Chapter 1 Practice Quiz

A  negative, negative

B  negative, positive

C    

D  positive, negative

E  positive, positive

A  intrinsic values.

B  incentives.

C  gifts.

D  premiums.

E    

A  respond to a given incentive in a random manner.

B  respond predictably to a given incentive.

C  not respond to any incentive.

D  respond irrationally to any incentive.

A  Alan Greenspan.

B  Thorstein Veblen.

C  Milton Friedman.

D  Adam Smith.

A  psychology

B  economics

C  psychiatry

D  sociology

A  how small changes in the money supply can have far-reaching effects.

B  the changes in economic theory brought about by real-world events.

C  decisions made by individual consumers and firms.

D  how small changes in the unemployment rate can have far-reaching effects.

A  make better decisions concerning your education

B  decide whether the U.S. government should encourage or discourage immigration.

C  make better decisions concerning your education and make decisions in financing your home.

D  Make better decisions concerning your education, make decisions in financing your home, and decide whether the U.S. government should encourage or discourage immigration.

E  make decisions in financing your home.

A  Gross Domestic Product

B  the price of apples

C  the effects of fiscal policy on the economy

D  a nation’s unemployment rate

A  Economic models are not used to forecast.

B  Economists empirically test their models.

C  An economic model should capture only the essential relationships that are sufficient to analyze the particular problem being studied.

D  Economic models relate to behavior rather than to individual thought processes.

A  dictatorship

B  command and control

C  market system

D  mixed economic system

A  only responds to rewards that involve money.

B  never makes a mistake in his life.

C  does not intentionally make decisions that would leave him worse off.

D  always uses a model or mathematical formula to help him make a decision.

A  environmental economics

B  labor economics

C  macroeconomics

D  microeconomics

A  choices.

B  themselves worse off.

C  subjective judgments.

D  money.

A  constant.

B  inverse.

C  nonlinear.

D  direct.

A  federal budget details.

B  foreign policy economic issues.

C  individual decision making.

D  aggregate measures of the economy.

A  the allocation of scarce resources.

B  personal finance.

C  how to run a business successfully.

D  how to make money in the stock market.

A  Every model is based on a set of assumptions.

B  Economic models are designed to explain what people need.

C  A good model does not rely on any assumptions.

D  A good economic model is complex.

A  cannot be defined.

B  changes from one point to the next on that line.

C  is the same at all points along that line.

D  is always equal to zero.

A  would be an example of a positive statement.

B  would be a statement of mercantilist economic philosophy.

C  would be an example of a normative statement.

D  would be an example of a microeconomic statement.

A  if-then statements.

B  positive analysis.

C  objective descriptions of the way things are.

D  value judgments.