Macroeconomics studies economy wide issues like inflation and unemployment
true
The branch of economics that focuses on economy wide variables like inflation and unemployment is called
macroeconomics
Campaign speeches normally include normative economic statements
false
a textbook is an example of
capital
Positive economics is an
statement of fact
A normative economic statement can be proven either true or false
false
Complete the following analogy: A criminal is to a police artist's sketch as the economy is to
an economic model
A model is defined as a
simplified description of reality to understand and predict an economic event.
Financial capital by itself is not a factor or production instead it is only a paper claim on economic capital.
True
Economists use models to
abstract from the complexities of the world, understand economic behavior, explain and help predict human behavior
an economic model is defined as
a simplified representation of the way in which facts are related
Policies to determine the price of troll dolls are a concern of macroeconomics
false
Examples of capital
-the robot used to help produce your car
-a computer used by your professor to write this exam
-the factory that produces the costume jewelry you buy
-the inventory of unsold goods at your local hardware store
An economic model is useful only if it
yields accurate predictions
As soon as a major announced his/her get tough on crime policy on New Year's day, criminals got scared and the crime rate went down. Suppose that the lower crime rate was actually caused by freezing cold temperatures in January- it was just to cold for an
believing that association is the same as causation
X increase along the horizontal axis, corresponding to points A-B on the line, the Y values increase. The relationship between the X and Y variables is
direct
The slop of straight line AB (Y to X value) is
negative
X increases along the horizontal axis corresponding to points A-D on the line Y value remains unchanged at 40 unties. The relationship between the X and Y variables is
independent
the slope of straight line A-D is zero
The horizontal line has an infinite slope
false
A direct relationship exits when
one variable increases and the other variable increases
Capital resources include money and other financial assets
false
abstracting from reality is an important element of all economic models
true
When economists says goods are scare they mean
the desire for goods and services exceed our ability to produce them with the limited resources available
The statement John buys more of good X as his income increases...Ceteris paribus means
John's income and purchases of this good are being held constant
The finite nature of the economy's resource base
will always be with us
A positive economic statement
The economy's real output increased at about 3 percent last year and the unemployment rate decreased.
The Latin expression ceteris paribus means
everything else being equal
When economists say scarcity the mean
the human desire for goods exceeds the available supply of time goods and resources
Positive statement
If wages rise more rapidly than productivity profits will fall, the workers will earn 3/4 GDP and the rate of inflation increases
positive statement
statement testable by facts
Example of a normative economic statement
The minimum wage should be increased so that low income workers can afford to keep up with the cost of living
All human wants cannot be satisfied because of the problem of scarcity
true
a horizontal line has an infinite slop
false
A downward sloping straight line exhibits a direct relationship between two variables
false