Question

1. All the following statements regarding how economists measure the economy are true except

a. Going to the movies instead of reading a book is an example of an opportunity cost.

b. An economist collecting data is an example of being a policy maker.

c. Economic decisions are made at the margin.

d. A point outside the production possibility frontier is not a feasible allocation of resources

2. An example of the difference between an economist being ‘positivist’ and being ‘normative’ is

a. The former is acting as a scientist and the latter is acting judgmentally.

b. The former would recommend tariffs and the latter would collect data on tariffs

c. The former would write editorials and the latter would develop pie chart presentations

d. The former would make statements using the word ‘ought’ and the latter would make statements using the word ‘is’.

3. The ‘invisible hand’ argument of the 18th Century economist Adam Smith is

a. The title of a science fiction thriller.

b. Is used to describe the benefits of the free enterprise system.

c. Is a philosophy supported by the 19th century economist, Karl Marx

d. Was a philosophy that seeking selfish gain would result in harm to the rest of society.

4. An economy produces hot dogs and hamburgers. If it is discovered that hot dogs had great health benefits, we would expect

a. The production possibility frontier to expand

b. A movement along the production possibility frontier.

c. The economy to produce inside the production possibility frontier.

d. Production to produce outside the production possibility frontier

5. All of the statements below are true of the psychology theories of Abraham Maslow except

a. A belief that humans should actualize their potential

b. A belief that a human needs can be shown in a hierarchal fashion.

c. A belief that except for outside circumstances beyond our control, we control our destiny

d. A political system of tyranny is most compatible with human growth.

6. Regarding the circular diagram of an economy, all of the below is true except

a. Rent is the payment for the use of the factor of production, land

b. The total value of purchases of goods and services is equal to payments for the inputs for those goods and services.

c. Describes the flow of inputs and outputs of an economy.

d. Does not show the relationship between inputs and outputs of an economy

7. Microeconomics studies all the following topics except

a. The European Union’s restriction on American corporations.

b. The effect of a change in Apple’s IPhone price.

c. Governments restrictions on vaping prices

d. The impact of unemployment and inflation the labor markets.

8. The following statements are true regarding what economists describe as a normal good except

a. A good that increased in demand during an Irish famine.

b. A good that is less desired when prices fall

c. A good that is more desired when prices fall

d. A good that is bought to show wealth status

Answer 1

1. b

Data collection is not same as policy making.

2. a

Positive economics is subjective, factual and subject to validation. Normative economics is objective and answers "What should or ought to be".

3. b

When everyone acts according to self-interest, the economy gains.

4. b

Favorable report of consumption will increase demand, but not production so that the PPF will shift.

5. d

6. d

7. d

Macroeconomics deals with economy-wide variables like inflation and unemployment.

8. a

A famine will decrease consumer income. A good which has higher demand when consumer income falls, is an inferior good.