It has been noted that when the price of a good increases people purchase less of the good. This is…

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It has been noted that when the price of a good increases people purchase less of the good. This is…

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It has been noted that when the price of a good increases people purchase less of the good. This is an example of A) macroeconomic analysis. B) irrational behavior. C) normative economic analysis. D) positive economic analysis 2. In economics, all the items that people would consume if they had unlimited income are known as A) wants. B) aggregates. C) outputs. D) needs. 3. Macroeconomics is the study of economics from the standpoint of A) a specific individual. B) a typical firm. C) a typical household. D) the economy as a whole. 4. Economics is an empirical science, which means that economists A) must use laboratory experiments to test their theories. B) evaluate a model or theory by whether its assumptions are consistent with the real world. C) try to prove their models are true by referring to logic. D) look for evidence to determine whether the model is useful or not. 5. One reason why economists often use models in their analysis is that A) a model helps us to understand, explain, and predict economic phenomena in the real world. B) a model accurately pictures every detail of the real world economy. C) a model relates to individual thought processes rather than behavior. D) it is relatively easy to perfectly specify a model. 6. One problem with constructing a perfectly complete realistic economic model is that A) it would be too simplistic to have any value. B) it would be far too complicated to analyze. C) politicians see little value in such a model. D) None of the above is true. 7. An appropriate test of the effectiveness of an economic model is A) the number of variables contained within the model. B) the model’s ability to predict future economic activity. C) the number of economists who have worked on the model. D) the number of assumptions which the economist has made. 8. The usefulness of a model is determined by A) whether it yields usable predictions for the real world. B) whether it possesses realistic assumptions. C) how well it uses the ceteris paribus assumption. D) how many of the possible relationships that exist are included in the model. 9. The use of data in economic models is important because A) the model’s predictive value rests on supportive evidence from real-world data. B) the models are always complex in nature. C) models must analyze every possible angle of the problem. D) social problems analyzed by economists require long streams of data. 10. Positive statements can contain A) opinions and conditions. B) facts and predictions. C) a mixture of facts and opinions. D) logical arguments mixed with statements of opinion.

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