Question 1

All of the following are examples of capital except :

Accepted Answer

A)   the robot used to help produce your car.
B)   a computer used by your professor to write this exam.
C)   the factory that produces the costume jewelry you buy.
D)   the inventory of unsold goods at your local hardware store.
E)   an uncut diamond that you discover in your backyard.F) A) and B)
G) B) and E)

Question 2

The graph of a direct relationship will have a positive slope.

Accepted Answer

A) True 
 B)False

Question 3

Your scarcity problem would disappear if you were rich.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 1A-3  Straight line  Straight line AB in Exhibit 1A-3 shows that:

Accepted Answer

A)   increasing values for X reduces the value of Y.
B)   decreasing values for X increases the value of Y.
C)   there is an inverse relationship between X and Y.
D)   all of the above.E) B) and C)
F) A) and B)

Question 5

An economic model is:

Accepted Answer

A)   a plastic scaled version of the economy.
B)   a complete depiction of reality.
C)   an abstraction from reality.
D)   applicable to consumer behavior but not to producer behavior.
E)   not an accepted tool of the economics profession.F) B) and C)
G) C) and D)

Question 6

An upward-sloping line or curve is used to illustrate:

Accepted Answer

A)   a direct relationship.
B)   an inverse relationship.
C)   two unrelated variables.
D)   the ceteris paribus assumption.E) All of the above
F) None of the above

Question 7

The creative ability of persons to combine and direct resources to produce new products is known as:

Accepted Answer

A)   economizing.
B)   entrepreneurship.
C)   value judgment.
D)   product sensitivity.E) None of the above
F) B) and C)

Question 8

Economists use ____ economic analysis to understand an individual market. They then use ____ economic analysis to guide future national economic policy.

Accepted Answer

A)   b and d
B)   macro; micro
C)   positive; normative
D)   normative; positiveE) A) and D)
F) C) and D)

Question 9

An economics textbook is an example of:

Accepted Answer

A)   capital.
B)   labor.
C)   a natural resource.
D)   entrepreneurship.E) B) and D)
F) A) and C)

Question 10

A positive economic statement is:

Accepted Answer

A)   an opinion of an action that should be taken.
B)   an action that will have a positive effect on the economy.
C)   a statement testable by facts.
D)   a claim that the speaker is positive will occur.
E)   always a microeconomic position.F) A) and E)
G) A) and D)

Question 11

When economists say scarcity, they mean:

Accepted Answer

A)   there are only a limited number of consumers who would be interested in purchasing goods.
B)   the human desire for goods exceeds the available supply of time, goods and resources.
C)   most people in poorer countries do not have enough goods.
D)   goods are so expensive that only the rich can afford it.E) C) and D)
F) A) and B)

Question 12

Exhibit 1A-7  Straight line relationship  According to Exhibit 1A-7, the relationship between annual income and air-travel expenditures is:

Accepted Answer

A)   direct.
B)   inverse.
C)   complex.
D)   independent.E) A) and B)
F) A) and C)

Question 13

The sun is an example of:

Accepted Answer

A)   a natural resource.
B)   capital.
C)   labor.
D)   none of the above.E) C) and D)
F) B) and C)

Question 14

To be valid, an economic model must:

Accepted Answer

A)   include every activity which occurs in the real world.
B)   include at least 85 percent of the activity which occurs in the real world.
C)   be able to predict events occurring in the real world.
D)   exclude any link to the real world.
E)   not be based on an abstraction of the real world.F) B) and D)
G) A) and E)

Question 15

In a graphic relationship, shifts in a curve are caused by a change in:

Accepted Answer

A)   the slope of the curve.
B)   a factor not measured on the axes of the graph.
C)   one of the factors measured on either axes of the graph.
D)   any factor, whether measured on the axes of the graph of not.E) B) and C)
F) A) and D)

Question 16

Which of the following is the best example of a microeconomic topic?

Accepted Answer

A)   The impact that the money supply has on inflation.
B)   The reasons for increases in the price of soft drinks.
C)   The effect that federal budget deficits have on the interest rate.
D)   The tradeoff between inflation and unemployment.E) B) and C)
F) A) and B)

Question 17

The basic purpose of economic models is to:

Accepted Answer

A)   construct simplifying assumptions about the real world.
B)   explain reality in all its complexity.
C)   construct situations where controlled experiments can be carried out.
D)   provide explanations for, and predictions of the relationship between variables.E) A) and D)
F) A) and C)

Question 18

Computer programs or software are an example of:

Accepted Answer

A)   land.
B)   labor.
C)   capital.
D)   none of the above.E) C) and D)
F) All of the above

Question 19

Macroeconomics deals with the analysis of all of the following questions except:

Accepted Answer

A)   why do national economies grow.
B)   what determines a nation's savings and investments.
C)   how does a central bank influence inflation.
D)   why does a country experience recessions.
E)   how does Microsoft price its software packages.F) All of the above
G) None of the above

Question 20

Which of the following pairs is the most likely to exhibit a direct relationship?

Accepted Answer

A)   The price of gasoline and the amount of gasoline that people purchase.
B)   Cholesterol levels and the likelihood of developing heart disease.
C)   Outdoor temperature and heating oil sales.
D)   Annual income and weekly pawn shop visits.E) A) and C)
F) B) and C)

Exam 1: Introducing the Economic Way of Thinking

All of the following are examples of capital except :

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An upward-sloping line or curve is used to illustrate:

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The graph of a direct relationship will have a positive slope.

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Which of the following pairs is the most likely to exhibit a direct relationship?

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Exhibit 1A-7 Straight line relationship According to Exhibit 1A-7, the relationship between annual income and air-travel expenditures is:

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Computer programs or software are an example of:

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The sun is an example of:

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When economists say scarcity, they mean:

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The creative ability of persons to combine and direct resources to produce new products is known as:

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Your scarcity problem would disappear if you were rich.

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Economists use ____ economic analysis to understand an individual market. They then use ____ economic analysis to guide future national economic policy.

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An economics textbook is an example of:

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In a graphic relationship, shifts in a curve are caused by a change in:

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Exhibit 1A-3 Straight line Straight line AB in Exhibit 1A-3 shows that:

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The basic purpose of economic models is to:

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An economic model is:

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Which of the following is the best example of a microeconomic topic?

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To be valid, an economic model must:

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A positive economic statement is:

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Macroeconomics deals with the analysis of all of the following questions except:

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Economists use economic analysis to understand an individual market. They then use economic analysis to guide future national economic policy.

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