Question 1

Normative statements are concerned primarily with:

Accepted Answer

Normative statements are concerned with what ought to be, or what is considered good or right. This is in contrast to descriptive statements, which are concerned with what is currently happening or the facts and theories of a situation. Normative statements involve judgments and values and are often subjective.

Question 2

Which of the following is associated with macroeconomics?

Accepted Answer

Macroeconomics deals with the study of the overall economy, including topics such as general price level, inflation, unemployment, and economic growth. Option B relates to the empirical investigation of the general price level and unemployment rates since 1990, which falls under macroeconomics. The other options are more focused on microeconomics topics such as specific industries, production, and pricing of goods.

Question 3

"Economics is concerned with how individuals,institutions,and society make optimal choices under conditions of scarcity." This statement is:

Accepted Answer

The statement accurately defines what economics is concerned with, and it is a positive statement because it is describing what is, not what ought to be.

Question 4

Microeconomics is concerned with:

Accepted Answer

Microeconomics focuses on the behavior and decision-making of individual economic units, such as consumers, firms, and industries. It studies how these units interact in markets to determine the allocation of scarce resources. It does not address aggregate or total levels of income, employment, and output, nor does it establish an overall view of the operation of the economic system.

Question 5

The problems of aggregate inflation and unemployment are:

Accepted Answer

Aggregate inflation and unemployment are major topics of macroeconomics as they relate to the overall performance of the economy rather than individual markets or firms. Additionally, these issues are relevant to the U.S. economy and many other economies around the world, regardless of their economic system.

Question 6

A positive statement is concerned primarily with:

Accepted Answer

A positive statement is a factual statement that describes what is currently happening or has happened in the past. It is not concerned with what should be or what goals are desirable for society. Positive statements are often used in economic analysis to provide an objective description of economic phenomena.

Question 7

Which of the following is a microeconomic statement?

Accepted Answer

The statement "The price of personal computers declined 4.7 percent last year" is a microeconomic statement because it pertains to the specific market for personal computers, rather than broader economic indicators like real domestic output or general price level.

Question 8

"Macroeconomics is the part of economics concerned with individual units such as a person,a household,a firm,or an industry." This statement is:

Accepted Answer

The statement is incorrect as macroeconomics is concerned with the entire economy as a whole and not just individual units like a person or a household. It looks at factors like inflation, unemployment, GDP, and overall economic growth.

Question 9

A positive statement is one that is:

Accepted Answer

A positive statement is a statement that can be proven or disproven based on objective facts. This means that it is not subjective and does not rely on personal opinions or value judgments. Choice D is the only option that describes a statement based on objective facts.

Question 10

Microeconomics:

Accepted Answer

Microeconomics deals with individual economic units and specific markets like demand and supply, consumer behavior, production theory, market structure, and pricing policies. It is concerned with analyzing and understanding the behavior of small economic agents like individuals, households, or firms, rather than the entire economy as a whole.

Question 11

The economizing problem is one of deciding how to make the best use of:

Accepted Answer

The economizing problem arises because resources are scarce in relation to the wants and needs of individuals and society. Therefore, the best choice is option B, which recognizes that there are limited resources to satisfy virtually unlimited wants.

Question 12

Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India." We can conclude that:

Accepted Answer

Both statements are positive because they describe observable phenomena or causes for rising gas prices without making value judgments or prescribing what should be done.

Question 13

The economizing problem is:

Accepted Answer

The economizing problem is the need to make choices because economic wants exceed economic means. This means that individuals, businesses, and societies must make decisions about how to allocate resources among competing uses because they cannot satisfy all of their wants and needs with the limited resources they have available.

Question 14

A normative statement is one that:

Accepted Answer

A normative statement is based on subjective value judgments rather than objective facts or data. It expresses an opinion about what ought to be or what is desirable. Therefore, normative statements cannot be proven true or false, unlike positive statements that can be verified or falsified through empirical observation.

Question 15

Which of the following statements pertains to macroeconomics?

Accepted Answer

Macroeconomics is concerned with the overall performance of the economy, including measures of national income (such as gross domestic product) and other aggregate economic indicators.

Answer: D
 This statement pertains to microeconomics, which focuses on the behavior of individual agents such as consumers, firms, and banks. The interest rate change affects the bank's customers and may influence their spending and borrowing decisions, but it does not provide information about the overall performance of the economy.

Question 16

Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that:

Accepted Answer

Ben's statement is positive because it makes a prediction about what will happen if the tax on beer is increased. Holly's statement is normative because it makes a value judgment about what should happen regarding the tax on beer based on her opinion about college students.

Question 17

Macroeconomics can best be described as the:

Accepted Answer

Macroeconomics is concerned with studying the economy as a whole, including larger aggregates such as GDP, national income, employment, inflation, etc. It focuses on the performance, structure, and behavior of the entire economy, rather than individual markets or consumers. Option A is incorrect because it concerns the behavior of individual consumers, not the entire economy. Option C is also incorrect because it focuses on the activities of firms, which is a microeconomic concept. Option D focuses on individual markets and prices, which is also a microeconomic concept.

Question 18

The scarcity problem:

Accepted Answer

The scarcity problem exists because there are limited resources to fulfill unlimited human wants and needs. It is a fundamental economic problem that cannot be fully resolved but can be alleviated through efficient allocation and utilization of resources. Choices A, C, and D are incorrect as they do not accurately represent the nature of the scarcity problem.

Question 19

Which of the following is a positive statement?

Accepted Answer

A positive statement is a statement that describes what is, rather than what should be or what could be. Option C simply states a fact about the temperature, without any subjective value judgment or opinion, making it a positive statement. Options A and B express subjective opinions about what is too high or too hot, while option D expresses a subjective opinion about what is nice, making them normative statements.

Question 20

Which of the following statements is true?

Accepted Answer

Microeconomics focuses on specific decision-making units such as individuals, households, and firms, while macroeconomics examines the economy as a whole, including issues such as inflation, unemployment, and economic growth. Therefore, statement A is true. Statements B, C, and D are false.

Quiz 1: Limits, Alternatives, and Choices