Q: If the absolute value of a variable in the base period is 200 and in the current period is 250, what is the index number for the current period?

$$\frac{250}{200} \times 100 = 125$$

Question 1

Which of the following is a positive statement?

Accepted Answer

Raising the minimum wage will increase unemployment among teenagers.

Question 2

An economist claims, "If the price of gasoline rises, the quantity demanded will fall." This is an example of:

Accepted Answer

A positive statement

Question 3

Which of the following best describes the difference between endogenous and exogenous variables in economic theory?

Accepted Answer

Endogenous variables are explained within the theory, while exogenous variables are determined outside the theory.

Question 4

Suppose a theory predicts that an increase in income leads to an increase in consumption. If data shows the opposite, what should economists do according to the scientific approach?

Accepted Answer

Amend the theory to make it consistent with the data or replace it with a superior theory.

Question 5

Which of the following statements about correlation and causation is correct?

Accepted Answer

Correlation does not necessarily imply causation.

Question 6

A randomized controlled trial (RCT) in economics is primarily used to:

Accepted Answer

Determine the underlying causal relationship between economic variables.

Question 7

The Consumer Price Index (CPI) is an example of:

Accepted Answer

An index number

Question 8

If the absolute value of a variable in the base period is 200 and in the current period is 250, what is the index number for the current period?

Accepted Answer

$$\frac{250}{200} 	imes 100 = 125$$

Question 9

Which of the following best describes cross-sectional data?

Accepted Answer

Data collected at a single point in time for several different units.

Question 10

A scatter diagram is most useful for:

Accepted Answer

Visualizing the relationship between two variables for multiple observations.

Question 11

Suppose the consumption function is given by $$C = 800 + 0.8W$$, where $$C is $$consumption and $$W is $$wage income. If wage income increases by $$1000$$, by how much does consumption increase?

Accepted Answer

$$0.8 	imes 1000 = 800$$

Question 12

If the slope of a straight line is calculated as $$\frac{\Delta Y}{\Delta X}$$, and between points A and B, $$Y$$ decreases by 1000 and $$X$$ increases by 2000, what is the slope?

Accepted Answer

$$\frac{-1000}{2000} = -0.5$$

Question 13

Which of the following is true about non-linear functions in economics?

Accepted Answer

The marginal response of $$Y to a $$change in $$X$$ depends on the value of $$X.$$

Question 14

A function with a minimum point is most likely to represent which of the following economic concepts?

Accepted Answer

Average total cost as a function of output

Question 15

Which of the following is an example of a normative statement in a real-world context?

Accepted Answer

"Canada should increase spending on healthcare."

Question 16

Why do economists often use index numbers such as the CPI?

Accepted Answer

To express the value of a variable relative to a base period, making comparisons over time easier.

Question 17

Which of the following best illustrates a time-series graph?

Accepted Answer

A graph showing the unemployment rate in Canada from 1978 to 2021.

Question 18

If two variables are positively related, which of the following is true?

Accepted Answer

As one variable increases, the other also increases.

Question 19

A responsible economist, when giving policy advice, should:

Accepted Answer

Clearly state which parts of their advice are normative and which are positive.

Question 20

Which of the following is a real-world example of using economic theory and empirical observation together?

Accepted Answer

Developing a model predicting that higher taxes reduce consumption, then testing this prediction using data from several countries.

Economic Theories, Data, and Graphs: Foundations for Microeconomics

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