1. Define "microeconomics" and "macroeconomics". No credit, optional question: At this point, which interests you more, microeconomics or macroeconomics?

2. Which of the following is (are) example(s) of normative statements?

a. The unemployment rate is 6 percent.

b. An unemployment rate of 6 percent is too high and the government should do something to lower it.

c. An increase in government purchases of goods and services will decrease the unemployment rate.

d. The price of electricity will rise if electric utility companies are deregulated so that they can decide what price to charge.

e. Electric utility companies should not be deregulated because deregulation would harm poor people.

f. Electric utility companies should be deregulated because deregulation would help the rich people who own the companies.

3. Macroeconomics is the branch of economics that studies

a. prices of individual goods.

b. the way individual markets work.

c. the economy as a whole.

d. important, as opposed to trivial, issues.

4. Which of the following is a macroeconomic issue?

a. How a rise in the price of sugar affects the market for sodas.

b. How federal government budget deficits affect interest rates.

c. What determines the amount a firm will produce.

d. The cause of a decline in the price of peanut butter.

5. The term "opportunity cost" points out that

a. there may be such a thing as a free lunch.

b. not all individuals will make the most of life's opportunities because some will fail to achieve their goals.

c. executives do not always recognize opportunities for profit as quickly as they should.

d. any decision regarding the use of a resource involves a costly choice.

6. A statement is a positive one if it

a. tells us what must be done for the good of society.

b. can be tested by factual evidence.

c. does not use the term ceteris paribus.

d. depends on an individual's value judgment.