test 1-study guide - Chapter 1 1 The objective of economics...

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Chapter 1 1. The objective of economics is to a. Make money b. Entertain students c. Enrich professors d. Bore students e. Explain why the world is what it is 2. Which of the following is not an economic good? a. Wine b. Bicycles c. Refrigerators d. Air pollution e. Education 3. Which of the following is not one of the three categories of resources? a. Land b. Automobiles c. Capital d. Labor e. None of the above 4. The payment for capital is called a. Rent b. Wages c. Salaries d. Interest e. Profit 5. If an item is scarce, a. It is not an economic good b. At a zero price the amount of the item that people want is less than the amount that is available c. There is not enough of the item to satisfy everyone who wants it d. There is enough to satisfy wants even at a zero price e. It must be a resource as opposed to an input 6. Which of the following is a free good? a. Clean air b. Water from a river c. Education golf lessons d. None of the above 7. The payment for land is called a. Wages and salaries b. Rent c. Interest d. Profit e. Financial capital 8. Rational self-interest a. Dictates that individuals with the same information will make identical choices b. Means that people are completely selfish c. Explains why people give money to charitable organizations d. Explains why all drivers wear seat belts e. Means that people choose options that they think will give them the smallest amount of satisfaction 9. Analysis that does not impose the value judgments of one individual on the decision of others is called _______ analysis. a. Positive b. Normative c. Economic
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d. Noneconomic 10. Which of the following is a normative statement? a. Lower interest rates encourage people to borrow b. Higher prices for cigarettes discourage people from buying cigarettes c. If the price of eggs fell, people probably would buy more eggs d. There should be a higher tax on cigarettes, alcohol, and other “sin” items to discourage people from buying them e. A higher interest rate encourages people to save more 11. Microeconomics includes the study of a. How an individual firm decides the price of its product b. Inflation in the US c. How much output will be produced in the US economy d. How many workers will be unemployed in the US economy e. How the US banking system works 12. Which of the following is part of microeconomics rather than macroeconomics? a. Measuring how fast the economy is growing b. Determining how the price of wheat is set c. Preventing high unemployment d. Determining how quickly money flows through the economy e. Calculating the effects of government spending on inflation 13. Which of the following is part of macroeconomics rather than microeconomics? a.
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test 1-study guide - Chapter 1 1 The objective of economics...

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