Question 1

The two broad fields that make up the subject of economics are:

Accepted Answer

A)   microeconomics and macroeconomics.
B)   personal investments and business investments.
C)   fiscal policy and monetary policy.
D)   imports and exports.E) B) and C)
F) A) and D)

Question 2

Which of the following is an example of a normative statement?

Accepted Answer

A)   The average price of a Whopper Jr. is $1.69.
B)   The United States ought to adopt a flat rate personal income tax.
C)   A higher percentage of prostitutes incarcerated in Miami test positive for AIDS when compared to registered prostitutes in Nevada.
D)   Average growth in real GDP per year was 1.84 percent between 2000 and 2010.E) All of the above
F) None of the above

Question 3

People choose to do something:

Accepted Answer

A)   when they believe the benefits outweigh the costs of the decision.
B)   when they believe the costs outweigh the benefits of the decision.
C)   when they believe their decision cannot be questioned by anyone else.
D)   when they believe it won't harm anyone and will better themselves.E) None of the above
F) C) and D)

Question 4

Which of the following is an assumption that economists make?

Accepted Answer

A)   Most people possess entrepreneurial talent.
B)   People are very good at assessing the costs of decisions accurately.
C)   Individuals and firms will act to provide the things people want.
D)   Individuals usually fail to optimize the use of their resources because they think on the margin.E) B) and D)
F) C) and D)

Question 5

The extra benefit associated with producing or consuming the next unit is called the:

Accepted Answer

A)   revenue product.
B)   spillover.
C)   marginal benefit.
D)   economic benefit.E) A) and B)
F) None of the above

Question 6

A factual claim about how the world actually works is a ______________ statement.

Accepted Answer

A)   positive
B)   marginal
C)   irrational
D)   normativeE) None of the above
F) B) and D)

Question 7

Opportunity Cost:

Accepted Answer

A)   only includes explicit, out of pocket expenses.
B)   is the value of your next best alternative.
C)   is never provided in dollar values.
D)   would not include lost wages from working when deciding to take a vacation.E) B) and D)
F) All of the above

Question 8

Which of the following is an example of a normative statement?

Accepted Answer

A)   Tom is a college student.
B)   Immigration should be allowed in the United States.
C)   The cost of basic health insurance rose from the previous year.
D)   The federal minimum wage is $7.25.E) A) and B)
F) A) and C)

Question 9

The price of pizza falls relative to the price of spaghetti, so people buy more pizza instead of spaghetti. This is an example of responding to:

Accepted Answer

A)   marginal science.
B)   incentives.
C)   disincentives.
D)   sunk benefit.E) B) and C)
F) A) and C)

Question 10

Which of the following is an example of a disincentive?

Accepted Answer

A)   Law enforcement creates a "Mug Shots" section online in order to discourage potential law breakers.
B)   You offer workers a bonus if they sell 100 widgets per month.
C)   A local gym offers a weight loss competition and the winner earns a free trip to Bermuda.
D)   Your professor offers to edit your paper before it's graded if you turn it in early.E) A) and B)
F) B) and C)

Question 11

"Which came first, the chicken or the egg?" This question seeks to address the common fallacy of __________ in the context of correlation and causation.

Accepted Answer

A)   reverse causality
B)   omitted variables
C)   linear relationships
D)   comparative analysisE) B) and C)
F) All of the above

Question 12

Which of the following is an example of positive statement?

Accepted Answer

A)   The state government should allocate more funds toward education.
B)   Teachers should be paid higher salaries.
C)   Individuals with a bachelor's degree earn higher average incomes than those with only a high school diploma.
D)   The consumption of marijuana is unacceptable and should never be legally allowed in a society.E) None of the above
F) A) and B)

Question 13

Which type of statement is most likely to include the word "should"?

Accepted Answer

A)   Positive statement
B)   Normative statement
C)   Fair statement
D)   Factual statementE) All of the above
F) None of the above

Question 14

The use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society is called:

Accepted Answer

A)   innovation.
B)   efficiency.
C)   sustainability.
D)   economic quantity.E) A) and C)
F) A) and B)

Question 15

Which of the following is a normative statement?

Accepted Answer

A)   College tuition rates are rising.
B)   Twenty-eight percent of U.S. adults have a bachelor's degree.
C)   The average income of a college graduate exceeds that of the average high school graduate.
D)   State governments should pay for the first two years of college at public institutions.E) A) and C)
F) B) and D)

Question 16

The two flows, or things being exchanged, in the circular flow model are:

Accepted Answer

A)   inputs and outputs.
B)   imports and exports.
C)   inputs/outputs and money.
D)   land and labor.E) C) and D)
F) B) and C)

Question 17

A simplified representation of a complicated situation is:

Accepted Answer

A)   cutting corners.
B)   a model.
C)   useless without adding fine details.
D)   econometrics.E) B) and D)
F) B) and C)

Question 18

To provide an incentive for villagers to repay loans, in the text Muhammad Yunus:

Accepted Answer

A)   forced villagers to offer collateral for loans.
B)   made loans using group responsibility.
C)   threatened to call the borrower's mother.
D)   would increase interest rates by 1 percentage point after each late payment.E) A) and C)
F) A) and D)

Question 19

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

Accepted Answer

A)   NCAA Football should have adopted a playoff system 10 years ago.
B)   An increase in minimum wage results in higher teenage unemployment.
C)   No oneshould be allowed to carry guns into the classroom.
D)   Cats are better pets than dogs.E) C) and D)
F) None of the above

Question 20

Which of the following is considered a macroeconomic topic?

Accepted Answer

A)   iTunes raises the price of all its music.
B)   iTunes raises the price of its pop artists' music only.
C)   Jay-Z decides to sell his Brooklyn Nets minority ownership.
D)   The labor force participation rate in the US fell by 1 percent in 2010.E) A) and D)
F) B) and D)

Exam 1: Economics and Life

Which of the following is an example of a normative statement?

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A simplified representation of a complicated situation is:

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"Which came first, the chicken or the egg?" This question seeks to address the common fallacy of __________ in the context of correlation and causation.

Correct AnswerverifiedShow Answer

The two flows, or things being exchanged, in the circular flow model are:

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A factual claim about how the world actually works is a ______________ statement.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The extra benefit associated with producing or consuming the next unit is called the:

Correct AnswerverifiedShow Answer

Which of the following is an example of a disincentive?

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People choose to do something:

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The price of pizza falls relative to the price of spaghetti, so people buy more pizza instead of spaghetti. This is an example of responding to:

Correct AnswerverifiedShow Answer

Opportunity Cost:

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Which of the following is an example of a normative statement?

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The two broad fields that make up the subject of economics are:

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To provide an incentive for villagers to repay loans, in the text Muhammad Yunus:

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Which of the following is considered a macroeconomic topic?

Correct AnswerverifiedShow Answer

The use of resources in the most productive way possible to produce the goods and services that have the greatest total economic value to society is called:

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Which type of statement is most likely to include the word "should"?

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Which of the following is an assumption that economists make?

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Which of the following is a normative statement?

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Which of the following is an example of positive statement?

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