Question

1. If a graph of two variables shows a downward-sloping relationship, that relationship is considered to be

1. Positive.
2. Inverse.
3. Normative.
4. Independent.
5. Variabl

2. Economic analysis is:

1. A framework for understanding issues with arise because societies need to make allocation decisions.
2. Widely understood by all in our society.
3. Important for problem solving in underdeveloped and socialist societies but of little use in western capitalist systems.
4. A natural science concerned with the biological growth and changed of social systems.
5. A set of mathematical rules to ensure a society’s happiness and prosperity.

3. Over time the American economy has had:

1. Full employment without serious inflation.
2. Steadily increasing unemployment
3. Persistent deflation.
4. Fluctuations in growth and unemployment.
5. Continuous growth in output per person

1. The basic idea of Adam Smith’s “invisible hand” is that:

1. Dire poverty and income inequalities are inevitably a part of a free market.
2. There is a force inherent in government with seeks to achieve social usefulness.
3. Population increase is an important determinant of a country’s development.
4. The pursuit of private interests by individuals and firms can lead to socially desirable ends.
5. A free, competitive economy cannot allocate resources efficiently without government planning.

2. The purpose of an economic model is to:

1. Set the prices in a price system.
2. Make predictions about the real world.
3. Manage the economy like an automatic pilot.
4. Demonstrate which values and beliefs are best for the economy.
5. Be a complex, exact replica of reality

Answer 1

1. If a graph of two variables shows a downward-sloping relationship, that relationship is considered to be

Answer b) Inverse

This is because as the "x" variable goes on increasing, the "y" variable falls and vice versa. This shows that a downward sloping curve will have an inverse relationship.

Example - Demand curve is downward sloping because as the quantity goes on the increase, the price decreases and vice versa.

2. Economic analysis is:

Answer a) A framework for understanding issues with arise because societies need to make allocation decisions.

The economic analysis deals with solving a problem with the allocation of scarce resources. It is followed by experts to understand how key economic factors affect the functioning of an organization, industry, population group or region so that wiser decisions could be taken.

3. Over time the American economy has had:

Answer d) Fluctuations in growth and unemployment.

The economy had been facing fluctuating unemployment since the recession in 2008, which has caused a negative impact on employment as unemployment as risen in the economy. In other words, key to the long-run relationship between changes in GDP rates of growth and unemployment is the rate of growth in potential output. The output is an unobservable capacity of the economy to produce goods and services when available resources that could be fully utilized.