Economic Methodology 1 - A Level Economics MCQ Quiz

Question 1/9

Which one of the following is a positive statement?

The UK should aim to have the lowest unemployment rate in Europe. A rise in the minimum wage increases costs for firms employing low-paid workers. Inflation is bad for the economy and should be reduced immediately. Tax cuts are the best way to boost economic growth. The government ought to increase spending on the NHS.

Question 2/9

Which one of the following statements is positive rather than normative?

The government ought to subsidise renewable energy production. It is morally wrong for firms to pollute the environment. Polluting firms should pay compensation to everyone affected by their emissions. Firms should be forced to reduce their carbon emissions. A tax on carbon emissions is likely to raise the cost of production for polluting firms.

Question 3/9

Which one of the following statements involves a value judgement?

Average house prices in London are higher than the UK average. The government should do more to help first-time buyers get onto the property ladder. An increase in stamp duty is likely to reduce the number of house sales. A rise in interest rates increases the cost of mortgage repayments. House prices tend to rise when the supply of housing fails to keep pace with demand.

Question 4/9

Which one of the following statements involves a value judgement?

Free trade increases the range of goods available to consumers. Countries tend to export goods in which they have a comparative advantage. A depreciation of the exchange rate makes exports cheaper. A tariff increases the price of imported goods. It is wrong for developed countries to protect their markets against poorer developing nations.

Question 5/9

Which one of the following best describes the difference between positive and normative statements?

Positive statements are made by economists, while normative statements are made by politicians. Positive statements contain numbers, while normative statements do not. Positive statements are always correct, while normative statements are always incorrect. Positive statements are about the present, while normative statements are about the future. Positive statements are based on facts and can be tested; normative statements are based on opinion and cannot.

Question 6/9

A normative statement in economics is always

based upon numerical data. a statement about what has happened in the past. correct. capable of being tested against the facts. based on an opinion or value judgement.

Question 7/9

Which one of the following best describes how economic theories are typically developed and refined?

A theory is accepted permanently once it has correctly predicted a single outcome. A theory is only accepted once the government agrees with its conclusions. A theory is proposed, tested against evidence, and revised or discarded if it fails to match observed outcomes. A theory is developed purely from public opinion surveys. A theory is proposed and never tested, since economics cannot be studied scientifically.

Question 8/9

The assumption of 'ceteris paribus' is used by economists to

assume that markets always clear instantly. ignore the effect of price on quantity demanded. allow every factor affecting demand to change at the same time. hold all other relevant factors constant so the effect of a single variable can be isolated. assume that government intervention is always necessary.

Question 9/9

Economic data (such as prices or output) is often converted into an index number, with a base year value of 100, mainly in order to

make it easier to compare changes in the data over time or between different series. hide the true value of the underlying data. measure the total value of output in pounds. convert real values into nominal values. guarantee that the data is completely accurate.