Question 1

A positive statement is concerned primarily with

Accepted Answer

A)  some goal that is desirable to society.
B)  what should be.
C)  what is.
D)  the formulation of economic policy.E) A) and D)
F) All of the above

Question 2

Which question is an illustration of a microeconomic question?

Accepted Answer

A)  Is the volume of wine produced in one year dependent upon the price of wine?
B)  Does government spending influence interest rates in the economy?
C)  Is the purchasing power of the dollar higher or lower today than it was in 2008?
D)  Which economic system is better for consumers and firms?E) None of the above
F) A) and D)

Question 3

In a curved graph that is dome-shaped, the tangent line at its maximum, or highest point, has an infinite slope.

Accepted Answer

A) True 
 B)False

Question 4

Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert.This suggests that

Accepted Answer

A)  the production possibilities curves of such nations are more bowed out from the origin.
B)  the production possibilities curves of such nations have shifted inward.
C)  the production possibilities curves of such nations have shifted outward.
D)  these nations are operating at some point outside of their production possibilities curves.E) A) and B)
F) A) and C)

Question 5

A person observes that consumer prices often fall when a nation experiences economic growth.The person then concludes that falling consumer prices lead to economic growth.This would be an example of

Accepted Answer

A)  the fallacy of composition.
B)  biases.
C)  confusing correlation and causation.
D)  the use of loaded terminology.E) C) and D)
F) A) and B)

Question 6

Positive statements are expressions of value judgments.

Accepted Answer

A) True 
 B)False

Question 7

Economics involves marginal analysis because

Accepted Answer

A)  most decisions involve changes from the present situation.
B)  marginal benefits always exceed marginal costs.
C)  marginal costs always exceed marginal benefits.
D)  much economic behavior is irrational.E) A) and B)
F) A) and C)

Question 8

The term "other things equal" means that

Accepted Answer

A)  the associated statement is normative.
B)  many variables affect the variable under consideration.
C)  a number of relevant variables are assumed to be constant.
D)  when variable X increases, so does related variable Y.E) B) and C)
F) All of the above

Question 9

Normative statements are expressions of facts.

Accepted Answer

A) True 
 B)False

Question 10

The slope of a line parallel to the vertical axis is

Accepted Answer

A)  zero.
B)  one.
C)  infinite.
D)  one-half.E) B) and D)
F) B) and C)

Question 11

Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good.This economy

Accepted Answer

A)  should not change its production, because it cannot improve its allocation by shifting resources.
B)  can improve its allocation by lowering the unemployment rate.
C)  can improve its allocation by producing more of one good and less of the other.
D)  can improve its allocation by producing more of both goods.E) B) and D)
F) All of the above

Question 12

The negative slope of the production possibilities curve is a graphical way of indicating that

Accepted Answer

A)  any economy "can have its cake and eat it too."
B)  to produce more of one product, we must do with less of another.
C)  the principle of increasing opportunity costs applies to only parts of the economy.
D)  consumers buy more when prices are low than when prices are high.E) All of the above
F) A) and B)

Question 13

If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph,

Accepted Answer

A)  the economy will always be at full employment.
B)  more of one product can be produced without producing less of the other product.
C)  the production possibilities curve would be a straight line.
D)  the two products are of equal value to the economy.E) C) and D)
F) A) and B)

Question 14

Answer the question on the basis of the following information.Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment, so investment would be zero.But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion.If the interest rate were 12 percent, $20 billion would be invested.Assume that total investment continues to increase by $10 billion for each
Successive 4 percentage point decline in the interest rate.Refer to the information.Which of the following is an accurate verbal statement of the described relationship?

Accepted Answer

A)  There is no regular or dependable relationship between business investment and the interest rate.
B)  The amount of business investment is unaffected by changes in the interest rate.
C)  Investment spending by businesses varies inversely with the interest rate.
D)  Investment spending by businesses varies directly with the interest rate.E) A) and D)
F) B) and C)

Question 15

Because economic generalizations are simplifications from reality, they are impractical and useless.

Accepted Answer

A) True 
 B)False

Question 16

The slope of a graph with "income" on the horizontal axis and "saving" on the vertical axis is +0.2.This means that if

Accepted Answer

A)  income is $100, then saving is $20.
B)  income is 0.20, then saving is zero.
C)  income increases by $100, then saving will rise by $20.
D)  saving rises by $100, then income will rise by $20.E) C) and D)
F) A) and B)

Question 17

Which of the following do economists consider to be capital?

Accepted Answer

A)  a pair of stockings
B)  a construction crane
C)  a savings account
D)  a share of IBM stockE) A) and B)
F) All of the above

Question 18

In the graph for the linear equation S = 15 - 5T, with T on the horizontal axis, the vertical intercept of the graph is -5.

Accepted Answer

A) True 
 B)False

Question 19

A normative statement is one that

Accepted Answer

A)  is based on the law of averages.
B)  applies only to microeconomics.
C)  applies only to macroeconomics.
D)  is based on value judgments.E) B) and C)
F) All of the above

Question 20

In a relationship between two variables, the "independent variable" refers to the

Accepted Answer

A)  one measured on the vertical axis, in the convention of mathematics.
B)  one whose value is assumed constant.
C)  effect or outcome.
D)  cause or source variable.E) A) and C)
F) B) and D)

Exam 1: Limits, Alternatives, and Choices

The negative slope of the production possibilities curve is a graphical way of indicating that

Correct Answer
verified

A person observes that consumer prices often fall when a nation experiences economic growth.The person then concludes that falling consumer prices lead to economic growth.This would be an example of

Correct Answer
verified

Economics involves marginal analysis because

Correct Answer
verified

The slope of a graph with "income" on the horizontal axis and "saving" on the vertical axis is +0.2.This means that if

Correct Answer
verified

Correct Answer
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Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good.This economy

Correct Answer
verified

Normative statements are expressions of facts.

Correct Answer
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Because economic generalizations are simplifications from reality, they are impractical and useless.

Correct Answer
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A positive statement is concerned primarily with

Correct Answer
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If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph,

Correct Answer
verified

In a relationship between two variables, the "independent variable" refers to the

Correct Answer
verified

A normative statement is one that

Correct Answer
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Positive statements are expressions of value judgments.

Correct Answer
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Which question is an illustration of a microeconomic question?

Correct Answer
verified

Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert.This suggests that

Correct Answer
verified

The slope of a line parallel to the vertical axis is

Correct Answer
verified

In the graph for the linear equation S = 15 - 5T, with T on the horizontal axis, the vertical intercept of the graph is -5.

Correct Answer
verified

In a curved graph that is dome-shaped, the tangent line at its maximum, or highest point, has an infinite slope.

Correct Answer
verified

The term "other things equal" means that

Correct Answer
verified

Which of the following do economists consider to be capital?

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

The negative slope of the production possibilities curve is a graphical way of indicating that

Correct AnswerverifiedShow Answer

A person observes that consumer prices often fall when a nation experiences economic growth.The person then concludes that falling consumer prices lead to economic growth.This would be an example of

Correct AnswerverifiedShow Answer

Economics involves marginal analysis because

Correct AnswerverifiedShow Answer

The slope of a graph with "income" on the horizontal axis and "saving" on the vertical axis is +0.2.This means that if

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that an economy is producing on its production possibilities curve but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good.This economy

Correct AnswerverifiedShow Answer

Normative statements are expressions of facts.

Correct AnswerverifiedShow Answer

Because economic generalizations are simplifications from reality, they are impractical and useless.

Correct AnswerverifiedShow Answer

A positive statement is concerned primarily with

Correct AnswerverifiedShow Answer

If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph,

Correct AnswerverifiedShow Answer

In a relationship between two variables, the "independent variable" refers to the

Correct AnswerverifiedShow Answer

A normative statement is one that

Correct AnswerverifiedShow Answer

Positive statements are expressions of value judgments.

Correct AnswerverifiedShow Answer

Which question is an illustration of a microeconomic question?

Correct AnswerverifiedShow Answer

Some agricultural sub-Saharan nations of Africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert.This suggests that

Correct AnswerverifiedShow Answer

The slope of a line parallel to the vertical axis is

Correct AnswerverifiedShow Answer

In the graph for the linear equation S = 15 - 5T, with T on the horizontal axis, the vertical intercept of the graph is -5.

Correct AnswerverifiedShow Answer

In a curved graph that is dome-shaped, the tangent line at its maximum, or highest point, has an infinite slope.

Correct AnswerverifiedShow Answer

The term "other things equal" means that

Correct AnswerverifiedShow Answer

Which of the following do economists consider to be capital?

Correct AnswerverifiedShow Answer

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