Chapter 1 Practice Quiz

A  positive, negative

B  negative, negative

C  negative, positive

D    

E  positive, positive

A  gifts.

B  premiums.

C  intrinsic values.

D  incentives.

E    

A  respond to a given incentive in a random manner.

B  respond predictably to a given incentive.

C  respond irrationally to any incentive.

D  not respond to any incentive.

A  Milton Friedman.

B  Adam Smith.

C  Thorstein Veblen.

D  Alan Greenspan.

A  psychology

B  economics

C  sociology

D  psychiatry

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

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

C  decisions made by individual consumers and firms.

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

A  make decisions in financing your home.

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

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

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

E  make better decisions concerning your education

A  Gross Domestic Product

B  the effects of fiscal policy on the economy

C  the price of apples

D  a nation’s unemployment rate

A  Economic models are not used to forecast.

B  Economists empirically test their models.

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

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

A  market system

B  command and control

C  mixed economic system

D  dictatorship

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  microeconomics

B  macroeconomics

C  labor economics

D  environmental economics

A  money.

B  themselves worse off.

C  choices.

D  subjective judgments.

A  inverse.

B  nonlinear.

C  constant.

D  direct.

A  federal budget details.

B  individual decision making.

C  aggregate measures of the economy.

D  foreign policy economic issues.

A  personal finance.

B  how to run a business successfully.

C  how to make money in the stock market.

D  the allocation of scarce resources.

A  Every model is based on a set of assumptions.

B  A good economic model is complex.

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  cannot be defined.

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

D  is always equal to zero.

A  would be an example of a normative statement.

B  would be a statement of mercantilist economic philosophy.

C  would be an example of a positive statement.

D  would be an example of a microeconomic statement.

A  objective descriptions of the way things are.

B  value judgments.

C  positive analysis.

D  if-then statements.