Chapter 1

Question 1

y-axis

Answer 1

the vertical axis on a graph

Question 2

x-axis

Answer 2

the horizontal axis on a graph

Question 3

pie chart

Answer 3

visual display showing the relative size of various quantities that add up to 100 percent

Question 4

bar graph

Answer 4

visual display showing the comparison of quantities

Question 5

time-series graph

Answer 5

visual tool to show changes in a variable’s value over time

Question 6

variable

Answer 6

something that is measured by a number, such as your height

Question 7

positive relationship

Answer 7

when two variables change in the same direction

Question 8

negative relationship

Answer 8

when two variables change in opposite directions

Question 9

slope

Answer 9

the ratio of rise (change in y) over run (change in x)

Question 10

economics

Answer 10

the study of choices we make among our many wants and desires given our limited resources

Question 11

Resources

Answer 11

inputs used to produce goods and services

Question 12

hypothesis

Answer 12

a testable proposition

Question 13

empirical analysis

Answer 13

the use of data to test a hypothesis

Question 14

ceteris paribus

Answer 14

holding all other things constant

Question 15

macroeconomics

Answer 15

the study of the whole economy, including the topics of inflation, unemployment, and economic growth

Question 16

normative statement

Answer 16

a subjective, contestable statement that attempts to describe what should be done

Question 17

scarcity

Answer 17

exists when human wants exceed available resources

Question 18

the economic problem

Answer 18

scarcity forces us to choose, and choices are costly because we must give up other opportunities that we value

Question 19

rational behavior

Answer 19

people do the best they can, based on their values and information, under current and anticipated future circumstances

Question 20

theories and models

Answer 20

simplified versions of the real world used to explain and predict behavior

Question 21

Microeconomics

Answer 21

the study of household and firm behavior and how they interact in the marketplace

Question 22

aggregate

Answer 22

the total amount

Question 23

correlation

Answer 23

when two events occur together

Question 24

causation

Answer 24

when one event brings about another event

Question 25

fallacy of composition

Answer 25

the incorrect view that what is true for the individual is always true for the group

Question 26

positive statement

Answer 26

an objective, testable statement that describes what happens and why it happens

Question 27

normative statement

Answer 27

a subjective, contestable statement that attempts to describe what should be done