Question 1

A review of the performance of the economy during the Bush administration is the concern of:
A) macroeconomics.
B) microeconomics.
C) both macroeconomics and microeconomics.
D) neither macroeconomics nor microeconomics.

Accepted Answer

The performance of the economy during the Bush administration is a significant macroeconomic concern as it deals with the overall functioning and performance of the national or global economy, such as gross domestic product, unemployment, inflation, and fiscal policies. Microeconomics, on the other hand, focuses on the individual behavior of households and firms and their interactions in specific markets, such as pricing, consumer behavior, and supply and demand.

Question 2

The basic purpose of economic models is to:
A) construct simplifying assumptions about the real world.
B) explain reality in all its complexity.
C) construct situations where controlled experiments can be carried out.
D) provide explanations for, and predictions of the relationship between variables.

Accepted Answer

Economic models are constructed to provide explanations for and predictions of the relationship between variables. They simplify the real world by making certain assumptions but are not intended to explain reality in all its complexity or to construct situations for controlled experiments.

Question 3

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?
A) Why do national economies grow?
B) What percentage of consumer income is spent on entertainment?
C) Why do workers prefer the 4-day workweek?
D) How is the electric industry harmed by the passage of new clean air legislation?

Accepted Answer

Questions related to national economies and their growth fall under the domain of macroeconomics. The other three questions are related to individual behavior and decisions, which are studied by microeconomics.

Question 4

An economic model is defined as:
A) a value judgment.
B) a presentation of all possible relevant real-world variables.
C) a simplified representation of the way in which facts are related.
D) data adjusted for irrational actions.

Accepted Answer

An economic model is a simplified representation of the way in which facts are related. It is not a value judgment, does not present all possible relevant real-world variables, and does not involve data adjusted for irrational actions.

Question 5

A sub-discipline of economics that looks at the economy as a whole is:
A) macroeconomics.
B) microeconomics.
C) positive economics.
D) normative economics.
E) impossible to model.

Accepted Answer

Macroeconomics studies the performance and behavior of the economy as a whole, including topics such as inflation, unemployment, and economic growth. It is distinct from microeconomics, which focuses on individual economic agents like firms and consumers.

Question 6

A model is defined as a:
A) description of all variables affecting a situation.
B) positive analysis of all variables affecting an event.
C) simplified description of reality to understand and predict an economic event.
D) prediction based on historical evidence.

Accepted Answer

A model is a simplified representation of reality used to understand and predict an economic event. It is not a description of all variables affecting a situation, a positive analysis of variables, or a prediction based solely on historical evidence.

Question 7

Which of the following is a macroeconomic subject?
A) Shipping rates.
B) Price of corporate stock.
C) Market price of Japanese cars.
D) Unemployment rate in the nation.

Accepted Answer

The unemployment rate in a nation is a macroeconomic subject as it pertains to the economy as a whole, rather than a specific company or industry. Shipping rates, price of corporate stock, and market price of Japanese cars are all microeconomic subjects as they relate to individual industries or companies.

Question 8

The branch of economics that focuses on decision making for the economy as a whole is called:
A) normative economics.
B) macroeconomics.
C) microeconomics.
D) consumer economics.

Accepted Answer

Macroeconomics focuses on the economy as a whole, including topics like inflation, unemployment, and economic growth. Normative economics deals with value judgments and what “should” be, while microeconomics is concerned with the behavior of individual agents, such as consumers and firms. Consumer economics is a subfield of microeconomics that specifically focuses on consumer behavior and decision making.

Question 9

Which of the following is a macroeconomics topic?
A) Wages of textile workers in the Northeast.
B) The cost of producing 10,000 bookcases.
C) The economy's annual growth rate.
D) National demand for fish.
E) Effects of farm subsidies on food prices.

Accepted Answer

The economy's annual growth rate is a macroeconomic topic as it deals with the overall performance of the entire economy.

Question 10

Which of the following is included in the study of macroeconomics?
A) Salaries of college professors.
B) Computer prices.
C) Unemployment in the nation.
D) Silver prices.

Accepted Answer

Macroeconomics studies the performance of the entire economy, including topics such as inflation, economic growth, and unemployment at a national level. Therefore, unemployment in the nation is included in the study of macroeconomics, but salaries of college professors, computer prices, and silver prices are not necessarily macroeconomic topics.

Question 11

Which of the following markets is closely related to macroeconomics?
A) Cattle futures market.
B) Fulton's fish market.
C) Skilled labor market.
D) Nation's unemployment rate.

Accepted Answer

Macroeconomics deals with the broad trends and indicators of the overall economy, including things like inflation, GDP, and unemployment. The nation's unemployment rate is a key metric in macroeconomic analysis, making it the most closely related market among the options listed.

Question 12

The television network newscaster reports that the national inflation rate the past year equaled 4 percent.This report would be of particular interest to a ____.
A) microeconomist.
B) normative economist.
C) macroeconomist.
D) Ceteris paribus.
E) social science economist.

Accepted Answer

Macroeconomists study the overall performance of the economy, which includes monitoring inflation rates.

Question 13

Policies to lower the price level of goods in the nation are a concern of:
A) macroeconomics.
B) microeconomics.
C) both microeconomics and macroeconomics.
D) political science.

Accepted Answer

Policies to lower the price level of goods are a macroeconomic concern because they deal with the overall economy and the aggregate supply and demand for goods and services. It involves factors such as inflation, monetary policy, and fiscal policy, which are macroeconomic concepts. Microeconomics, on the other hand, deals with the individual consumer and firm decision-making and does not consider the overall price level of goods in a nation.

Question 14

Policies to create jobs in the nation are the concern of:
A) macroeconomics.
B) microeconomics.
C) both microeconomics and macroeconomics.
D) neither microeconomics nor macroeconomics.

Accepted Answer

The answer of Policies to create jobs in the nation...

Question 15

Economists use models to:
A) abstract from the complexities of the world.
B) understand economic behavior.
C) explain and help predict human behavior.
D) do all of the above.

Accepted Answer

Economists use models to abstract from the complexities of the world, understand economic behavior, explain and help predict human behavior. Therefore, the best choice is D, "do all of the above."

Question 16

Which of the following is included in the study of macroeconomics?
A) Wage rate of college students.
B) Prices of automobiles.
C) Unemployment in the nation.
D) Price of silver and gold.

Accepted Answer

Macroeconomics focuses on the overall performance and behavior of the economy as a whole, including factors such as unemployment, inflation, and economic growth. A and B are more focused on microeconomics, which looks at individual markets and consumer behavior. D is related to finance and the stock market, not macroeconomics.

Question 17

A theory is:
A) based only on critical factors or variables.
B) a simplified abstraction of the real world.
C) a detailed description of reality.
D) a and

Accepted Answer

A theory is based on critical factors or variables, but it is also a simplified abstraction of the real world. It is not a detailed description of reality, as it is a simplified model that aims to explain and predict phenomena in the real world. Therefore, both choices A and B are correct.

Question 18

An economist at the University of Alaska at Anchorage has been asked to explain why the price of Alaskan crude oil has fallen recently.In order to develop a model,the professor should take which steps?
A) Identify the problem, develop a model based on simplifying assumptions and test the model to formulate a conclusion.
B) Gather data on crude oil prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations.
C) Ask people in Alaska why they are not purchasing oil.
D) None of the above. The oil industry is controlled by a cartel; therefore price changes in the industry cannot be explained using economic theories.

Accepted Answer

The economist should first identify the problem, develop a model based on simplifying assumptions, and test the model to formulate a conclusion. This is the standard procedure for developing economic models. Gathering data and formulating a hypothesis based on unexpected associations may be a step in the model development process, but it should follow the initial identification of the problem and development of a model. Asking people in Alaska why they are not purchasing oil is not necessarily relevant to the question of why the price of Alaskan crude oil has fallen. Lastly, while it is true that the oil industry is controlled by a cartel, economic theories can still be used to explain price changes within the industry.

Question 19

Macroeconomics deals with the analysis of all of the following questions except:
A) why do national economies grow.
B) what determines a nation's savings and investments.
C) how does a central bank influence inflation.
D) why does a country experience recessions.
E) how does Microsoft price its software packages.

Accepted Answer

Macroeconomics focuses on the overall functioning of the economy at a national or global level and does not deal with the pricing decisions of individual companies like Microsoft.

Question 20

The branch of economics that focuses on economywide variables like inflation and unemployment is called:
A) macroeconomics.
B) microeconomics.
C) free-market economics.
D) aggregate economics.

Accepted Answer

The question specifically mentions "economywide variables like inflation and unemployment," which are topics typically discussed in macroeconomics. Therefore, the correct answer is A) macroeconomics. The other choices are not accurate descriptions of this branch of economics.

Quiz 1: Introducing the Economic Way of Thinking

A review of the performance of the economy during the Bush administration is the concern of:

The basic purpose of economic models is to:

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

An economic model is defined as:

A sub-discipline of economics that looks at the economy as a whole is:

A model is defined as a:

Which of the following is a macroeconomic subject?

The branch of economics that focuses on decision making for the economy as a whole is called:

Which of the following is a macroeconomics topic?

Which of the following is included in the study of macroeconomics?

Which of the following markets is closely related to macroeconomics?

The television network newscaster reports that the national inflation rate the past year equaled 4 percent.This report would be of particular interest to a ____.

Policies to lower the price level of goods in the nation are a concern of:

Policies to create jobs in the nation are the concern of:

Economists use models to:

Which of the following is included in the study of macroeconomics?

A theory is:

An economist at the University of Alaska at Anchorage has been asked to explain why the price of Alaskan crude oil has fallen recently.In order to develop a model,the professor should take which steps?

Macroeconomics deals with the analysis of all of the following questions except:

The branch of economics that focuses on economywide variables like inflation and unemployment is called: