Question 1

Policies such as rent control and trade barriers persist

Accepted Answer

A)   because economists are about evenly divided as to the merits of those policies.
B)   because almost all economists agree that those policies have no discernible economic effects.
C)   because almost all economists agree that those policies are desirable.
D)   despite the fact that almost all economists agree that those policies are undesirable.E) A) and D)
F) B) and C)

Question 2

Figure 2-3 
-Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

Accepted Answer

A)   J
B)   L
C)   M
D)   NE) All of the above
F) A) and D)

Question 3

When an economist evaluates a positive statement,he or she is primarily

Accepted Answer

A)   examining evidence.
B)   evaluating values as well as facts.
C)   acting as a policy adviser.
D)   concerned with making a sound decision on how the world ought to be.E) All of the above
F) C) and D)

Question 4

Figure 2-4 
-Refer to Figure 2-4.The opportunity cost of obtaining 10 additional lamps by moving from point W to point Z is

Accepted Answer

A)   0 notepads.
B)   10 notepads.
C)   50 notepads.
D)   None of the above; the economy cannot move from point W to point Z.E) B) and C)
F) A) and D)

Question 5

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)   the effect of an increase in the alcohol tax on the market for beer
B)   the effect of foreign competition on the domestic auto industry
C)   the effect of a price war in the airline industry
D)   the effect of an increase in the minimum wage on an economy's overall rate of unemploymentE) A) and B)
F) B) and C)

Question 7

In the circular-flow diagram,another name for goods and services produced by firms is

Accepted Answer

A)   factors of production.
B)   output.
C)   inputs.
D)   resources.E) C) and D)
F) B) and C)

Question 8

Figure 2-4 
-Refer to Figure 2-4.The opportunity cost of obtaining 20 additional lamps by moving from point W to point V is

Accepted Answer

A)   0 notepads.
B)   10 notepads.
C)   50 notepads.
D)   None of the above; the economy cannot move from point W to point V.E) None of the above
F) A) and D)

Question 9

In the markets for factors of production in the circular-flow diagram,

Accepted Answer

A)   households provide firms with labor,land,and capital.
B)   households provide firms with savings for investment.
C)   firms provide households with goods and services.
D)   firms provide households with profit.E) None of the above
F) All of the above

Question 10

Microeconomics and macroeconomics are closely intertwined.

Accepted Answer

A) True 
 B)False

Question 11

Historical episodes allow economists to illustrate and evaluate current economic theories.

Accepted Answer

A) True 
 B)False

Question 12

Suppose an economy produces two goods,food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 1000 units of food and 47 machines.This year it experienced a technological advance in its machine-making industry.As a result,this year the society wants to produce 1050 units of food and 47 machines.Which of the following statements is correct?

Accepted Answer

A)   Because the technological advance occurred in the machine-making industry,it will not be possible to increase food production without reducing machine production below 47.
B)   Because the technological advance occurred in the machine-making industry,increases in output can only occur in the machine industry.
C)   In order to increase food production in these circumstances without reducing machine production,the economy must reduce inefficiencies.
D)   The technological advance reduced the amount of resources needed to produce 47 machines,so these resources could be used to produce more food.E) A) and B)
F) All of the above

Question 13

When income increases the slope of an individual's demand curve,the demand curve

Accepted Answer

A)   turns positive.
B)   becomes undefined.
C)   remains negative.
D)   becomes infinite.E) B) and C)
F) A) and D)

Question 14

A pie chart is a way to display information regarding two variables.

Accepted Answer

A) True 
 B)False

Question 15

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A)   households and firms are both buyers.
B)   households and firms are both sellers.
C)   households are buyers and firms are sellers.
D)   households are sellers and firms are buyers.E) B) and C)
F) A) and D)

Question 16

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Accepted Answer

A) True 
 B)False

Question 17

Production is efficient if the economy is producing at a point

Accepted Answer

A)   on the production possibilities frontier.
B)   outside the production possibilities frontier.
C)   on or inside the production possibilities frontier.
D)   inside the production possibilities frontier.E) A) and B)
F) A) and D)

Question 18

Since economists cannot use natural experiments offered by history,they must use carefully constructed laboratory experiments instead.

Accepted Answer

A) True 
 B)False

Question 19

Sometimes economists disagree because their values differ.Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)   One economist believes the North American Free Trade Agreement (NAFT
A)  has led to a loss of American jobs; another economist disputes this claim.
B)   One economist believes that when income taxes are cut,people will increase their spending; another economist believes that when income taxes are cut,people will increase their saving.
C)   One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people.
D)   One economist believes that,prior to the Civil War,slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth.E) None of the above
F) B) and C)

Question 20

The Council of Economic Advisers

Accepted Answer

A)   was created in 1946.
B)   advises the president of the United States on economic policy matters.
C)   writes the annual Economic Report of the President.
D)   All of the above are correct.E) All of the above
F) None of the above

Exam 2: Thinking Like an Economist

Figure 2-3 -Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

Correct Answer
verified

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Correct Answer
verified

A pie chart is a way to display information regarding two variables.

Correct Answer
verified

Production is efficient if the economy is producing at a point

Correct Answer
verified

The Council of Economic Advisers

Correct Answer
verified

Policies such as rent control and trade barriers persist

Correct Answer
verified

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Correct Answer
verified

In the circular-flow diagram,another name for goods and services produced by firms is

Correct Answer
verified

When income increases the slope of an individual's demand curve,the demand curve

Correct Answer
verified

Historical episodes allow economists to illustrate and evaluate current economic theories.

Correct Answer
verified

Figure 2-4 -Refer to Figure 2-4.The opportunity cost of obtaining 10 additional lamps by moving from point W to point Z is

Correct Answer
verified

In the markets for goods and services in the circular-flow diagram,

Correct Answer
verified

Since economists cannot use natural experiments offered by history,they must use carefully constructed laboratory experiments instead.

Correct Answer
verified

Sometimes economists disagree because their values differ.Which of the following instances best reflects this source of disagreement?

Correct Answer
verified

Correct Answer
verified

Microeconomics and macroeconomics are closely intertwined.

Correct Answer
verified

Figure 2-4 -Refer to Figure 2-4.The opportunity cost of obtaining 20 additional lamps by moving from point W to point V is

Correct Answer
verified

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Correct Answer
verified

In the markets for factors of production in the circular-flow diagram,

Correct Answer
verified

When an economist evaluates a positive statement,he or she is primarily

Correct Answer
verified

Exam 2: Thinking Like an Economist

Figure 2-3 -Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

Correct AnswerverifiedShow Answer

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Correct AnswerverifiedShow Answer

A pie chart is a way to display information regarding two variables.

Correct AnswerverifiedShow Answer

Production is efficient if the economy is producing at a point

Correct AnswerverifiedShow Answer

The Council of Economic Advisers

Correct AnswerverifiedShow Answer

Policies such as rent control and trade barriers persist

Correct AnswerverifiedShow Answer

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Correct AnswerverifiedShow Answer

In the circular-flow diagram,another name for goods and services produced by firms is

Correct AnswerverifiedShow Answer

When income increases the slope of an individual's demand curve,the demand curve

Correct AnswerverifiedShow Answer

Historical episodes allow economists to illustrate and evaluate current economic theories.

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4.The opportunity cost of obtaining 10 additional lamps by moving from point W to point Z is

Correct AnswerverifiedShow Answer

In the markets for goods and services in the circular-flow diagram,

Correct AnswerverifiedShow Answer

Since economists cannot use natural experiments offered by history,they must use carefully constructed laboratory experiments instead.

Correct AnswerverifiedShow Answer

Sometimes economists disagree because their values differ.Which of the following instances best reflects this source of disagreement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Microeconomics and macroeconomics are closely intertwined.

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4.The opportunity cost of obtaining 20 additional lamps by moving from point W to point V is

Correct AnswerverifiedShow Answer

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Correct AnswerverifiedShow Answer

In the markets for factors of production in the circular-flow diagram,

Correct AnswerverifiedShow Answer

When an economist evaluates a positive statement,he or she is primarily

Correct AnswerverifiedShow Answer

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