Question 1

The unemployment rate was falling during all of the years that I was a student, but as soon as I graduated, the unemployment rate started to rise. Therefore, the job market was waiting until I started looking for employment to start to go bad. This statement is an example of
A) fallacy of logic.
B) post hoc, ergo propter hoc fallacy.
C) ceteris paribus fallacy.
D) fallacy of inductive reasoning.

Accepted Answer

This statement is an example of the post hoc, ergo propter hoc fallacy, which means that just because two things happened in succession, it does not mean that one caused the other. In this case, the falling and rising unemployment rates likely had many other factors at play, and were not solely influenced by the narrator's graduation.

Question 2

The decrease in exports from the United States is in part due to the strength of the U.S. dollar relative to foreign currencies. This statement is best described as
A) a marginal statement.
B) a normative statement.
C) a positive statement.
D) an unsubstantiated statement.

Accepted Answer

The statement is describing a fact about the relationship between the strength of the U.S. dollar and exports, so it is a positive statement. It is not expressing any subjective value judgement or opinion, so it is not normative. It is also not a marginal statement or unsubstantiated, as it is supported by economic data and analysis.

Question 3

The concept of equity would explain the redistribution from the rich to the poor which is achieved from a tax system that requires taxes to
A) fall when income rises.
B) rise when income rises.
C) remain stable when income rises.
D) be unrelated to income.

Accepted Answer

The concept of equity implies that taxes should be proportionate to one's ability to pay. Therefore, as income rises, taxes should also increase in order to achieve redistribution from the rich to the poor.

Question 4

The Latin phrase ceteris paribus means that when a relationship between two variables is being studied
A) both are treated as unpredictable.
B) neither of those two variables is allowed to change.
C) all other variables are held fixed.
D) we recognize that some factors are unknown.

Accepted Answer

"Ceteris paribus" means "all other things being equal" or "all other variables being held constant." Therefore, choice C is the correct answer.

Question 5

There is a high correlation between the number of automobiles on the road and the amount of carbon emissions in the atmosphere. This statement is best described as
A) a normative statement.
B) a positive statement.
C) a marginal statement.
D) an implication of an efficient market.

Accepted Answer

The statement is describing a factual relationship between the number of automobiles and carbon emissions. Therefore, it is a positive statement.

Question 6

The mistake of inferring causality from ________ is called the post hoc, ergo propter hoc fallacy.
A) two events happening one after the other
B) two or more related events occurring at the same time
C) two or more unrelated events occurring at the same time
D) the same event occurring multiple times

Accepted Answer

The post hoc, ergo propter hoc fallacy is the mistake of assuming that because one event happened before another event, it must have caused the second event. This choice accurately describes this scenario. The other options do not necessarily involve inferring causality based on temporal relationships between events.

Question 7

Economic stability refers to the condition of steady growth in national output, with ________ inflation and ________ employment of resources.
A) negative; low
B) low; full
C) high; full
D) no; no

Accepted Answer

Economic stability is achieved when there is low inflation and full employment of resources. Option A is incorrect because negative inflation indicates deflation, which is not desirable for the economy. Option C is incorrect because high inflation indicates that the value of money is decreasing, which can lead to economic instability. Option D is incorrect because it is not possible to have no inflation or unemployment, but maintaining them at a low level contributes to economic stability.

Question 8

A change in economic output is ________ if the value of the resulting gains exceeds the value of the resulting losses.
A) potentially efficient
B) always efficient
C) always inefficient
D) irrelevant

Accepted Answer

A change in economic output is potentially efficient if the resulting gains exceed the resulting losses. This means that the change has the potential to increase overall economic welfare. However, it is not guaranteed to be efficient as there may be distributional impacts and other externalities to consider.

Question 9

Isabel noted that whenever she wore her green contact lenses, the Chicago White Sox would win that evening. Based on this observation, she developed the "green-eyes-for-White-Sox" theory of winning. It is most likely true that Isabel
A) showed good reasoning for the reason the White Sox would win.
B) committed the ceteris paribus error.
C) committed the fallacy of logic.
D) was confusing causality.

Accepted Answer

Isabel is confusing causality with correlation. Just because the White Sox win on the days she wears green contact lenses does not mean her wearing them causes the team to win. This is a common logical fallacy where two events occurring together are mistakenly believed to have a cause-and-effect relationship.

Question 10

Because all workers should be able to earn a living wage, the minimum wage should be raised to $11.50 per hour in the United States. This statement is best described as
A) a normative statement.
B) a positive statement.
C) a marginal statement.
D) an implication of an efficient market.

Accepted Answer

This statement is expressing a moral value and advocating for a policy change, which is subjective and normative in nature. It is not a statement that can be proven or refuted by objective evidence, so it is not a positive statement. It does not concern marginal analysis or efficiency, so it is not a marginal statement or an implication of an efficient market.

Question 11

By invoking the assumption of ceteris paribus, economists
A) consider the impact of all relevant factors.
B) hold all variables constant when analyzing a model.
C) isolate the impact of one single variable while holding all other variables constant.
D) exclude irrelevant detail when analyzing a model.

Accepted Answer

By invoking ceteris paribus, economists isolate the impact of one single variable while holding all other variables constant. This allows for a clearer understanding of the relationship between the variable in question and the outcome being analyzed.

Question 12

If you observe that Kelly Clarkson won American Idol 3 years before Carrie Underwood won, and you conclude that Kelly Clarkson winning caused Carrie Underwood to win 3 years later, you would be guilty of an error called the
A) fallacy of inductive reasoning.
B) fallacy of ceteris paribus.
C) fallacy of logic.
D) post hoc, ergo propter hoc fallacy.

Accepted Answer

This statement describes the post hoc, ergo propter hoc fallacy, which asserts that because one event occurred before another, it caused it. In this case, the fact that Kelly Clarkson won American Idol three years before Carrie Underwood did not necessarily cause Carrie Underwood to win. This is an example of a logical fallacy.

Question 13

You always have math problems to work in class whenever you forget to bring your calculator to school. Concluding that forgetting your calculator causes your professor to assign math problems is an example of the
A) fallacy of logic.
B) fallacy of inductive reasoning.
C) ceteris paribus conditions.
D) post hoc, ergo propter hoc fallacy.

Accepted Answer

The statement suggests that forgetting your calculator causes your professor to assign math problems, but it fails to consider other possible factors that may lead to the same outcome. This is an example of the post hoc, ergo propter hoc fallacy, which assumes that because one event follows another, the first event must have caused the second event.

Question 14

When an economist states that "price changes cause quantity changes ceteris paribus", she is stating that price changes cause quantity changes
A) always.
B) all else equal.
C) only in theory.
D) only in efficient markets.

Accepted Answer

When an economist states that "price changes cause quantity changes ceteris paribus", she means that all other factors affecting demand and supply are held constant except for the price. Therefore, the statement is true only when all other conditions remain the same (i.e. all else equal or ceteris paribus). In reality, there may be other factors that affect the quantity demanded or supplied, leading to exceptions to this general rule.

Question 15

Ockham's razor is the principle that states
A) supply creates its own demand.
B) we must forgo something when making a decision.
C) costs which have been incurred cannot be avoided.
D) irrelevant detail should not be included in a model.

Accepted Answer

Ockham's razor is a principle used in problem-solving and scientific inquiry that states that when multiple explanations or models are available for a phenomenon, the simplest one should be preferred. This means that irrelevant or unnecessary details should not be included in models or explanations.

Question 16

Since the legal age to vote in the United States is 18, the legal drinking age in the United States should be lowered to 18. This statement is best described as
A) a normative statement.
B) a positive statement.
C) a marginal statement.
D) an implication of an efficient market.

Accepted Answer

This statement is expressing a subjective opinion about how the legal system should be structured, rather than stating a factual observation about the current state of affairs. Therefore, it is a normative statement.

Question 17

Empirical economics refers to the
A) exclusion of irrelevant data when analyzing a model.
B) collection and use of data to test economic theories.
C) model of economics used prior to the Industrial Revolution.
D) belief that what is true for a part is necessarily true for the whole.

Accepted Answer

Empirical economics is a method of testing economic theories by collecting and analyzing data. This allows economists to determine whether a theory accurately describes real-world economic phenomena. Choices A, C, and D do not accurately describe empirical economics.

Question 18

Whenever a former governor is elected president, the unemployment rate decreases; whenever a former congressman is elected president, the inflation rate increases. This statement is an example of
A) fallacy of logic.
B) post hoc, ergo propter hoc fallacy.
C) ceteris paribus fallacy.
D) fallacy of inductive reasoning.

Accepted Answer

This statement is an example of post hoc, ergo propter hoc fallacy, also known as "correlation does not imply causation". There is no logical or causal relationship between the former occupation of a president and the economic indicators that follow their presidency. It is possible that these trends are simply coincidental or influenced by a variety of other factors.

Question 19

Salary caps are imposed when league officials believe some football team owners are taking advantage of their deep pockets and buying more quality players than the other owners can afford to buy. Which of the following criteria are they using to guide their actions?
A) growth
B) stability
C) efficiency
D) equity

Accepted Answer

The criteria being used to guide their actions is equity, as they want to ensure that all teams have an equal opportunity to buy quality players and compete on a level playing field, regardless of the size of their owners' bank accounts. Salary caps help to promote fairness and equity in the league.

Question 20

You have observed that every time you get a new tattoo the day before you take an exam you get an A. You therefore conclude that to get an A on an exam, all you have to do is get a new tattoo the day before. You have committed the
A) fallacy of division.
B) fallacy of inductive reasoning.
C) post hoc, ergo propter hoc fallacy.
D) Ockham's fallacy.

Accepted Answer

The reasoning used is post hoc, ergo propter hoc (Latin for "after this, therefore because of this"). This fallacy assumes that because two events occur in sequence, the first event caused the second event. In this case, getting a new tattoo the day before an exam and getting an A may have no causal relationship, but are simply coincidental.

Quiz 1: The Scope and Method of Economics

The unemployment rate was falling during all of the years that I was a student, but as soon as I graduated, the unemployment rate started to rise. Therefore, the job market was waiting until I started looking for employment to start to go bad. This statement is an example of

The decrease in exports from the United States is in part due to the strength of the U.S. dollar relative to foreign currencies. This statement is best described as

The concept of equity would explain the redistribution from the rich to the poor which is achieved from a tax system that requires taxes to

The Latin phrase ceteris paribus means that when a relationship between two variables is being studied

There is a high correlation between the number of automobiles on the road and the amount of carbon emissions in the atmosphere. This statement is best described as

The mistake of inferring causality from ________ is called the post hoc, ergo propter hoc fallacy.

Economic stability refers to the condition of steady growth in national output, with inflation and employment of resources.

A change in economic output is ________ if the value of the resulting gains exceeds the value of the resulting losses.

Isabel noted that whenever she wore her green contact lenses, the Chicago White Sox would win that evening. Based on this observation, she developed the "green-eyes-for-White-Sox" theory of winning. It is most likely true that Isabel

Because all workers should be able to earn a living wage, the minimum wage should be raised to $11.50 per hour in the United States. This statement is best described as

By invoking the assumption of ceteris paribus, economists

If you observe that Kelly Clarkson won American Idol 3 years before Carrie Underwood won, and you conclude that Kelly Clarkson winning caused Carrie Underwood to win 3 years later, you would be guilty of an error called the

You always have math problems to work in class whenever you forget to bring your calculator to school. Concluding that forgetting your calculator causes your professor to assign math problems is an example of the

When an economist states that "price changes cause quantity changes ceteris paribus", she is stating that price changes cause quantity changes

Ockham's razor is the principle that states

Since the legal age to vote in the United States is 18, the legal drinking age in the United States should be lowered to 18. This statement is best described as

Empirical economics refers to the

Whenever a former governor is elected president, the unemployment rate decreases; whenever a former congressman is elected president, the inflation rate increases. This statement is an example of

Salary caps are imposed when league officials believe some football team owners are taking advantage of their deep pockets and buying more quality players than the other owners can afford to buy. Which of the following criteria are they using to guide their actions?

You have observed that every time you get a new tattoo the day before you take an exam you get an A. You therefore conclude that to get an A on an exam, all you have to do is get a new tattoo the day before. You have committed the