Question 1

Which of the following is an example of a positive, as opposed to normative, statement?

Accepted Answer

A)   Income tax rates should not have been cut as they were a few years ago.
B)   The quantity of money has grown too slowly in recent years.
C)   When the quantity of money grows rapidly, inflation is a predictable consequence.
D)   All of the above are positive statements.E) B) and D)
F) All of the above

Question 2

An economic model

Accepted Answer

A)   uses equations to understand normative economic phenomena.
B)   often omits crucial elements.
C)   simplifies reality in order to focus on crucial elements.
D)   cannot be proven wrong.E) B) and C)
F) A) and D)

Question 3

Instead of conducting laboratory experiments to generate data to test their theories, economists often

Accepted Answer

A)   ask winners of the Nobel Prize in Economics to evaluate their theories.
B)   argue that data is impossible to collect in economics.
C)   gather data from historical episodes of economic change.
D)   assume that data would support their theories.E) A) and B)
F) A) and C)

Question 4

Is it fair that people earning in excess of €150 000 a year should pay a much higher tax rate on income above this level? Explain your answer.

Accepted Answer

There is no one correct answer...

Question 5

Good assumptions simplify a problem without substantially affecting the answer.

Accepted Answer

A) True 
 B)False

Question 6

History shows us that there have always been __________ among scientists about truth and reality.

Accepted Answer

A)   consistency.
B)   uniformity.
C)   agreements.
D)   disagreements.E) All of the above
F) A) and D)

Question 7

Which of the following is most closely associated with positive economics?

Accepted Answer

A)   Determining the impact of government spending on the actual level of unemployment.
B)   Determining the best level of immigration into a country.
C)   Determining whether too many luxury goods are being produced.
D)   Determining whether or not the government should reduce poverty.E) All of the above
F) C) and D)

Question 8

If two variables tend to increase and decrease together, they are

Accepted Answer

A)   positively correlated.
B)   negatively correlated.
C)   uncorrelated.
D)   quasi-correlated.E) C) and D)
F) A) and B)

Question 9

Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.

Accepted Answer

A) True 
 B)False

Question 10

The ultimate purpose of an economic model is to

Accepted Answer

A)   explain reality as completely as possible.
B)   establish assumptions that closely resemble reality.
C)   help us to understand economic behaviour.
D)   guide government policy decisions.E) B) and C)
F) A) and D) C

Question 11

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following activities would occur in a market for goods and services?

Accepted Answer

A)   Harry mows his grass.
B)   Peugeot hires additional workers to run a third shift at a car factory.
C)   Jane bakes biscuits for her son's birthday party.
D)   Ingrid buys a ticket to a football match.E) A) and D)
F) A) and B)

Question 13

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Accepted Answer

A) True 
 B)False

Question 14

In building economic models, economists often omit

Accepted Answer

A)   assumptions.
B)   theories.
C)   details.
D)   equations.E) None of the above
F) A) and B)

Question 15

Models are also inherently unstable when they extend to

Accepted Answer

A)   long time periods.
B)   short time periods.
C)   no time periods.
D)   micro periods of time.E) A) and B)
F) C) and D) A

Question 16

Which of the following is not correct?

Accepted Answer

A)   Economists use some familiar words in specialized ways.
B)   Economics has its own language and its own way of thinking, but few other fields of study do.
C)   Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language.
D)   The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live.E) A) and B)
F) B) and D)

Question 17

When an economist evaluates a positive statement, he or she is primarily

Accepted Answer

A)   examining evidence.
B)   evaluating values as well as facts.
C)   acting as a policy adviser.
D)   concerned with making a sound decision on how the world ought to be.E) A) and C)
F) B) and C) A

Question 18

A normative economic statement such as "The minimum wage should be abolished"

Accepted Answer

A)   would likely be made by an economist acting as a scientist.
B)   would require values and data in order to be evaluated.
C)   would require data but not values in order to be evaluated.
D)   could not be evaluated by economists acting as policy advisers.E) A) and D)
F) A) and C)

Question 19

Because economics is a science which is centred on _________, it is not always possible to conduct experiments in the same way in which as the physical sciences do.

Accepted Answer

A)   human behaviour.
B)   consumer behaviour.
C)   organizational behaviour.
D)   conjoint analysis.E) B) and C)
F) A) and B)

Question 20

A government minister states that wage rates in the country have risen by 2 per cent in the past year. The head of a trade union states that wage increases should have been higher. The Secretary's statement is a __________ economic statement, and the union leader's statement is a __________ economic statement.

Accepted Answer

A)   normative; normative
B)   normative; positive
C)   positive; normative
D)   positive; positiveE) B) and D)
F) B) and C)

Exam 2: Thinking Like an Economist

Which of the following is an example of a positive, as opposed to normative, statement?

Correct AnswerverifiedShow Answer

An economic model

Correct AnswerverifiedShow Answer

Instead of conducting laboratory experiments to generate data to test their theories, economists often

Correct AnswerverifiedShow Answer

Is it fair that people earning in excess of €150 000 a year should pay a much higher tax rate on income above this level? Explain your answer.

Correct AnswerverifiedThere is no one correct answer...View AnswerShow Answer

Good assumptions simplify a problem without substantially affecting the answer.

Correct AnswerverifiedShow Answer

History shows us that there have always been __________ among scientists about truth and reality.

Correct AnswerverifiedShow Answer

Which of the following is most closely associated with positive economics?

Correct AnswerverifiedShow Answer

If two variables tend to increase and decrease together, they are

Correct AnswerverifiedShow Answer

Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.

Correct AnswerverifiedShow Answer

The ultimate purpose of an economic model is to

Correct AnswerverifiedC

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Correct AnswerverifiedShow Answer

Which of the following activities would occur in a market for goods and services?

Correct AnswerverifiedShow Answer

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Correct AnswerverifiedShow Answer

In building economic models, economists often omit

Correct AnswerverifiedShow Answer

Models are also inherently unstable when they extend to

Correct AnswerverifiedA

Which of the following is not correct?

Correct AnswerverifiedShow Answer

When an economist evaluates a positive statement, he or she is primarily

Correct AnswerverifiedA

A normative economic statement such as "The minimum wage should be abolished"

Correct AnswerverifiedShow Answer

Because economics is a science which is centred on _________, it is not always possible to conduct experiments in the same way in which as the physical sciences do.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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C

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A

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