ch1
Student: ___________________________________________________________________________
1. Economics may best be defined as:
A. the interaction between macro and micro considerations.
B. the study of the behaviour of people and institutions in the production, distribution
and consumption of scarce goods.
C. the empirical testing of value judgments through the use of induction and deduction.
D. the use of policy to refute facts and hypotheses.
2. The study of economics is primarily concerned with:
A. keeping private businesses from losing money.
B. demonstrating that capitalistic economies are superior to socialistic economies.
C. choices that are made in seeking to use scarce resources efficiently.
D. determining the most equitable distribution of society's output.
3. Economic theories:
A. are useless because they are not based upon laboratory experimentation.
B. that are true for individual economic units are never true for the economy as a whole.
C. are generalisations based upon a careful observation of facts.
D. are abstractions and therefore have no application to real situations.
4. Which of the following statements is correct?
A. Economic concepts or laws that are valid during depression are necessarily valid
during prosperity.
B. Though not quantitatively exact, economic laws are useful because they allow us to
make predictions that are meaningful and useful.
C. Economics is as scientific as physics and chemistry because economic laws are as
quantitatively precise as the laws of physics or chemistry.
D. Since economics is concerned with questions of ‘ought', it is a branch of applied ethics
and is not scientific.
,5. Generally speaking, it may be said that the inductive method:
A. begins with hypotheses that are tested against real-world facts.
B. confuses correlation with cause and effect.
C. moves from facts to generalisations or theory.
D. cannot be applied to economic analysis.
6. The deductive method:
A. begins with hypotheses that are tested against real-world facts.
B. confuses correlation with cause and effect.
C. begins with facts and moves to generalisations or theory.
D. applies to the physical sciences, but not to the social sciences.
7. In constructing models, economists:
A. make simplified assumptions.
B. include all available information.
C. must use mathematical equations.
D. attempt to duplicate the real world.
8. Economic models:
A. are of limited use because they cannot be tested empirically.
B. are limited to variables that are directly related to one another.
C. emphasise basic economic relationships by abstracting from the complexities of the
real world.
D. are unrealistic and are therefore of no practical consequence.
9. The term ceteris paribus means:
A. if event A precedes event B, A has caused B.
B. economics deals with facts, not values.
C. other things being equal.
D. prosperity inevitably follows recession.
,10. The basic purpose of the ceteris paribus assumption is to:
A. allow one to reason about the relationship between two variables without the intrusion
of other variables.
B. allow one to focus upon micro variables by ignoring macro variables.
C. allow one to focus upon macro variables by ignoring micro variables.
D. determine whether X causes Y or vice versa.
11. A ‘hypothesis' is:
A. a fundamental truth which all economists accept.
B. a tentative, untested principle.
C. the same as a normative statement.
D. always the result of induction.
12. The term ceteris paribus means that:
A. the associated statement is normative.
B. many variables affect the variable under consideration.
C. a number of relevant variables are assumed to be constant.
D. when variable X increases, so does the related variable.
13. Microeconomics is concerned with:
A. the aggregate or total levels of income, employment and output.
B. a detailed examination of specific economic units, which comprise the economic
system.
C. the concealment of detailed information about specific segments of the economy.
D. the establishment of an overall view of the operation of the economic system.
14. Macroeconomics approaches the study of economics from the viewpoint of:
A. the entire economy.
B. governmental units.
C. the operation of specific product and resource markets.
D. individual firms.
, 15. Which of the following is a microeconomic statement?
A. The real domestic output increased by 2.5% last year.
B. Unemployment was 6.8% of the labour force last year.
C. The price of wheat declined last year.
D. The general price level increased by 4% last year.
16. Which of the following is a macroeconomic statement?
A. The gross profit of all Australian businesses was $182 billion last year.
B. The price of beef declined by 3% last year.
C. General Motors' profit increased in 1988.
D. The productivity of steelworkers increased by 1% in 1992.
17. A normative statement is one that:
A. is based on the law of averages.
B. pertains only to microeconomics.
C. pertains only to macroeconomics.
D. is based upon value judgments.
18. A positive statement is:
A. derived by induction.
B. derived by deduction.
C. subjective and based upon a value judgment.
D. objective and based upon facts.
19. ‘Economics is concerned with using scarce productive resources efficiently in
attempting to satisfy society's material wants.' This statement is:
A. positive, but incorrect.
B. positive and correct.
C. normative, but incorrect.
D. normative and correct.
Student: ___________________________________________________________________________
1. Economics may best be defined as:
A. the interaction between macro and micro considerations.
B. the study of the behaviour of people and institutions in the production, distribution
and consumption of scarce goods.
C. the empirical testing of value judgments through the use of induction and deduction.
D. the use of policy to refute facts and hypotheses.
2. The study of economics is primarily concerned with:
A. keeping private businesses from losing money.
B. demonstrating that capitalistic economies are superior to socialistic economies.
C. choices that are made in seeking to use scarce resources efficiently.
D. determining the most equitable distribution of society's output.
3. Economic theories:
A. are useless because they are not based upon laboratory experimentation.
B. that are true for individual economic units are never true for the economy as a whole.
C. are generalisations based upon a careful observation of facts.
D. are abstractions and therefore have no application to real situations.
4. Which of the following statements is correct?
A. Economic concepts or laws that are valid during depression are necessarily valid
during prosperity.
B. Though not quantitatively exact, economic laws are useful because they allow us to
make predictions that are meaningful and useful.
C. Economics is as scientific as physics and chemistry because economic laws are as
quantitatively precise as the laws of physics or chemistry.
D. Since economics is concerned with questions of ‘ought', it is a branch of applied ethics
and is not scientific.
,5. Generally speaking, it may be said that the inductive method:
A. begins with hypotheses that are tested against real-world facts.
B. confuses correlation with cause and effect.
C. moves from facts to generalisations or theory.
D. cannot be applied to economic analysis.
6. The deductive method:
A. begins with hypotheses that are tested against real-world facts.
B. confuses correlation with cause and effect.
C. begins with facts and moves to generalisations or theory.
D. applies to the physical sciences, but not to the social sciences.
7. In constructing models, economists:
A. make simplified assumptions.
B. include all available information.
C. must use mathematical equations.
D. attempt to duplicate the real world.
8. Economic models:
A. are of limited use because they cannot be tested empirically.
B. are limited to variables that are directly related to one another.
C. emphasise basic economic relationships by abstracting from the complexities of the
real world.
D. are unrealistic and are therefore of no practical consequence.
9. The term ceteris paribus means:
A. if event A precedes event B, A has caused B.
B. economics deals with facts, not values.
C. other things being equal.
D. prosperity inevitably follows recession.
,10. The basic purpose of the ceteris paribus assumption is to:
A. allow one to reason about the relationship between two variables without the intrusion
of other variables.
B. allow one to focus upon micro variables by ignoring macro variables.
C. allow one to focus upon macro variables by ignoring micro variables.
D. determine whether X causes Y or vice versa.
11. A ‘hypothesis' is:
A. a fundamental truth which all economists accept.
B. a tentative, untested principle.
C. the same as a normative statement.
D. always the result of induction.
12. The term ceteris paribus means that:
A. the associated statement is normative.
B. many variables affect the variable under consideration.
C. a number of relevant variables are assumed to be constant.
D. when variable X increases, so does the related variable.
13. Microeconomics is concerned with:
A. the aggregate or total levels of income, employment and output.
B. a detailed examination of specific economic units, which comprise the economic
system.
C. the concealment of detailed information about specific segments of the economy.
D. the establishment of an overall view of the operation of the economic system.
14. Macroeconomics approaches the study of economics from the viewpoint of:
A. the entire economy.
B. governmental units.
C. the operation of specific product and resource markets.
D. individual firms.
, 15. Which of the following is a microeconomic statement?
A. The real domestic output increased by 2.5% last year.
B. Unemployment was 6.8% of the labour force last year.
C. The price of wheat declined last year.
D. The general price level increased by 4% last year.
16. Which of the following is a macroeconomic statement?
A. The gross profit of all Australian businesses was $182 billion last year.
B. The price of beef declined by 3% last year.
C. General Motors' profit increased in 1988.
D. The productivity of steelworkers increased by 1% in 1992.
17. A normative statement is one that:
A. is based on the law of averages.
B. pertains only to microeconomics.
C. pertains only to macroeconomics.
D. is based upon value judgments.
18. A positive statement is:
A. derived by induction.
B. derived by deduction.
C. subjective and based upon a value judgment.
D. objective and based upon facts.
19. ‘Economics is concerned with using scarce productive resources efficiently in
attempting to satisfy society's material wants.' This statement is:
A. positive, but incorrect.
B. positive and correct.
C. normative, but incorrect.
D. normative and correct.
