Chapter 1 Practice Quiz

A    

B  positive, negative

C  negative, positive

D  negative, negative

E  positive, positive

A  incentives.

B  gifts.

C  premiums.

D  intrinsic values.

E    

A  respond irrationally to any incentive.

B  not respond to any incentive.

C  respond predictably to a given incentive.

D  respond to a given incentive in a random manner.

A  Milton Friedman.

B  Alan Greenspan.

C  Thorstein Veblen.

D  Adam Smith.

A  economics

B  psychology

C  psychiatry

D  sociology

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

B  decisions made by individual consumers and firms.

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

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

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

B  make decisions in financing your home.

C  make better decisions concerning your education

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

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

A  the price of apples

B  Gross Domestic Product

C  the effects of fiscal policy on the economy

D  a nation’s unemployment rate

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

B  Economists empirically test their models.

C  Economic models are not used to forecast.

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

A  command and control

B  mixed economic system

C  dictatorship

D  market system

A  only responds to rewards that involve money.

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

C  never makes a mistake in his life.

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

A  environmental economics

B  microeconomics

C  macroeconomics

D  labor economics

A  subjective judgments.

B  money.

C  choices.

D  themselves worse off.

A  direct.

B  nonlinear.

C  constant.

D  inverse.

A  aggregate measures of the economy.

B  foreign policy economic issues.

C  federal budget details.

D  individual decision making.

A  how to make money in the stock market.

B  personal finance.

C  the allocation of scarce resources.

D  how to run a business successfully.

A  A good economic model is complex.

B  Every model is based on a set of assumptions.

C  Economic models are designed to explain what people need.

D  A good model does not rely on any assumptions.

A  is the same at all points along that line.

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

C  is always equal to zero.

D  cannot be defined.

A  would be an example of a microeconomic statement.

B  would be an example of a normative statement.

C  would be an example of a positive statement.

D  would be a statement of mercantilist economic philosophy.

A  value judgments.

B  positive analysis.

C  if-then statements.

D  objective descriptions of the way things are.