Description

Test Bank Brief Principles of Macroeconomics 7th Edition by Gregory Mankiw

Edition by Gregory Mankiw
Multiple Choice – Section 00: Introduction
Which of the following is not correct?
Economists use some familiar words in specialized ways.
Economics has its own language and its own way of thinking, but few other fields of study do.
Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist’s language.
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.
ANSWER:b
POINTS:1
DIFFICULTY:Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.5 – LO: 2-0
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Economists use some familiar terms in specialized ways
to make the subject sound more complex than it is.
because every respectable field of study has its own language.
to provide a new and useful way of thinking about the world.
d. because it was too difficult to come up with new terms.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.5 – LO: 2-0
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
The language of economics is
needlessly arcane.
valuable because it provides a new and useful way of learning about the world.
easy to learn within a day.
unnecessary to learn for a thorough understanding of economics.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.5 – LO: 2-0
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Multiple Choice – Section 01: The Economist as Scientist
Economists, like mathematicians, physicists, and biologists,
make use of the scientific method.
try to address their subject with a scientist’s objectivity.
devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
All of the above are correct.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
The essence of science is
the laboratory experiment.
the scientific method.
the study of nature, but not the study of society.
All of the above are correct.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Knowledge
The scientific method is
the use of modern technology to understand the way the world works.
the use of controlled laboratory experiments to understand the way the world works.
the dispassionate development and testing of theories about how the world works.
the search for evidence to support preconceived theories about how the world works.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Knowledge

The scientific method is applicable to
studying
natural sciences, but not social sciences.
social sciences, but not natural sciences.
both natural sciences and social sciences.
None of the above is correct.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
Who said, “The whole of science is nothing more than the refinement of everyday thinking”?
Isaac Newton
Albert Einstein
Adam Smith
Benjamin Franklin
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Knowledge
Albert Einstein once made the following observation
about science:
“The whole of science is nothing more than the refinement of everyday thinking.”
“The whole of science is nothing more than an interesting intellectual exercise.”
“In order to understand science, one must rely solely on abstraction.”
“In order to understand science, one must transcend everyday thinking.”
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Knowledge
Sir Isaac Newton’s development of the theory of gravity after observing an apple fall from a tree is an example of
a controlled experiment that lead to the formulation of a scientific theory.
being in the right place at the right time.
an idea whose time had come.
the interplay between observation and theory in science.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: General
Principles
KEYWORDS: BLOOM’S: Comprehension
Which of the following steps does an economist take when studying the economy?
devise theories
collect data
analyze data
All of the above are correct.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Which of the following is an example of using the scientific method with a natural experiment?
measuring how long it takes a marble to fall from a ten story building
comparing plant growth with and without a soil additive
tracking the price of oil when a war in the Middle East interrupts the flow of crude oil
observing the reaction when two chemicals are mixed together
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: General
Principles
KEYWORDS: BLOOM’S: Application
NOTES: s
The goal of an economist who formulates new
theories is to
provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works.
provoke stimulating debate in scientific journals.
contribute to an understanding of how the world works.
demonstrate that economists, like other scientists, can formulate testable theories.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Suppose an economist develops a theory that higher food prices arise from higher gas prices. According to the scientific method, which of the following is the economist’s next step?
Collect and analyze data.
Go to a laboratory and generate data to test the theory.
Publish the theory without testing it.
Consult with other economists to see they agree with the theory.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Application

Which of the following statements applies to economics, as well as to other sciences such as physics?
Experiments are considered valid only when they are conducted in a laboratory.
Good theories do not need to be tested.
Real-world observations often lead to theories.
Economics, as well as other sciences, is concerned primarily with abstract concepts.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: General
Principles
KEYWORDS: BLOOM’S: Comprehension
With respect to how economists study the economy, which of the following statements is most accurate?
Economists study the past, but they do not try to predict the future.
Economists use “rules of thumb” to predict the future.
Economists devise theories, collect data, and analyze the data to test the theories.
Economists use controlled experiments in much the same way that biologists and physicists do.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Economists face an obstacle that many other scientists do not face. What is that obstacle?
It is often difficult to formulate theories in economics.
It is often impractical to perform experiments in economics.
Economics cannot be addressed objectively; it must be addressed subjectively.
The scientific method cannot be applied to the study of economics.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: General
Principles
KEYWORDS: BLOOM’S: Comprehension
NOTES: s
In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to
make use of theory and observation.
rely upon the scientific method.
conduct laboratory experiments.
find articles or books that were written before 1900.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: General
Principles
KEYWORDS: BLOOM’S: Comprehension
NOTES: s

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in
performing an experiment in an economic system.
applying mathematical methods to economic analysis.
analyzing available data.
formulating theories about economic events.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
Which of the following statements is (are) correct?
Relative to some other scientists, economists find it more difficult to conduct experiments.
Theory and observation are important in economics as well as in other sciences.
To obtain data, economists often rely upon the natural experiments offered by history.
All of the above are correct.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension

Because it is difficult for economists to use experiments to generate data, they generally must
do without data.
substitute assumptions for data when data are unavailable.
rely upon hypothetical data that were previously concocted by other economists.
use whatever data the world gives them.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Which of the following statements is correct?
Economists almost always find it easy to conduct experiments in order to test their theories.
Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories.
Economics is a social science rather than a true science because it cannot employ the scientific method.
Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Instead of conducting laboratory experiments to generate data to test their theories, economists often
ask winners of the Nobel Prize in Economics to evaluate their theories.
argue that data is impossible to collect in economics.
gather data from historical episodes of economic change.
assume that data would support their theories.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
The most common data for testing economic theories
come from
carefully controlled and conducted laboratory experiments.
computer models of economies.
historical episodes of economic change.
centrally planned economies.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
In conducting their research, economists often substitute historical events and historical episodes for
theories and observations.
laboratory experiments.
models.
assumptions.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
For economists, substitutes for laboratory experiments often come in the form of
natural experiments offered by history.
untested theories.
“rules of thumb” and other such conveniences.
reliance upon the wisdom of elders in the economics profession.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Economists regard events from the past as
irrelevant, since history is unlikely to repeat itself.
of limited interest, since those events seldom provide any useful economic data.
interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories.
interesting and valuable, since those events are capable of helping us to understand the past, the present, and the future.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
For economists, historical episodes
are not worthy of study because they offer few insights into current economic events and problems.
are not worthy of study because laboratory experiments provide more reliable data.
are worthy of study because economists rely entirely on observation, rather than on theory.
are worthy of study because they serve as valuable substitutes for laboratory experiments.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Historical episodes are
valuable to economists because they allow economists to see how the science of economics has evolved.
valuable to economists because they allow economists to evaluate economic theories.
not of concern to economists because economics is about predicting the future, not dwelling on the past.
not of concern to economists because the exact circumstances of historical episodes are unlikely to be observed again.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
One thing economists do to help them understand how the real world works is
make assumptions.
ignore the past.
try to capture every aspect of the real world in the models they construct.
All of the above are correct.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?
Transit ridership increased in Atlanta following an increase in gas prices.
Federal tax revenue increased following a decrease in the tax rate.
Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances.
Following the imposition of austerity measures, the growth rate of the economy in Greece slowed.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Application
Economists make
assumptions to
mimic the methodologies employed by other scientists.
minimize the number of experiments that yield no useful data.
minimize the likelihood that some aspect of the problem at hand is being overlooked.
focus their thinking on the essence of the problem at hand.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
NOTES: s
Economists make use of assumptions, some of which are unrealistic, for the purpose of
teaching economics to people who have never before studied economics.
advancing their political agendas.
developing models when the scientific method cannot be used.
focusing their thinking.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
For an economist, the idea of making assumptions is
regarded generally as a
bad idea, since doing so leads to the omission of important ideas and variables from economic models.
bad idea, since doing so invariably leads to data-collection problems.
good idea, since doing so helps to simplify the complex world and make it easier to understand.
good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
Economists make
assumptions to
provide issues for political discussion.
make a complex world easier to understand.
make it easier to teach economic concepts and analysis.
create policy alternatives that are incomplete or subject to criticism.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Knowledge
A circular-flow model and production possibilities frontier
are similar in that
neither allows economic analysis to occur.
neither can be represented visually on a graph.
both make use of assumptions.
both make use of complex equations to arrive at solutions.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Challenging
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
An economic theory about international trade that is based on the assumption that there are only two countries trading two goods
is useless, since the real world has many countries trading many goods.
can be useful only in situations involving two countries and two goods.
can be useful in the classroom, but is useless in the real world.
can be useful in helping economists understand the complex world of international trade involving many countries and many goods.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
The art in scientific thinking — whether in chemistry, economics, or biology – – is
a. the design and implementation of laboratory experiments.
b. knowing when to stop collecting data and when to start analyzing the data.
c. deciding which assumptions to make.
d. being able to mathematically model natural phenomena.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Knowledge
The art in scientific thinking is
finding the right problem to study.
deciding which assumptions to make.
the ability to make an abstract subject easy to understand.
not something in which economists have to be skilled.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Knowledge
The decision of which assumptions to make is
an easy decision for an economist, but a difficult decision for a physicist or a chemist.
not a particularly important decision for an economist.
usually regarded as an art in scientific thinking.
usually regarded as the easiest part of the scientific method.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
An example of a price that changes only infrequently is the price of
stocks on the New York Stock Exchange.
crude oil.
residential real estate.
magazines sold at newsstands.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Knowledge
When studying the effects of public policy
changes, economists
always refrain from making assumptions.
sometimes make different assumptions about the short run and the long run.
consider only the direct effects of those policy changes and not the indirect effects.
consider only the short-run effects of those policy changes and not the long-run effects.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
When studying the effects of changes in public policy, economists believe that
it is important to distinguish between the short run and the long run.
the assumptions used in studying those effects should be the same for the short run as for the long run.
the short-run effects of those changes are always more beneficial to society than are the long-run effects.
the long-run effects of those changes are always more beneficial to society than are the short-run effects.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC: Thinking Like an Economist
KEYWORDS: BLOOM’S: Comprehension
A model can be accurately described as a
theoretical abstraction with very little value.
device that is useful only to the people who created it.
realistic and carefully constructed theory.
simplification of reality.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
Which of the following statements about
models is correct?
Ȁ ⸀Ā ЀĀ ȀĀ⸀Ā ᜀ Ā ᜀ Ā ᜀ more details a model includes, the better the model.
Ȁ ⸀Ā ЀĀ ȀĀ⸀Ā ᜀ Ā ᜀ Ā ᜀ assume away irrelevant details.
Ȁ ⸀Ā ЀĀ ȀĀ⸀Ā ᜀ Ā ᜀ Ā ᜀ cannot be used to explain how the economy functions.
Ȁ ⸀Ā ЀĀ ȀĀ⸀Ā ᜀ Ā ᜀ Ā ᜀ cannot be used to make predictions.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
In building economic models, economists often omit
assumptions.
theories.
details.
equations.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
Which of the following statements about economic
models is correct?
Economic models are built to mirror reality exactly.
Economic models are useful, but they should not be used for the purpose of improving public policies.
Because economic models omit many details, they allow us to see what is truly important.
Economic models seldom incorporate equations or diagrams.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
Economic models
cannot be useful if they are based on false assumptions.
were once thought to be useful, but that is no longer true.
must incorporate all aspects of the economy if they are to be useful.
can be useful, even if they are not particularly realistic.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
Which of the following is not correct about most economic models?
They are composed of equations and diagrams.
They contribute very little to economists’ understanding of the real world.
They omit many features of the real-world economy.
In constructing models, economists make assumptions.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
Economic models
are constructed to mirror reality as closely as possible, and in this respect economic models are no different from other scientific models.
are constructed to mirror reality as closely as possible, and in this respect economic models are very different from other scientific models.
are simplifications of reality, and in this respect economic models are no different from other scientific models.
are simplifications of reality, and in this respect economic models are very different from other scientific models.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension

Economic models
are not useful because they omit many real-world details.
are usually composed of diagrams and equations.
are useful because they do not omit any real-world details.
are usually plastic representations of the economy.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Knowledge
Just like models constructed in other areas of science,
economic models
a. incorporate assumptions that contradict reality.
b. incorporate all details of the real world.
c. complicate reality.
d. avoid the use of diagrams and equations.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
Which types of models are built with assumptions?
economic models, but not models in other disciplines such as physics and biology
economic models as well as models in other disciplines such as physics and biology
models that are built for teaching purposes but not for research purposes
bad models
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic
TOPICS: DISC:
General
Principles
KEYWORDS: BLOOM’S: Comprehension
An assumption an economist might make while studying international trade is
there are only two countries.
countries only produce two goods.
technology does not change.
All of the above are possible assumptions.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Easy
LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1
NATIONAL STANDARDS: United States – BUSPROG: Analytic