Which of the following represents positive economics?
a. Policy A is fair.
b. Outcome B is the best objective to achieve.
c. If policy A is followed, then outcome B results.
d. All of these.
QUESTION 2Which of the following is a statement of positive economics?
a. Too much government spending is the biggest problem facing the U.S. economy.
b. Creating jobs is the most serious problem facing the U.S. economy.
c. Raising taxes provides additional revenue that should be used to finance health care.
d. If taxes are over 50 percent of national income, job creation falls.
QUESTION 3Which of the following is a statement of positive economics?
a. I hope unemployment comes down soon.
b. President X's way of dealing with unemployment is better than President Y's.
c. I think everyone should sacrifice to reduce the deficit.
d. If taxes are reduced, unemployment will drop.
QUESTION 4If individuals who sit in the back of the classroom receive lower grades on average than the rest of the class, does that mean that sitting in the back of a classroom causes one to perform poorly on exams?
a. Not necessarily. The reoccurrence of a certain relationship between two variables does not necessarily imply causation.
b. It is not possible for an economist to determine causation between variables.
c. The reoccurrence of such a relationship is sufficient evidence that sitting in the back of a classroom will lead to lower grades.
d. The reoccurrence of such a relationship is sufficient evidence that students who receive low grades prefer to keep a low profile and always sit in the back of the classroom.
QUESTION 5As soon as a mayor 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 Januaryit was just too cold for anybody to be out robbing other people. Which fundamental hazard of the economic way of thinking did the mayor make?
a. believing that what's good for one person is good for the whole group (the fallacy of composition)
b. failing to take into account the benefits of crime (the payoff fallacy)
c. believing that association is the same as causation
d. failing to understand the difference between positive and normative economics.
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