Question 1

The beginning point of a graph (the 0,0 point) is known as:​

Accepted Answer

The 0,0 point on a graph is known as the origin. This is the starting point for plotting data and forming a graph. The other options, such as ground zero and variable one, do not accurately describe this point on a graph. The quadrant may refer to any of the four sections of a graph, but the origin specifically refers to the 0,0 point.

Question 2

Which of the following represents a normative statement?

Accepted Answer

A normative statement is a subjective statement that reflects an opinion or value judgment. Option B reflects an opinion on the importance of economics over history and is therefore a normative statement. The rest of the options represent positive statements that describe objective facts or causal relationships.

Question 3

"The government should levy higher taxes on the rich and use the additional revenues to provide better housing for the poor." This statement illustrates:

Accepted Answer

This statement is a normative economic statement because it expresses a value judgment about what the government should do, rather than describing a positive economic fact or relationship.

Question 4

Positive statements are:

Accepted Answer

Positive statements are descriptive, meaning they describe how the world is or operates, rather than prescribing how it should be.

Question 5

There are some well-respected economists that believe we should substitute a national sales tax for the income tax. Other equally well-respected economists do not agree. What accounts for the difference in opinion?

Accepted Answer

The difference in opinion could be due to their interpretation of fairness or due to different modeling. Therefore, both options (a) and (b) could account for the difference in opinion.

Question 6

"A reduction in the rate at which stock dividends are taxed will lead to greater investment in the stock market." This is an example of:

Accepted Answer

This statement is a positive economic statement, as it predicts a cause-and-effect relationship between a lower tax rate on dividends and greater investment in the stock market. It does not express any value judgments or opinions about whether this outcome is desirable or not.

Question 7

Graphs are useful because of the way they:

Accepted Answer

Graphs are useful because they facilitate interpretation and analysis of data, clarify interpretation and analysis of ideas, and permit a person to more easily see relationships. Therefore, option D (do all of the above) is the correct answer.

Question 8

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

Accepted Answer

A normative statement expresses a value judgment or opinion, and suggests what ought to be. Option B suggests that young people should learn how to prepare their own taxes, which is a normative statement. The other options are descriptive statements that describe a fact or a phenomenon.

Question 9

Which of the following is an example of a relationship with a negative slope?

Accepted Answer

A negative slope indicates an inverse relationship between two variables, meaning as one variable increases, the other decreases. Choice B, "more items purchased when prices drop," exemplifies this as the decrease in prices leads to an increase in the quantity of items purchased.

Question 10

Most students expect that if they spend more time studying, the outcome will be improved grades in the course. This supposes that:

Accepted Answer

The statement supposes that there is a positive relationship between studying and grades, meaning that as one increases, the other also increases. Therefore, choice A is the correct answer. choices C and D are incorrect because grades cannot be independent or not dependent variables as they are the outcome being measured. Choice B is incorrect because it suggests that the more one studies, the worse their grades will be, which is not logical.

Question 11

An economic study concludes that an investment tax credit would increase business investment next year. This is an example of:

Accepted Answer

The economic study is providing a statement of fact that an investment tax credit would increase business investment next year. This is an example of positive analysis, which is based on evidence and does not involve value judgments or opinions. Normative analysis, on the other hand, involves making value judgments and prescribing a course of action. Negative economic analysis would focus on the potential downsides or drawbacks of an investment tax credit. The fallacy of composition involves assuming that what is true for one individual or firm is true for the entire group or economy.

Question 12

"The hotter it gets, the more water people drink." This statement implies that the relationship between temperature and water consumption must have:

Accepted Answer

The statement suggests a positive correlation between temperature and water consumption, indicating that as temperature increases, people tend to drink more water. Therefore, the relationship between temperature and water consumption has a positive slope.

Question 13

Which of the following graphs or charts must add up to one hundred percent?

Accepted Answer

A pie chart is a type of graph that displays data in the form of a circular chart divided into sectors, with each sector representing a proportionate part of the whole. Because the whole is represented by 100%, the sectors must add up to 100%, making it the best choice. A labor graph, time-series graph, and scatter diagram are not typically designed to display proportions or percentages.

Question 14

When President Harry Truman said that he wanted to find a one-armed economist because his economic advisors always said, "On the one hand... and on the other hand... " he recognized that the advice of economists is often open to more than one interpretation. Why is this?

Accepted Answer

Economists recognize that most policy questions involve tradeoffs, meaning that there are costs and benefits to any decision. Therefore, there can be more than one valid interpretation or recommendation for a given situation.

Question 15

Suppose there are two members of the U.S. Congress who were once economics professors. Why is it important to be able to distinguish their positive from their normative statements about economic policy?

Accepted Answer

Distinguishing between positive and normative statements is important because positive statements describe what "is" while normative statements describe what "ought" to be, based on value judgments. As members of Congress, their normative statements may have a significant impact on economic policy decisions. It is important to separate their value judgments from objective analysis of the economy's response to a particular policy.

Question 16

Normative statements are:

Accepted Answer

Normative statements express value judgments and recommend actions based on those values. These statements are prescriptive in nature and make claims about how things should be, rather than how things actually are (descriptive statements). The other options do not accurately describe normative statements.

Question 17

Which of the following is a statement of positive economics?

Accepted Answer

Statement D is a positive economic statement because it makes a factual claim about the relationship between tax rates and unemployment. It does not express any normative judgment or opinion about what should be done. Statements A, B, and C are normative statements because they express opinions about what policies should be implemented.

Question 18

Which of the following is a normative statement?

Accepted Answer

Normative statements express a value judgment or opinion and suggest what ought to be done. Option C is a normative statement because it states what should be done with income distribution. Option A and D are positive statements that describe cause and effect relationships without making value judgments. Option B is also a positive statement that describes the impact of an economic policy without making a judgment about whether it is good or bad.

Question 19

Which of the following is a positive statement?

Accepted Answer

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

Question 20

"The minimum wage should be increased so that low-income workers can afford to feed their families." This is an example of:

Accepted Answer

This statement expresses a value judgement about what ought to be, rather than describing what is. Therefore, it is a normative economic statement.

Quiz 1: The Role and Method of Economics