices of poor people

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A) positive analysis.
B) value judgments.
C) if-then statements.
D) objective descriptions of the way things are.

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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."

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A) empirical
B) exact
C) assumptive
D) soft

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A) can be refuted.
B) is free of the ceteris paribus assumption.
C) is based on a value judgment.
D) asserts something about the role of moral behavior in building a strong economy.

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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 decision.

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A) making all the necessary changes.
B) other things constant.
C) for certain parameters.
D) let the buyer beware.

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A) the two variables being compared change in opposite directions,or when one goes up the other goes down.
B) a change in one of the variables causes a change in the other variable in any direction.
C) the two variables being compared change in the same direction,or when one goes up the other also goes up.
D) the two variables have no identifiable relationship with each other.

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A) a microeconomist.
B) a macroeconomist.
C) both a macroeconomist and a microeconomist.
D) neither a macroeconomist nor a microeconomist.

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