Question 1

Which of these statements is a positive statement (as opposed to a normative statement) ?

Accepted Answer

A)  Income tax rates should not have been cut as they were a few years ago.
B)  The quantity of money has grown too slowly in recent years.
C)  When the quantity of money grows rapidly, inflation is a predictable consequence.
D)  All of the above are positive statements.E) A) and B)
F) A) and C)

Question 2

An economy is being efficient if it is impossible to produce more of one good without producing less of another.

Accepted Answer

A) True 
 B)False

Question 3

Economists who are primarily responsible for advising Congress on economic matters work in which agency?

Accepted Answer

A)  the Federal Reserve
B)  the Congressional Budget Office
C)  the Department of Treasury
D)  the Department of CommerceE) A) and D)
F) A) and C)

Question 4

The use of the coordinate system allows

Accepted Answer

A)  for the display of the flows of income, goods, and factors of production in an economic system.
B)  for the display of how labor and other resources are organized in the production process.
C)  economists to show two variables on a single graph.
D)  students of economics to become proficient with pie charts and bar graphs.E) A) and B)
F) C) and D)

Question 5

Which of the following is an example of an economic model?

Accepted Answer

A)  the production possibilities frontier
B)  the concept of opportunity cost
C)  the concept of capital
D)  All of the above are economic models.E) None of the above
F) B) and D)

Question 6

Figure 2-6
 
-Refer to Figure 2-6.A movement from point C to point D could be caused by

Accepted Answer

A)  unemployment.
B)  a decrease in society's preference for bananas.
C)  fewer resources available for production of bananas.
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 7

Figure 2-2
 
-Refer to Figure 2-2.The figure represents a circular-flow diagram.If the outer loop represents flows of dollars,then the inner loop includes

Accepted Answer

A)  flows of goods and services, of which households are sellers.
B)  flows of inputs, of which firms are buyers.
C)  flows of rent payments paid to owners of land.
D)  flows of wages and salaries paid to workers.E) A) and B)
F) None of the above

Question 8

Figure 2-10
 
-Refer to Figure 2-10.The curves shown are

Accepted Answer

A)  supply curves.
B)  demand curves.
C)  preference curves.
D)  income-consumption curves.E) B) and C)
F) A) and D)

Question 9

In the circular-flow diagram,

Accepted Answer

A)  factors of production flow from government to firms.
B)  goods and services flow from households to firms.
C)  income paid to the factors of production flows from firms to households.
D)  spending on goods and services flows from firms to households.E) A) and B)
F) B) and C)

Question 10

A certain production possibilities frontier shows production possibilities for two goods: wheat and shirts.Which of the following concepts can not be illustrated in this model?

Accepted Answer

A)  the flow of dollars between (i)  sellers of wheat and shirts and (ii)  buyers of wheat and shirts
B)  the tradeoff between production of wheat and production of shirts
C)  the opportunity cost of shirts in terms of wheat
D)  the effect of economic growth on production possibilities involving wheat and shirtsE) B) and C)
F) A) and B)

Question 11

By scientific method we mean

Accepted Answer

A)  the use of modern electronic testing equipment to understand the world.
B)  the dispassionate development and testing of theories about how the world works.
C)  the use of controlled laboratory experiments to understand the way the world works.
D)  finding evidence to support preconceived theories about how the world works.E) A) and C)
F) C) and D)

Question 12

The decision of which assumptions to make is

Accepted Answer

A)  an easy decision for an economist, but a difficult decision for a physicist or a chemist.
B)  not a particularly important decision for an economist.
C)  usually regarded as an art in scientific thinking.
D)  usually regarded as the easiest part of the scientific method.E) A) and D)
F) All of the above

Question 13

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Accepted Answer

A)  opinions and education.
B)  opinions and values.
C)  scientific judgments and education.
D)  scientific judgments and values.E) B) and C)
F) None of the above

Question 14

In a certain economy,brooms and radios are produced,and the economy currently operates on its production possibilities frontier.Which of the following events would allow the economy to produce more brooms and more radios,relative to the quantities of those goods that are being produced now?

Accepted Answer

A)  The economy experiences economic growth.
B)  There is a technological advance in the broom industry, but the radio industry experiences no such advance.
C)  There is a technological advance in the radio industry, but the broom industry experiences no such advance.
D)  All of the above are correct.E) All of the above
F) A) and C)

Question 15

The slope of a line is calculated by the

Accepted Answer

A)  change in the value of x divided by the change in the value of y.
B)  change in the value of y divided by the change in the value of x.
C)  horizontal distance divided by the vertical distance.
D)  value of y divided by value of x.E) B) and C)
F) A) and D)

Question 16

Figure 2-7
 
-Refer to Figure 2-7.Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

Accepted Answer

A)  an increase in the availability of capital-producing resources
B)  a technological advance in the consumer-goods industries
C)  a general technological advance
D)  a decrease in unemploymentE) C) and D)
F) B) and D)

Question 17

Figure 2-8
 
-Refer to Figure 2-8.Production is efficient if the economy is producing

Accepted Answer

A)  30 barrels and 6 bathtubs.
B)  20 barrels and 8 bathtubs.
C)  25 barrels and 12 bathtubs.
D)  15 barrels and 12 bathtubs.E) A) and B)
F) C) and D)

Question 18

When studying the effects of changes in public policy,economists believe that

Accepted Answer

A)  it is important to distinguish between the short run and the long run.
B)  the assumptions used in studying those effects should be the same for the short run as for the long run.
C)  the short-run effects of those changes are always more beneficial to society than are the long-run effects.
D)  the long-run effects of those changes are always more beneficial to society than are the short-run effects.E) C) and D)
F) B) and D)

Question 19

Figure 2-1
 
-Refer to Figure 2-1.Which arrow represents the flow of goods and services?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) B) and C)
F) A) and B)

Question 20

In constructing models,economists

Accepted Answer

A)  leave out equations, since equations and models tend to contradict one another.
B)  ignore the long run, since models are useful only for short-run analysis.
C)  make assumptions that are contrary to features of the real world.
D)  try to include every feature of the economy.E) All of the above
F) B) and D)

Exam 2: Thinking Like an Economist

Which of these statements is a positive statement (as opposed to a normative statement) ?

Correct AnswerverifiedShow Answer

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8.Production is efficient if the economy is producing

Correct AnswerverifiedShow Answer

Figure 2-7 -Refer to Figure 2-7.Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

Correct AnswerverifiedShow Answer

Economists who are primarily responsible for advising Congress on economic matters work in which agency?

Correct AnswerverifiedShow Answer

Figure 2-10 -Refer to Figure 2-10.The curves shown are

Correct AnswerverifiedShow Answer

The decision of which assumptions to make is

Correct AnswerverifiedShow Answer

In constructing models,economists

Correct AnswerverifiedShow Answer

A certain production possibilities frontier shows production possibilities for two goods: wheat and shirts.Which of the following concepts can not be illustrated in this model?

Correct AnswerverifiedShow Answer

Figure 2-2 -Refer to Figure 2-2.The figure represents a circular-flow diagram.If the outer loop represents flows of dollars,then the inner loop includes

Correct AnswerverifiedShow Answer

An economy is being efficient if it is impossible to produce more of one good without producing less of another.

Correct AnswerverifiedShow Answer

In the circular-flow diagram,

Correct AnswerverifiedShow Answer

In a certain economy,brooms and radios are produced,and the economy currently operates on its production possibilities frontier.Which of the following events would allow the economy to produce more brooms and more radios,relative to the quantities of those goods that are being produced now?

Correct AnswerverifiedShow Answer

Which of the following is an example of an economic model?

Correct AnswerverifiedShow Answer

When studying the effects of changes in public policy,economists believe that

Correct AnswerverifiedShow Answer

The slope of a line is calculated by the

Correct AnswerverifiedShow Answer

By scientific method we mean

Correct AnswerverifiedShow Answer

Figure 2-6 -Refer to Figure 2-6.A movement from point C to point D could be caused by

Correct AnswerverifiedShow Answer

Figure 2-1 -Refer to Figure 2-1.Which arrow represents the flow of goods and services?

Correct AnswerverifiedShow Answer

The use of the coordinate system allows

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified