HW1_DEV_501_EMB_502_211

(Thursday 11 March 2021 5 PM)

Online submission
No email submission please.

ID: Name: Course:

A. True/False
Indicate whether the sentence or statement is true (T) or false (F).
____ 1. Two variables that are inversely related tend to move in opposite directions.
____ 2. Your scarcity problem would disappear if you were rich.
____ 3. Macroeconomics studies national economic issues like inflation and unemployment.
____ 4. A normative economic statement can be proven either true or false.
____ 5. Assuming an economy is already experiencing full employment, then it must produce more consumer goods
and fewer capital goods if it wishes to experience greater rates of economic growth over time.

B. Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
____ 6. A direct relationship is expressed graphically as a:
a. positively sloped line or curve.
b. negatively sloped line or curve.
c. horizontal line.
d. vertical line.
____ 7. When an inverse relationship is graphed, the resulting line or curve is:
a. horizontal.
b. vertical.
c. upward-sloping.
d. downward-sloping.
Exhibit 1A-1
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 40

B
30
Y value
20
A
10

0 10 20 30 40
X value
____ 8. In Exhibit 1A-1, the slope of straight-line AB is:
a. positive.
b. zero.
c. negative.
d. variable.
Exhibit 1A-2
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 A
20

15
Y v a lu e
10

B
0 5 10 15 20
X v a lu e
____ 9. Straight line AB in Exhibit 1A-2 shows that:
a. increasing values for X reduces the value of Y.
b. decreasing values for X increases the value of Y.
c. there is an inverse relationship between X and Y.
d. all of the above.
____ 10. Which of the following is the best example of a nonrenewable resource?
a. Forests.
b. Oil.
c. Clean air.
d. Fish in the ocean.
____ 11. Which of the following would not be classified as a capital resource?
a. The Empire State Building.
b. A Caterpillar bulldozer.
c. A Macintosh computer.
d. 100 shares of stock in General Motors.
____ 12. Entrepreneurs can delegate every one of the following tasks to labor except:
a. hiring and training new employees.
b. assuming business risk and uncertainty.
c. supervision of the production process.
d. researching ideas for new products.
e. marketing the goods and services produced.
____ 13. The most fundamental concepts underlying the discipline of economics are:
a. scarcity and choice.
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b. supply and demand.

 c. money, stocks, and bonds.
d. inflation and unemployment.
____ 14. Policies to create jobs in the nation is the concern of:
a. macroeconomics.
b. microeconomics.
c. both microeconomics and macroeconomics.
d. neither microeconomics or macroeconomics.
____ 15. An economic model is useful only if it:
a. contains no positive statements.
b. captures all the complexities of reality.
c. yields accurate predictions.
d. has both macroeconomic and microeconomic applications.
____ 16. Economic theories or models help economists
a. predict economic events.
b. explain economic behavior.
c. estimate to what extent a predicted outcome is expected to occur.
d. estimate how long it will take for a predicted outcome to be observed.
e. do all of the above.
____ 17. The statement, "John buys more of good X as his income increases, ceteris paribus," means:
a. John's income is being held constant.
b. John's purchases of good X are being held constant.
c. John's income and purchases of this good are being held constant.
d. John's income is the only influence that is being allowed to change.
e. the price of this good is being allowed to change.
____ 18. A normative economic statement is:
a. a statement of fact.
b. a statement of opinion which advocates a particular position.
c. not acceptable in the economics profession.
d. the only acceptable manner to present economic information.
e. a statement based upon government-supplied information.
____ 19. Which of the following would be most likely to cause the production possibilities curve for computers and
education to shift outward?
a. A choice of more computers and less education.
b. A choice of more education and less computers.
c. A reduction in the labor force.
d. An increase in the quantity of resources.
Exhibit 2-8 Production possibilities curves
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 B
Consumption
goods A
production

Capital goods production

____ 20. In Exhibit 2-8, which of the following could have caused the production possibility curve of an economy to
shift from the one labeled A to the one labeled B?
a. A major natural disaster.
b. An increase in consumption goods production this year.
c. An advance in technology.
d. A decrease in unemployment.
e. A decrease in consumption goods production this year.

C. C. Essay
21. What is an economic theory or model? What constitutes a "good" economic theory or model?
22. What is the difference between positive and normative economics? How can knowledge of positive
economics be useful in normative economics?
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