1. John works at a coffee shop and makes $10 per hour. He decides to leave work an hour early to go see a movie that costs $8 per ticket. The opportunity cost of going to the movie is:

a) $8

b) $10

c) $16

d) $18

2. A government should:

a) Never intervene in the market

b) Always intervene in the market

c) Intervene in the market only when necessary

d) Intervene in the market except when it is not possible.

3. Economists construct theories for all but which one of the following:

a) Make students' lives miserable

b) Understand the relationships between things in the economy

c) Isolate important relationships

d) Make predictions about future economic outcomes

4. The best economic theories are the result of which of the following

a) A good idea

b) An idea, formulation of the idea into a theory, test of theory against data, revision of the theory

c) Trying to replicate the real world

d) A complicated formula

5. The role of the Federal Reserve Board is related to:

a) Tax Policy

b) The Federal Government Budget

c) Monetary Policy

d) Making Laws

6. The role of the Council of Economic Advisors is:

a) To advise the President in matters related to the economy

b) To manage monetary policy

c) To manage tax policy

d) To advise the chairperson of the Federal Reserve Board

7. Which of the following is not a reason why reasonable economists disagree?

a) Differences in scientific judgments

b) Differences in values

c) Perception versus reality

d) Some political viewpoints are always wrong

8. Which of the following does not describe the circular flow model between the householdand the firm?

a) The household buys goods from the firm

b) The firm buys labor from the household

c) The firm uses labor to produce goods

d) The household uses money to buy labor