Question 1

Economists are generally opposed to tariffs or other restrictions on imported goods because of the negative secondary effects they create that more than offset the benefits to employment in the domestic industry. Which of the following could be considered a secondary effect of these trade restrictions?

Accepted Answer

All of the above are potential secondary effects of trade restrictions. Tariffs and other trade restrictions can lead to higher prices for consumers, which then reduces their spending power for other goods and services, potentially leading to employment losses in other domestic industries. Additionally, trade restrictions can trigger responses from other countries which might restrict exports from the country imposing the tariffs, leading to lower employment in export industries.

Question 2

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

Accepted Answer

The statement is emphasizing the importance of considering secondary effects, which are effects that may only become observable over time. This highlights the idea that economic analysis must go beyond the immediate and obvious effects of a change, and take into account the indirect and long-term effects that may also occur. Therefore, the correct choice is C - the importance of secondary effects.

Question 3

The difference between a positive economic statement and a normative statement is that

Accepted Answer

A positive economic statement is a statement of fact that can be tested, proven or disproven. In contrast, a normative economic statement is an opinion or value judgment that cannot be tested or proven. Therefore, option (C) is the best choice as it correctly differentiates between the two types of statements.

Question 4

Which of the following represents a positive statement?

Accepted Answer

A positive statement is a statement that describes what is or what will be, rather than what should be. Option A is a descriptive statement that indicates the response (people would reduce the amount of time they spend working) to a specific action (an increase in income tax rates).

Question 5

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

Accepted Answer

Secondary effects refer to the unintended consequences of an economic change that may not be immediately evident but are gradually felt over time. These effects may be positive or negative and can have a significant impact on individuals, businesses, and the overall economy.

Question 6

What is the best test of an economic theory?

Accepted Answer

The ability of a theory to predict real-world events is the best test of an economic theory. A theory may have accurate assumptions and a high level of mathematical detail, but if it cannot accurately predict real-world events, it may not be a useful or valid theory. Additionally, the implications of a theory for public policy may be subjective and depend on political and social values, so it may not be the most objective test of a theory's validity.

Question 7

Which of the following is a positive economic statement?

Accepted Answer

The answer of Which of the following is a positive...

Question 8

Which of the following is a positive economic statement?

Accepted Answer

D is a positive economic statement because it makes a factual observation about the relationship between taxes and job creation. It does not express a value judgment or subjective opinion. A, B, and C express value judgments or subjective opinions about government spending, job creation, and tax revenue usage.

Question 9

The value of a good is

Accepted Answer

The value of a good is subjective and depends on the preferences and perceptions of the buyer. It can vary from person to person and can change over time.

Question 10

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) ____ economic statement, and the labor head's statement is a(n) ____ economic statement.

Accepted Answer

The Secretary's statement is a positive economic statement because it is a factual statement about what has occurred in the economy. The labor head's statement is a normative economic statement because it expresses an opinion about what should have occurred instead of simply stating what has occurred.

Question 11

Which of the following is true?

Accepted Answer

Positive economic statements can be tested through empirical evidence, while normative statements are based on opinions and values and cannot be empirically tested.

Question 12

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

Accepted Answer

The value of goods is subjective and varies from person to person based on individual preferences and circumstances. This is known as the subjective theory of value, a fundamental concept of economics.

Question 13

The difference between positive economic statements and normative economic statements is that

Accepted Answer

Positive economic statements are based on factual evidence and can be verified or disproven through economic data. Normative economic statements, on the other hand, involve value judgments and subjective opinions. Therefore, positive statements are based on fact while normative statements are based on opinion.

Question 14

The value of a good

Accepted Answer

The value of a good is subjective and depends on the individual using it and the context in which it is used. Factors such as supply and demand, availability, and perceived quality also play a role in determining the value of a good. The cost of production and labor necessary to supply the good may influence its price, but they do not necessarily determine its overall value. A survey of manufacturers would not necessarily be an objective measure of a good's value, as the manufacturers may have biases or interests in promoting their own product.

Question 15

Positive economics

Accepted Answer

Positive economics aims to objectively analyze and explain economic phenomena and postulates relationships among economic variables that can be tested and potentially refuted by real-world events. This distinguishes it from normative economics, which prescribes what ought to be done based on moral or political values. Positive economics does not necessarily indicate which economic policy is best since this involves normative judgments.

Question 16

Which of the following most clearly distinguishes between positive and normative economics?

Accepted Answer

Positive economics is concerned with describing and explaining economic phenomena, while normative economics involves making value judgments and prescribing what should be done. Positive economics is the study of facts and phenomena, while normative economics makes judgments about them.

Question 17

What is the best test of an economic theory?

Accepted Answer

The ability of an economic theory to predict real-world events, patterns, and changes is the best test of its validity and usefulness. The plausibility of its assumptions and lack of bias towards specific implications are also important, but ultimately the success of a theory is judged by its ability to accurately explain and predict economic phenomena in the real world. Eloquence is not a relevant criteria for evaluating the strength of an economic theory.

Question 18

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

Accepted Answer

All of the options listed could be considered secondary effects of making drugs such as cocaine illegal. Higher prices due to illegal status can lead to property theft and violent encounters between dealers and customers. The use of law enforcement resources for drug enforcement can lead to less enforcement of other crimes, potentially allowing for an increase in those crimes. The lack of legal enforcement for drug contracts can also lead to violence and other negative outcomes.

Question 19

The fact that some people love tomatoes while others dislike them illustrates that

Accepted Answer

The fact that some people love tomatoes while others dislike them illustrates the subjective nature of value. This means different people assign different values to goods based on their own preferences and needs, rather than there being an objective value inherent in the good itself.

Question 20

Which of the following is an example of a normative economic statement?

Accepted Answer

A normative economic statement is a statement that expresses an opinion or a value judgment about what ought to happen in the economy. Option E is an example of a normative statement because it expresses an opinion about what should be done with regards to the minimum wage. Option A is a positive economic statement because it describes what happened in the economy without expressing any opinion or value judgment. Option B is another example of a positive economic statement as it describes the growth rate of the economy. Option C is a positive economic statement because it describes what is likely to happen if two automobile companies merge. Option D is a positive economic statement because it describes the effects of international trade on workers without expressing any opinion or value judgment.

Quiz 1: The Economic Approach

"Mediocre economists often consider only the immediate apparent effects of a change, whereas a good economist will also consider effects that may only become observable over time." This statement most clearly emphasizes

The difference between a positive economic statement and a normative statement is that

Which of the following represents a positive statement?

The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as

What is the best test of an economic theory?

Which of the following is a positive economic statement?

Which of the following is a positive economic statement?

The value of a good is

The Secretary of Labor states that wage rates in the country have risen by 2 percent this past year. The head of a local labor union states that wage gains should have been higher. The Secretary's statement is a(n) economic statement, and the labor head's statement is a(n) economic statement.

Which of the following is true?

All but one of the following are elements of the economic way of thinking. Which one is not part of the economic way of thinking?

The difference between positive economic statements and normative economic statements is that

The value of a good

Positive economics

Which of the following most clearly distinguishes between positive and normative economics?

What is the best test of an economic theory?

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal?

The fact that some people love tomatoes while others dislike them illustrates that

Which of the following is an example of a normative economic statement?