Deck 1: The Nature of Economics

Question 1

Economics deals with

A) how to profit from the stock market.
B) how to satisfy limited human wants.
C) how society allocates unlimited resources.
D) how individuals allocate scarce resources to satisfy unlimited human wants.

Answer 1

D

Question 2

What does scarcity have to do with the fact that people must make choices?

Answer 2

Scarcity implies that people cannot have everything they want. This implies that ways must be found to determine which of the many goods that people want will actually be produced. Further, since any person cannot have everything he or she wants, the person must decide which specific things to acquire. That is, the person must make choices.

Question 3

Economic analysis is used

A) only in economics classrooms.
B) only by business people.
C) only by policy makers.
D) in all decision making.

Answer 3

D

Question 4

What is economics and what does it try to explain?

Question 5

What is the purpose of knowing "the economic way of thinking"?

Question 6

Economics is the study of

A) how to get rich.
B) how people allocate their limited resources to satisfy their unlimited wants.
C) how people spend their income.
D) why people want certain goods and services rather than other goods and services.

Question 7

Economics is the study of how

A) people make money.
B) preferences are determined.
C) psychology influences preferences.
D) people make choices.

Question 8

In economics, all the items that people would consume if they had unlimited income are known as

A) wants.
B) aggregates.
C) outputs.
D) needs.

Question 9

Economics is the study of

A) how to own as many resources as possible.
B) ceteris paribus.
C) the way people think rather than the way they act.
D) how people allocate their limited resources to satisfy their unlimited wants.

Question 10

Economics is the study of

A) nonhuman phenomena.
B) the determinants of preferences.
C) scarce resources and unlimited wants.
D) the physical sciences.

Question 11

Which statement most accurately defines economics?

A) Economics is the study of how people make money.
B) Economics is the study of how people make choices to satisfy their wants.
C) Economics is the study of values a society should choose.
D) Economics is the study of how to eliminate scarcity.

Question 12

Economics can be described as the study of how people use ________ resources to satisfy ________ wants.

A) unlimited; unlimited
B) unlimited; limited
C) limited; unlimited
D) limited; limited

Question 13

In economics, ________ are limited but ________ are unlimited.

A) wants; resources
B) resources; wants
C) money; ideas
D) ideas; money

Question 14

Economic resources are

A) all the items that people would purchase if they had limited wants.
B) all the unlimited items that people would purchase with limited income.
C) items of value that are used to make other things that satisfy people's wants.
D) the total planned expenditures throughout the nation.

Question 15

In economics, items that are used to produce goods and services are known as

A) wants.
B) aggregates.
C) factors of need.
D) resources.

Question 16

In economic analysis, people's resources are

A) limited and their wants are unlimited.
B) unlimited and their wants are also unlimited.
C) limited and their wants are also limited.
D) unlimited and their wants are limited.

Question 17

A fundamental aspect of economics is to

A) ensure that every firm makes a profit.
B) analyze how choices are made.
C) satisfy all our wants.
D) make sure that our resources will always be unlimited.

Question 18

Economic analysis is a tool that

A) aids all decision making.
B) helps us understand why people make mistakes.
C) helps us forgive selfish people.
D) complicates decision making.

Question 19

The economic way of thinking will help you

A) make decisions in financing your home.
B) decide whether the U.S. government should encourage or discourage immigration.
C) make better decisions concerning your education.
D) all of the above

Question 20

Economics is best defined as the

A) study of how people make choices to satisfy their wants.
B) study of individual self-interests.
C) study of how government can most efficiently raise funds by taxation.
D) process by which goods are sold in free markets.

Question 21

Wants are

A) another term for needs.
B) the things people would consume if they had unlimited incomes.
C) the things people consume with their income.
D) all the things people really need in order to live comfortably.

Question 22

Microeconomics is defined as that part of economic analysis that

A) studies the behavior of the economy as a whole.
B) includes the problems of inflation and unemployment.
C) studies individual decision making by households and firms.
D) concerns aggregate production and consumption.

Question 23

Which of the following is NOT a focus of the study of economics?

A) how individual preferences are formed
B) unemployment
C) inflation
D) prices in particular markets

Question 24

Economics is the study of how people make

A) judgments.
B) investments.
C) money.
D) choices.

Question 25

Economics is the study of

A) the allocation of scarce resources to satisfy unlimited wants.
B) why some people want certain goods and services.
C) earning the most income.
D) ways to use fewer resources.

Question 26

Economics

A) is a social science.
B) is concerned with limited resources.
C) is concerned with unlimited wants.
D) All of the above are correct.

Question 27

The primary purpose of economics is to understand how people make

A) money.
B) goods and services.
C) choices.
D) a comfortable living.

Question 28

Economics is a study of

A) how to make money in the stock market.
B) how to run a business successfully.
C) the allocation of scarce resources.
D) personal finance.

Question 29

Because resources are scarce relative to wants, the study of economics concerns

A) how money is important to people.
B) how individuals, businesses, and governments make choices.
C) how money is used to buy what people want.
D) None of the above are correct.

Question 30

The basic economic problem is a situation of

A) limited resources and unlimited wants.
B) both limited resources and limited wants.
C) limited incomes and unlimited choices.
D) unlimited incomes and limited choices.

Question 31

Macroeconomics is the study of

A) aggregate economic variables.
B) output in particular industries.
C) prices in particular industries.
D) all of the above.

Question 32

Economics is a social science that involves the study of how individuals

A) develop their tastes and preferences.
B) maximize their wealth.
C) define happiness.
D) choose among alternatives to satisfy their unlimited wants.

Question 33

________ are the things that are used to produce items that satisfy people's wants.

A) Concepts
B) Production possibilities curves
C) Resources
D) Costs

Question 34

In the definition of economics,

A) both resources and wants are limited.
B) both resources and wants are unlimited.
C) resources are limited and wants are unlimited.
D) resources are unlimited and wants are limited.

Question 35

The primary objective of economics is

A) to learn how to create more resources.
B) to study how people make choices with limited resources.
C) to learn how to make the most profits with a given amount of resources.
D) to study why some people are never happy with the resources they have.

Question 36

Economics is a part of the

A) social sciences.
B) natural sciences.
C) biological sciences.
D) organizational sciences.

Question 37

Economics is concerned with choices

A) that involve the wants of individuals.
B) that involve the political goals of professional associations.
C) made by individuals only when they are consuming goods or services.
D) that involve making money.

Question 38

Resources are

A) unlimited.
B) able to be replicated in large quantities.
C) what people would buy if their income was unlimited.
D) used to produce goods and services to satisfy people's wants.

Question 39

Economics is a

A) hard science.
B) physical science.
C) natural science.
D) social science.

Question 40

Economics is most precisely defined as

A) a study of what people need to survive.
B) a study of how culture evolves in different geographic areas.
C) the same as the study of finance and management.
D) the study of how people make choices.

Question 41

Macroeconomics is best defined by which of the following statements?

A) Macroeconomics is the study of how firms strive to maximize their profits.
B) Macroeconomics is the study of the behavior of the economy as a whole.
C) Macroeconomics is the study of individual economic units.
D) Macroeconomics is the study of how the prices of individual goods are determined.

Question 42

One topic of study for a microeconomist would be the

A) causes of inflation.
B) causes of aggregate unemployment.
C) effects of a gasoline price increase on consumer behavior.
D) effects of an increase in government spending on overall economic activity.

Question 43

Macroeconomics is concerned with

A) individual business firms.
B) specific industries.
C) individual consumers.
D) a nation's entire economy.

Question 44

Microeconomics is concerned with the study of

A) the effects of inflation.
B) the effects of government spending.
C) the effects on individual producers of higher wages paid to workers.
D) aggregates.

Question 45

A macroeconomist would study

A) the price changes at K-Mart.
B) the cost problems at several airlines.
C) the economy's unemployment level.
D) none of the above.

Question 46

The macroeconomist would most likely study

A) the effects of changing apple prices on the market for oranges.
B) the effects of an increase in wage rates on a woman's decision to enter the labor force.
C) the effects of a lower income tax rates on the nation's total production of goods and services.
D) the effect of increased union wages on the cost of producing automobiles.

Question 47

Macroeconomics often relies on microeconomic analysis because

A) microeconomics is older than macroeconomics.
B) microeconomic theory can be tested and macroeconomic theory cannot be tested.
C) all aggregates are made up of individuals and firms.
D) the effects of macroeconomic subjects such as inflation and unemployment are independent of individual consumers and firms.

Question 48

Which of the following would most likely NOT be taught in a microeconomics course?

A) changes in prices of automobiles
B) the effects of a gas tax on gas purchases
C) the effect of an increase in wheat prices on farmers' behavior
D) the unemployment rate

Question 49

Which of the following would most likely NOT be taught in a macroeconomics course?

A) changes in the health care industry
B) factors leading to different economic growth rates among countries
C) government actions in response to a slowdown in the economy
D) the relationship between the inflation rate and the unemployment rate

Question 50

Macroeconomics deals with ________ while microeconomics deals with ________.

A) choices important to people; choices not important to people
B) economywide choices; choices of individuals
C) choices that involve money; choices that does not involve money
D) choices of rich people; choices of poor people

Question 51

Microeconomics is concerned with studying which of the following?

A) the determinants of national unemployment
B) the effects of monetary policy
C) the study of individual markets
D) all of the above

Question 52

Macroeconomics deals with

A) aggregates within the economy.
B) specific sectors within the economy.
C) the retail industry only.
D) decisions made by firms.

Question 53

Macroeconomics is concerned with

A) individual consumers.
B) government decision making concerning farm price supports.
C) aggregates.
D) the effects on a corporation of a strike by the United Auto Workers.

Question 54

The impact of higher taxes would be examined by

A) a microeconomist.
B) a macroeconomist.
C) both a macroeconomist and a microeconomist.
D) neither a macroeconomist nor a microeconomist.

Question 55

A microeconomist would study all of the following issues EXCEPT

A) the impact of a change in consumer income on the sales of corn.
B) the impact of a snowstorm on the sales of snow shovels.
C) the most efficient means for General Motors to produce an automobile.
D) the effect of a change in income taxes on the nation's rate of unemployment.

Question 56

Microeconomics examines the

A) total household expenditures.
B) behavior of the economy as a whole.
C) aggregate business spending.
D) decision making undertaken by individual households.

Question 57

A friend wants to learn how the unemployment rate is calculated and how inflation is measured. He asks you which economics course to take and you advise him to enroll in

A) macroeconomics.
B) microeconomics.
C) either micro- or macroeconomics. They both concentrate equally on those issues.
D) financial accounting because economics doesn't address those topics in its courses.

Question 58

Microeconomics focuses on

A) individual decision makers within the economy.
B) the large parts of the economy.
C) changes in national income.
D) satisfying the needs of the economy.

Question 59

Microeconomics is the study of

A) the behavior of the economy as a whole.
B) how rising prices affect the level of employment in the economy.
C) how individuals and firms make decisions.
D) the effect that money has in the economic system.

Question 60

Which of the following would likely be studied in a macroeconomics course?

A) the unemployment rate
B) total output for an economy
C) the inflation rate
D) all of the above

Question 61

Modern economists are increasingly using microeconomic analysis in macroeconomics because

A) microeconomic theory is more scientific.
B) aggregate outcomes stem from decisions made by individuals, business firms and government.
C) macroeconomic subjects such as inflation affect all individuals.
D) macroeconomics is older and more outdated.

Question 62

Which of the following is a characteristic or focus of economics?

A) allocation of limited resources in an effort to satisfy potentially unlimited wants
B) positive economic analysis
C) empirical analysis
D) all of the above

Question 63

Which of the following is a microeconomic concern?

A) the rate of economic growth in the United States
B) the current unemployment rate in the United States
C) consumer behavior
D) national output of the United States

Question 64

Another word for "aggregate" is

A) government.
B) partial.
C) public.
D) total.

Question 65

Which of the following would likely be considered as falling into the domain of microeconomics?

A) the U.S. unemployment rate
B) the Gross Domestic Product
C) the price of apples
D) the effects of fiscal policy on the U.S. economy

Question 66

Which of the following is NOT a characteristic or focus of microeconomics?

A) normative analysis.
B) analysis of aggregate economic variables.
C) empirical analysis.
D) empirical analysis

Question 67

The study of the aggregate economic variables is

A) macroeconomics.
B) microeconomics.
C) positive economics.
D) normative economics.

Question 68

The distinction between microeconomics and macroeconomics is

A) clearly drawn, and there is no overlap between them.
B) determined by economists in a clear and concise manner.
C) narrowly drawn, and microeconomic analysis often relies on macroeconomic tools.
D) often blurred because aggregates are made up of individuals and firms.

Question 69

Macroeconomics might study which of the following?

A) the causes of domestic unemployment
B) decision making undertaken by firms
C) decision making undertaken by households
D) determinants of the prices of rare goods (e.g., diamonds)

Question 70

Macroeconomics would be concerned with

A) implications of changes in unemployment and inflation.
B) the effects on individual consumers of changes in the price of gasoline for a business.
C) the effects of a tax on beer.
D) the effects of wage increases on steel manufacturers.

Question 71

All of the following are examples of macroeconomic problems EXCEPT

A) inflationary pressures caused by an increase in the cost of petroleum.
B) unemployment caused by a fall off in the level of residential construction.
C) a decline in the rate of overall economic growth.
D) consumers deciding to buy more fish and less beef because of concerns about a healthier diet.

Question 72

What type of economics would most typically deal with aggregates?

A) macroeconomics
B) microeconomics
C) labor economics
D) environmental economics

Question 73

Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

A) incentives
B) resources
C) rationality
D) aggregates

Question 74

Microeconomics studies

A) decisions made by individual consumers and firms.
B) the changes in economic theory brought about by real-world events.
C) how small changes in the unemployment rate can have far-reaching effects.
D) how small changes in the money supply can have far-reaching effects.

Question 75

The study of how a particular firm might choose to maximize its profits would fall into what type of analysis?

A) macroeconomics
B) microeconomics
C) labor economics
D) aggregate economics

Question 76

Which of the following is a macroeconomic concern?

A) the unemployment rate in a specific industry
B) the national output of the United States
C) wage levels in specific industries
D) the operation of an individual firm

Question 77

Macroeconomics is concerned primarily with

A) positive economics.
B) production and prices in particular markets.
C) aggregate economic variables.
D) normative issues.

Question 78

Which of the following is NOT studied in microeconomics?

A) the effect of an increase in gasoline taxes on the purchase of gasoline
B) the impact of an increase in the unemployment rate on economic production
C) the impact of firms' collective hiring choices on the aggregate unemployment rate
D) the impact of higher fuel prices on the cost of airline tickets

Question 79

The study of an individual's choice about what type of computer to buy is a subject of

A) macroeconomics.
B) microeconomics.
C) an aggregate concept.
D) not a concern for economic analysis.

Question 80

Macroeconomics is concerned with studying the

A) behavior of individual decision makers.
B) behavior of the economy as a whole.
C) prices of specific companies' stocks.
D) wants of individuals.