2. Which topic is MOST likely to be studied in a microeconomics course?

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• Which statement represents a microeconomic issue?
• The unemployment rate fell by 2%.
• All businesses in the United States experienced a decrease in revenues of 5% due to the recession.
• The price of textbooks rose by 15% last year.
• GDP increased by 6% last quarter.

ANSWER: c

• Which topic is MOST likely to be studied in a microeconomics course?
• rent control
• unemployment
• inflation
• recessions

ANSWER: a

• Which topic is MOST likely to be studied in a macroeconomics course?
• taxation methods
• recessions
• public utility regulation
• game theory

ANSWER: b

4. Macroeconomics does NOT concern:

• recessions.
• inflation.
• job creation rates.
• the determinants of a rise in the price of semiconductor chips.

ANSWER: d

• Which topic is a microeconomic topic?
• the U.S. inflation rate in 2009
• the price of an iPad sold by Apple
• the U.S. unemployment rate in March 2010
• the rate of growth of GDP in the first quarter in 2010

ANSWER: b

• Which topic is a macroeconomic topic?
• the study of the business cycle
• the price of a pair of Nike shoes
• total sales of GE in 2009
• the labor market for computer analysts

ANSWER: a

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7. Supply and demand analysis is used:

• only in microeconomics.
• only in macroeconomics.
• in both microeconomics and macroeconomics.
• in neither microeconomics nor macroeconomics.

ANSWER: c

• Which topic would a microeconomic analysis address?
• the national unemployment rate
• the reasons for a decline in a country's total output
• the price of college tuition that an individual student pays
• the inflation rate in Brazil

ANSWER: c

9. International finance is generally studied in:

• microeconomics.
• macroeconomics.
• deductive logic.
• inductive logic.

ANSWER: b

10. The economics of uranium mining would be studied in:

• microeconomics.
• macroeconomics.
• deductive logic.
• inductive logic.

ANSWER: a

• Which statement does NOT concern microeconomics?
• Profits for some manufacturing firms fell in 2009.
• In 2009, the unemployment rate in the United States rose to nearly 10%.
• Salaries of top executives fell in 2009.
• Competitive markets promote efficiency.

ANSWER: b

• Which statement regarding macroeconomics and microeconomics is true?
• Microeconomics examines consumer behavior, while macroeconomics studies business behavior.
• Macroeconomics employs many of the same analytical tools as microeconomics.
• Because it focuses on national economies, macroeconomics does not study international trade and finance.
• Neither macroeconomics nor microeconomics is concerned with prices. 2 / 4

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ANSWER: b

• Which effect is NOT macroeconomic?
• the effect of the budget deficit on the economy
• the effect of monetary policy on inflation
• the effect of Walmart's pricing policies on consumers
• the effect of government policies on the country's unemployment rate

ANSWER: c

• Which is the BEST example of a microeconomic issue?
• The Federal Reserve will raise interest rates this week.
• The unemployment rate will exceed 6% this month.
• The country's price level has increased over the last quarter.
• The production of automobiles decreased last year.

ANSWER: d

• Belinda's favorite recreational activity is sailing, followed by fishing and shopping in that order. When

Belinda has a day off work for a holiday, she prepares to go sailing, then discovers that there's no wind, forcing

her to settle for a day of fishing. Belinda's opportunity cost of fishing is:

• sailing.
• sailing and shopping.
• shopping.
• the items she would have purchased if she had gone shopping.

ANSWER: d

• Which statement is NOT a macroeconomic issue?
• The Federal Reserve will raise interest rates this week.
• The unemployment rate will exceed 6% this month.
• The country's price level has increased over the last quarter.
• The production of automobiles decreased last year.

ANSWER: d

• Which statement correctly describes economic models?
• They try to boil down an economic situation to its most basic elements.
• They are always complex because the economy is complex.
• They attempt to reproduce reality exactly.
• They try to avoid invoking the ceteris paribus assumption.

ANSWER: a

• Which statement is NOT true of economic model building?
• There may be exceptions to economic models. 3 / 4

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• Adding more complexity to models does not always provide greater insights.
• Economic models always reach verifiable results.
• Economic models provide generalizations about economic behavior.

ANSWER: c

19. Economists like to use graphs and equations primarily because:

• these tools efficiently express economic concepts.
• economics should be difficult.
• mathematical aptitude is necessary to understand economics.
• the use of mathematics reduces rigor.

ANSWER: a

• A theory composed of a number of assumptions and facts boiled down to their basic relevant elements is

called a:

• metaphor.
• model.
• conclusion.
• practice.

ANSWER: b

21. The purpose of an economic model is to:

• be a complex, exact replica of reality.
• demonstrate which values and beliefs are best for the economy.
• explain the behavior of the issue being examined.
• manage the economy like an automatic pilot.

ANSWER: c

• Which statement does NOT describe model building in economics?
• Models are developed to cover specific behaviors only.
• Models are created and then tested.
• Models are used to help understand the general economy.
• Assumptions are used to analyze an economic issue.

ANSWER: a

23. Economic models must:

• be completely realistic to be useful.
• include all relationships that exist in the relevant issue to be modeled.
• completely represent the real world.
• rely on the ceteris paribus assumption.

ANSWER: d

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