CHAPTER ONE - QUESTION POOL Flashcards
A study of why national income was so low last year would be within the scope of:
a) microeconomics
b) macroeconomics
c) economic naturalist
d) marginal economic
B
“If the ECB raises interest rates, demand for housing is likely to fall” is a _______ statement about ________ policy.
a) positive, fiscal
b) normative, fiscal
c) positive, monetary
d) normative, monetary
C
The use of economic models, like the cost-benefit principle, means economists believe that
a) this is exactly how people choose between alternatives.
b) this is a reasonable abstraction of how people choose between alternatives.
c) those who explicitly make decisions this way are smarter.
d) with enough education, all people will start to explicitly make decisions this way.
B
Adele receives $100 as a birthday gift. In deciding how to spend the money, she narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is
a) the value to Adele of Options A, C and D combined.
b) $100.
c) $300.
d) the value to Adele of the option she would have chosen had Option B not been available.
D
Question 5:Microeconomics is best described as the study of
a) how households and firms make decisions and how they interact in specific markets.
b) the flows of dollars between households and firms.
c) markets for land, labor, and capital.
d) economy-wide phenomena.
A
The scarcity principle indicates that
a) compared to 100 years ago, individuals have less time today.
b) with limited resources, having more of one good or service means having less of another.
c) because tradeoffs must be made, resources are therefore scarce.
d) no matter how much one has, it is never enough.
B
The best alternative use of a resource is referred to as
a) fixed cost.
b) market price.
c) marginal utility.
d) opportunity cost
D
Which of the following is an example of a positive economic statement?
a) Pollution is one of the most serious economic problems.
b) The pricing policies of monopolies should be strictly supervised.
c) Unemployment is more harmful than inflation.
d) Higher interest rates will encourage more savings.
D
Statement A: In the past year, the chocolate industry in the European Union registered its
highest monthly growth rate in December.
Statement B: The best policy of the EU to reduce sugar consumption is to tax soft drinks.
Which of the following options is correct?
a) Both statements are positive statements.
b) Both statements are normative statements.
c) Statement A is a positive statement and statement B is a normative statement.
d) Statement A is a normative statement and statement B is a positive statement.
C
The return that could have been earned on the down payment for a house is an often overlooked of buying a house. a) omitted variable b) marginal benefit c) opportunity cost d) budget constraint
C
Statement A: The positive environmental effects of CO2 reduction are more important than
the reduction in today’s standard of living that they cause.
Statement B: The government should use wage subsidies to reduce unemployment.
Which of the following options is correct?
a) Statement A is a positive statement and statement B is a normative statement.
b) Statement A is a normative statement and statement B is a positive statement.
c) Both statements are positive statements.
d) Both statements are normative statements.
D
Using data to figure out the answer to an economic question is called
a) Equilibrium
b) Omitted variable
c) Correlation
d) Empiricism
D
Which of the following statements is correct?
a) Correlation always implies causation.
b) Microeconomics studies how governments, individuals, firms and households make
choices.
c) Scarcity in an economic sense only applies to people below a certain level of income.
d) In equilibrium, only some people would benefit from changing their behavior.
B
Consider the following two statements.
Statement A: The government should increase the tax on beverages containing a lot of sugar.
normative
Statement B: The rising price of gasoline will lead to an increase in cycling to work.
positive
Which of the following options is correct?
a) Statement A is a normative statement. statement B is a normative statement
b) Statement A is a normative statement, statement B is a positive statement.
c) Statement A is a positive statement, statement B is a positive statement.
d) Statement A is a positive statement, statement B is a normative statement.
B
