52. What area of economic study is most concerned with the determination of prices in the market for soccer balls?
a.
microeconomics
b.
monetary economics
c.
macroeconomics
d.
activity economics
ANSWER:
a
53. Which statement best describes microeconomics?
a.
It is a "positive" science, whereas macroeconomics is a "normative" science.
b.
It provides an overall view of the economy and how it functions.
c.
It explores the behaviour of individual consumers and firms when confronted with scarcity.
d.
It examines the aggregate behaviour of consumers and firms when confronted with scarcity.
ANSWER:
c
54. What does microeconomics primarily examine?
a.
the behaviour of firms and how they interact with each other in the marketplace
b.
the overall economy, especially fiscal and monetary policy
c.
the behaviour of households but not firms
d.
the behaviour of both firms and households and how they interact in the marketplace
ANSWER:
d
55. What does macroeconomics primarily examine?
a.
broad issues such as national output, employment, and inflation
b.
how prices are determined within individual markets
c.
the behaviour of individual households and firms
d.
the output levels that maximize the profits of business firms
ANSWER:
a
56. How do microeconomics and macroeconomics differ?
a.
Microeconomics is concerned with consumer behaviour, while macroeconomics is concerned with firm behaviour.
b.
Microeconomics utilizes positive economic analysis, while macroeconomics utilizes normative economic analysis.
c.
Microeconomics studies aggregate decision making, while macroeconomics examines individual decision making.
d.
Microeconomics studies individual decision making, while macroeconomics examines aggregate decision making.
ANSWER:
d
57. What is the definition of a theory?
a.
It is an untestable assertion or statement of untestable fact.
b.
It is a normative statement that can be tested empirically through analysis of real-world data.
c.
It is a testable statement that can be definitively proven to be true or false using empirical analysis.
d.
It is a deliberate simplification of factual relationships that attempts to explain and predict how those relationships work.
ANSWER:
d
58. How does an economist define a good economic theory?
a.
an abstraction from reality useful for explaining but not predicting behaviour
b.
an opinion that can be tested against economic data
c.
an abstraction for the sake of argument
d.
a statement or relationship that is used to explain and predict human behaviour
ANSWER:
d
59. How is an economic theory tested?
a.
by assessing the realism of its assumptions
b.
by comparing and contrasting its simplicity with related theories
c.
by comparing its predictions with real-world observations
d.
by polling economists to see whether there is consensus as to the validity of the hypothesis
ANSWER:
c
60. Why do economists need to develop abstractions?
a.
to avoid analyzing real-world economic interactions, which are too complicated to understand
b.
to understand and explain economic behaviour
c.
to avoid committing the fallacy of composition
d.
to distinguish normative economic behaviour from positive economic behaviour
ANSWER:
b