ECON 104 EXAM 1 RUSTICI
QUESTIONS & VERIFIED COMPLETE
ANSWERS
Microeconomics - Correct Answer ✔✔ "price theory", observing the details of the
consumers behavior, why are prices what they are, price of specific product, number of
employees in a firm
Macroeconomics - Correct Answer ✔✔ "the whole economy", coordination of
everything, examines the performance and behavior of the economy as a whole,
focuses on economic growth,interest rates, and inflation
Price System - Correct Answer ✔✔ Information about human values in a world in
scarcity, not numbers but info and its value
Money - Correct Answer ✔✔ Macro is money and money is the medium of exchange
that replaces bartering
Banks - Correct Answer ✔✔ banking evolved from warehouses that fundamentally
changed the monetary system, savers and borrowers trade through the institution
stocks and bonds - Correct Answer ✔✔ re-trade of ownership, debit and equities
Correspond Principle - Correct Answer ✔✔ something in your theory must correspond
to reality to isolate cause and effect
Theory - Correct Answer ✔✔ abstraction away from reality. It must have an abstract to
have an effect because reality is a bad theory
Positive Economics - Correct Answer ✔✔ "what is", answers that can be proven, on
facts and cause/effect relationships, includes description, theory, development&testing,
avoids value judgements
Normative Economics - Correct Answer ✔✔ "what ought to be", incorporates value
judgments about what the economy should be like or what particular policy actions
should be recommended to achieve a desirable goal, "what we should do--which is an
opinion",
Assumptions - Correct Answer ✔✔ In an entire economic system, adding interactions,
adds more assumptions.
Micro has limited set of assumptions (its the science of economics as everything is set).
Macro is built on different assumptions because a lot of theories and assuming
QUESTIONS & VERIFIED COMPLETE
ANSWERS
Microeconomics - Correct Answer ✔✔ "price theory", observing the details of the
consumers behavior, why are prices what they are, price of specific product, number of
employees in a firm
Macroeconomics - Correct Answer ✔✔ "the whole economy", coordination of
everything, examines the performance and behavior of the economy as a whole,
focuses on economic growth,interest rates, and inflation
Price System - Correct Answer ✔✔ Information about human values in a world in
scarcity, not numbers but info and its value
Money - Correct Answer ✔✔ Macro is money and money is the medium of exchange
that replaces bartering
Banks - Correct Answer ✔✔ banking evolved from warehouses that fundamentally
changed the monetary system, savers and borrowers trade through the institution
stocks and bonds - Correct Answer ✔✔ re-trade of ownership, debit and equities
Correspond Principle - Correct Answer ✔✔ something in your theory must correspond
to reality to isolate cause and effect
Theory - Correct Answer ✔✔ abstraction away from reality. It must have an abstract to
have an effect because reality is a bad theory
Positive Economics - Correct Answer ✔✔ "what is", answers that can be proven, on
facts and cause/effect relationships, includes description, theory, development&testing,
avoids value judgements
Normative Economics - Correct Answer ✔✔ "what ought to be", incorporates value
judgments about what the economy should be like or what particular policy actions
should be recommended to achieve a desirable goal, "what we should do--which is an
opinion",
Assumptions - Correct Answer ✔✔ In an entire economic system, adding interactions,
adds more assumptions.
Micro has limited set of assumptions (its the science of economics as everything is set).
Macro is built on different assumptions because a lot of theories and assuming
