Chapter 1

Question 1

The study of choices we make among our many wants and desires given our limited resources

Answer 1

Economics

Question 2

Inputs used to produce goods and services

Answer 2

Resources

Question 3

Exists because our unlimited wants exceed our limited resources

Answer 3

Scarcity

Question 4

Scarcity forces us to choose, and choices are costly because we must give up other opportunities that we value

Answer 4

The economic problem

Question 5

When people do the best they can, based on their values and information, under current and anticipated future circumstances

Answer 5

Rational behavior

Question 6

Simplified versions of the real world used to explain and predict behavior

Answer 6

Theories and models

Question 7

A testable proposition

Answer 7

Hypothesis

Question 8

The use of data to test a hypothesis

Answer 8

Empirical Analysis

Question 9

Holding all other things constant

Answer 9

Ceteris paribus

Question 10

The study of household and firm behavior and how they interact in the marketplace

Answer 10

Microeconomics

Question 11

The study of the whole economy, including the topics of inflation, unemployment, and economic growth

Answer 11

Macroeconomics

Question 12

The total amount- such as the aggregate level of demand

Answer 12

Aggregate

Question 13

When two events occur together

Answer 13

Correlation

Question 14

When one event brings about another event

Answer 14

Causation

Question 15

The incorrect view that what is true for the individual is always true for the group

Answer 15

Fallacy of Composition

Question 16

An objective, testable statement that describes what happens and why it happens

Answer 16

Positive statement

Question 17

A subjective, contestable statement that attempts to describe what should be done

Answer 17

Normative statement