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Microeconomics

Test Description: Review over Chapters 1 and 2

Instructions: Answer all questions to get your test result.

1) What is the Business Cycle

Aa cycle of business practices BAll of the above Cgovernment regulates DFluctuations in Economic Activity

2) Which of these statements is not true?

AGrowth in the quantity of money is the ultimate source of inflation BSociety faces a short-run trade off between inflation and unemployment CPrices Fall when the government prints to much money DProductivity is the ultimate source of living standards

3) The Ten Principles of Economics include all but which one?

APeople REspond to Incentives BRational People Think at the Margin CTrade does not make everyone better off DPeople Face Trade Offs

4) Inflation ....

Aa decerease in the overall level of prices in the economy Bdoes not affect the economy at all Cis an increase in the overall level of prices in the economy DInflation has never been an economic problem

5) The field of economics is divided into how many subfields

Afour Bone Cthree Dtwo

6) Microeconomists study

Athe decision making by firms Bthe interaction among households in the marketplace CAll of the Above Dthe decision making by households

7) Two simple economic models are

Athe circular flow diagram Bthe production possibilties curve CThe business cycle DBoth a and b

8) Which two of these statements are true?

ABoth A and C BA positive statement is an assertion about how the world is CA positive statement is an assertion about how scientists believe the world should be DA normative statement is an assertion about how the world ought to be

9) The opportunity cost of an item is

ANone of the above Bwhatever you gain from the use of a product Cwhatever must be given up to obtain a product Dnever considered in decision making

10) Economists study

Ahow people make decisions Bhow people interact with others Chow much people work DAll of the Above

*select an answer for all questions

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