1. Which of the following would be the best definition of the study of economics? (A) Economics is the study of how the stock market operates. (B) Economics is the study of money. (C) Economics is the study of how scarce resources are allocated to unlimited wants. (D) Economics is the study of how firms decide to make hiring decisions. (E) Economics is the study of how governments set production goals. ANS:- (C) Economics is the study of how individuals , households, firms and entire societies choose to allocate scarce resources. Societies face unlimited wants, but because resources are scarce, decisions must be made on how to best allocate them. Resources might be allocated in markets, by using money, or by a central planning agency in the government. Therefore, all choices besides C represent parts of the study of economics, but not the definition of the field itself. 2. Which of the following best describes a microeconomic question? (A) What is the value of US dollar in terms of other foreign currencies? (B) Should a particular firm enter a market? (C) Is the company of Japan in a recession? (D) What is the value of the goods and services that the United States produces every year? (E) What is the aggregate price level in an economy?

3. Sally is asked by her teacher to write a paper based on a macroeconomic topic. Which of the titles would be

appropriate for a macroeconomics paper?

4. The idea of _________ in economics is that we have unlimited wants but limited resources.

5. Consumers, firms, and governments face __________ because we are faced with the problem of

___________.

6. Normative analysis can best be shortened to ___________, while positive analysis is best shortened to

__________.

7. What is the best definition of the term ?

8. Jim is at an all-you-can-eat buffet and is considering whether or not to get another plateful of food. What

type of analysis should he be doing if he is thinking rationally?

9. A centrally planned system would be characterized by which of the following?

10. The nation of a Maxistan is moving from a centralized planning system to a market-based economy. Which