| 1. , . | Economics is the study how people make choices under the conditions of scarcity and how these choices affect total results of social activity. |
| 2. . | The study of economics helps different economic units to use available resources efficiently. |
| 3. . | The important economic issues in most cases cant be solved with theories and models alone. |
| 4. ̳ | Microeconomics and macroeconomics are two basic branches of economics. |
| 5. ̳ , - , . | Micro approach focuses on how cause-and-effect relationships affect choices of individuals, businesses and society. |
| 6. , , . | Macroeconomics studies how the choice of individual business units has an effect on the price level, total output and the level of unemployment in democracy. |
| 7. , , - . | To solve a difference existing between economists its necessary to make a distinction between positive and normative economics. |
| 8. , . | Positive economics involves assertions and predictions about world as it is. |
| 9. , - , . | Positive economics doesnt focus on what results will be good or bad and what we should do. |
| 10. , , , . | Normative economics makes statements what should be and what should an individual, business and nation do. |
Exercise 14. Answer the following questions.
1. What is economics?
2. Why is economics considered a social science?
3. What is microeconomics?
4. What does microeconomics focus on?
5. Why does microeconomics not look into a specific individuals behaviour?
6. Why does microeconomics trace cause-and-effect relationships?
7. What economic issues does microeconomics do with?
8. What is macroeconomics?
9. What economic issues does microeconomics look at?
10. Why does macroeconomics look into the total effect of individual choices?
11. What is the best place to begin an investigation of the economy?
12. What are two worlds that economists deal with?
13. What is an economic model?
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14. What do economists use to explain or describe the world that is?
15. Why do economists use basic economic principles and economic models?
16. Why is it impossible to solve economic issues economic theories and models alone?
17. Why do economists make the positive-normative distinction?
18. What is the difference between positive economic statement and normative one?
19. What is positive economics concerned with?
20. Why does positive economics avoid value judgements?
21. Why do economists use positive economics?
22. What does normative economics deal with?
23. What does normative economics include?
24. Why is normative economics used to take decisions as for issues of equity, equality, and fairness?
25. Why can some economic issues never be decided by using facts?
26. What is the relationship between positive and normative economics?
Questions for economic reasoning and discussion
1. Which of the following problems are studied by microeconomics and which are macroeconomic issues?
a. The allocation of a familys limited budget.
b. How will an increase in the price of cigarettes affect smoking habits?
c. Why was the 1981-1982 recession so severe?
d. Does a high government budget deficit tend to slow the rate of economic growth?
e. Why does Japans economy grow faster than the United States economy, while Britains grows slower?
f. Why does IBM sell more computers than Apple?
g. What caused the rate of inflation to rise rapidly in Ukraine in 2008?
2. Choose the right variant. Only one is possible.
1. What is economics?
a. Economics is the study of money and financial systems.
b. Economics is the study of business.
c. Economics is a behavioral science that studies how people make choices.
d. Economics is a natural science that studies the resources that nature and previous generations have provided.
2. Economics is defined as the social science that studies
a. how a person can get everything he or she wants.
b. the reason money exists.
c. the way to eliminate choices in our decisions.
d. the choices that societies, and the people and institutions that form societies, make in dealing with the issue of scarcity.
3. Which branch of economics studies the decisions of individual consumers and individual firms?
a. macroeconomics
b. positive economics
c. normative economics
d. microeconomics
4. Microeconomics concentrates on
a. looking at the operation of the entire economy.
b. examining the behavior and operation of the individual units or sectors that make up the economy.
c. our governments monetary policy.
d. the levels of employment and inflation.
5. Macroeconomics focuses on
a. the whole national economy.
b. the behavior of individual firms.
c. the behavior of individual households.
d. markets.
6. Macroeconomics studies
a. the overall effect of individuals choices on national and global economies.
b. the individual choices made by individuals.
c. how firms make profitable output decisions.
d. None of the above answers is correct.
7. The study of the total effects that individual, business, and government choices have on the national and global economies is
a. economics.
b. scarcity.
c. microeconomics.
d. macroeconomics.
8. In economics, there are two types of statements. One describes what is; the other describes what ought to be. These statements are
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a. macroeconomic and microeconomic.
b. fair and unfair.
c. right and wrong.
d. positive and normative.
9. An objective statement about what is is called a(n)
a. Normative statement
b. Positive statement
c. Economic model
d. Economic theory
10. Economic models
a. reflect trade-offs.
b. are based on custom.
c. simplify and therefore do not reflect the full complication of reality.
d. reflect all the real world conditions.
