Question 1

The circular-flow diagram shows the flow of _____, the flow of _____, and the flow of_______.

Accepted Answer

A)  goods and services; factors of production; and markets 
B)  households; firms; money 
C)  money; goods and services; factors of production. 
D)  factors of production; money; households. 
A)  goods and services; factors of production; and markets 
B)  households; firms; money 
C)  money; goods and services; factors of production. 
D)  factors of production; money; households.

Question 2

Use the following to answer questions:
\  
-(Figure: Consumption of Pizza and Tacos) Use Figure: Consumption of Pizza and Tacos. The figure shows the number of tacos and pizza slices Matt can eat in a day. The relation is nonlinear, and there is a negative relation between the number of tacos and pizza slices that Matt can eat in a day.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer questions:
\  
-(Figure: Production Possibilities and Circular-Flow Diagram) Use Figure: Production Possibilities and Circular-Flow Diagram. Assume the two figures represent the same economy. Suppose that in the circular-flow diagram there is a significant increase in the amount of human capital flowing to both coconut producers and fish producers. If all other variables remain unchanged, then the adjustment in this economy would be BEST represented in the production possibilities figure by a movement from point A toward:

Accepted Answer

A)  point A (no movement). 
B)  point B (a decrease in coconut production and an increase in fish production). 
C)  point C (a decrease in coconut production). 
D)  point D (an outward shift of the entire curve). 
A)  point A (no movement). 
B)  point B (a decrease in coconut production and an increase in fish production). 
C)  point C (a decrease in coconut production). 
D)  point D (an outward shift of the entire curve).

Question 4

Use the following to answer questions:
\  
-(Figure: Comparative Advantage) Use Figure: Comparative Advantage. The opportunity cost of producing 1 box of peaches for Eastland is _____ box(es) of oranges.

Accepted Answer

A)  1 
B)  0.25 
C)  4 
D)  10 
A)  1 
B)  0.25 
C)  4 
D)  10

Question 5

Economists are generally in support of:

Accepted Answer

A)  government restrictions on trade. 
B)  free international trade. 
C)  tariffs to restrict trade. 
D)  subsidizing exports. 
A)  government restrictions on trade. 
B)  free international trade. 
C)  tariffs to restrict trade. 
D)  subsidizing exports.

Question 6

Statements that make value judgments are:

Accepted Answer

A)  pecuniary. 
B)  positive. 
C)  nominal. 
D)  normative. 
A)  pecuniary. 
B)  positive. 
C)  nominal. 
D)  normative.

Question 7

Which of the following is sold in the product market?

Accepted Answer

A)  footballs 
B)  labor 
C)  physical capital 
D)  human capital 
A)  footballs 
B)  labor 
C)  physical capital 
D)  human capital

Question 8

Use the following to answer questions:
\  
-(Table: Production Possibilities Schedule I) Use Table: Production Possibilities Schedule I. If the economy produces 24 units of capital goods per period, it also can produce, at MOST, _____ units of consumer goods per period.

Accepted Answer

A)  5 
B)  4 
C)  3 
D)  2 
A)  5 
B)  4 
C)  3 
D)  2

Question 9

If two variables are negatively related, they will always be represented by a:

Accepted Answer

A)  line or curve that slopes downward. 
B)  straight line. 
C)  horizontal line. 
D)  line or curve that slopes upward. 
A)  line or curve that slopes downward. 
B)  straight line. 
C)  horizontal line. 
D)  line or curve that slopes upward.

Question 10

Dr. Colgate is a dentist who employs an assistant, Ms. Crest. If Dr. Colgate worked all day at the front desk, she could answer 40 phone calls. If she worked all day with patients, she could clean the teeth of 40 patients. If Ms. Crest worked all day at the front desk, she could answer 60 phone calls. If she worked all day with patients, she could clean the teeth of 20 patients. _____ has a(n) _____ advantage in _____.

Accepted Answer

A)  Dr. Colgate; absolute; answering phones 
B)  Ms. Crest; comparative; answering phones 
C)  Ms. Crest; absolute; cleaning patients' teeth 
D)  Dr. Colgate; comparative; answering phones 
A)  Dr. Colgate; absolute; answering phones 
B)  Ms. Crest; comparative; answering phones 
C)  Ms. Crest; absolute; cleaning patients' teeth 
D)  Dr. Colgate; comparative; answering phones

Question 11

Use the following to answer questions:
\  
-(Figure: Consumer and Capital Goods) Use Figure: Consumer and Capital Goods. The movement from curve 1 to curve 2 indicates a(n):

Accepted Answer

A)  growing ability of the economy to produce capital and consumer goods. 
B)  increase in the stock market. 
C)  decrease in the factors of production. 
D)  shift of the production possibility frontier toward producing fewer goods. 
A)  growing ability of the economy to produce capital and consumer goods. 
B)  increase in the stock market. 
C)  decrease in the factors of production. 
D)  shift of the production possibility frontier toward producing fewer goods.

Question 12

Households buy goods and services in the _____ markets.

Accepted Answer

A)  factor 
B)  product 
C)  resource 
D)  financial 
A)  factor 
B)  product 
C)  resource 
D)  financial

Question 13

A simplified representation that is used to study a real situation is called a(n):

Accepted Answer

A)  model. 
B)  production possibility frontier. 
C)  assumption. 
D)  trade-off. 
A)  model. 
B)  production possibility frontier. 
C)  assumption. 
D)  trade-off.

Question 14

Use the following to answer questions:
\  
-(Table: Fish and Coconut Production Possibilities) Use Table: Fish and Coconut Production Possibilities. The table shows the maximum number of fish or coconuts that Tom and Hank can produce when each produces only one of the goods. The table implies that Tom has a comparative advantage in the production of both goods.

Accepted Answer

A) True 
 B)False

Question 15

The financial crisis of 2008 showed that:

Accepted Answer

A)  models can be used in all cases to understand financial assets. 
B)  homeowners were able to pay their mortgages reliably. 
C)  a faulty economic model can have devastating macroeconomic consequences. 
D)  the average price of a house should not increase. 
A)  models can be used in all cases to understand financial assets. 
B)  homeowners were able to pay their mortgages reliably. 
C)  a faulty economic model can have devastating macroeconomic consequences. 
D)  the average price of a house should not increase.

Question 16

If LeRoyce trades two cookies for one of Amir's brownies, we say that they are engaging in:

Accepted Answer

A)  exploitation. 
B)  benevolence. 
C)  barter. 
D)  a zero-sum game. 
A)  exploitation. 
B)  benevolence. 
C)  barter. 
D)  a zero-sum game.

Question 17

It is impossible for economists to use computers to simulate how the economy works.

Accepted Answer

A) True 
 B)False

Question 18

Use the following to answer questions:
\  
-(Figure: Guns and Butter) Use Figure: Guns and Butter. This production possibility frontier is:

Accepted Answer

A)  bowed out because of increasing opportunity costs. 
B)  bowed in because of increasing opportunity costs. 
C)  bowed in because of constant costs of guns and butter. 
D)  linear because of constant costs. 
A)  bowed out because of increasing opportunity costs. 
B)  bowed in because of increasing opportunity costs. 
C)  bowed in because of constant costs of guns and butter. 
D)  linear because of constant costs.

Question 19

Because Casey can type reports faster and more accurately than Ahmet, Casey has a(n) _____ in typing reports.

Accepted Answer

A)  comparative advantage 
B)  absolute advantage 
C)  opportunity cost 
D)  specialization 
A)  comparative advantage 
B)  absolute advantage 
C)  opportunity cost 
D)  specialization

Question 20

Use the following to answer questions:
\  
-(Figure: Guns and Butter) Use Figure: Guns and Butter. On this figure, points A, B, E, and F:

Accepted Answer

A)  indicate combinations of guns and butter that society can produce using all of its factors efficiently. 
B)  indicate increasing opportunity costs for guns but decreasing opportunity costs for butter. 
C)  indicate that society wants butter more than it wants guns. 
D)  indicate constant opportunity costs for guns and increasing costs for butter. 
A)  indicate combinations of guns and butter that society can produce using all of its factors efficiently. 
B)  indicate increasing opportunity costs for guns but decreasing opportunity costs for butter. 
C)  indicate that society wants butter more than it wants guns. 
D)  indicate constant opportunity costs for guns and increasing costs for butter.

The circular-flow diagram shows the flow of ___, the flow of _, and the flow of_____.

Economists are generally in support of:

Statements that make value judgments are:

Which of the following is sold in the product market?

If two variables are negatively related, they will always be represented by a:

Households buy goods and services in the _____ markets.

A simplified representation that is used to study a real situation is called a(n):

The financial crisis of 2008 showed that:

If LeRoyce trades two cookies for one of Amir's brownies, we say that they are engaging in:

It is impossible for economists to use computers to simulate how the economy works.

Use the following to answer questions: \\ $Use the following to answer questions: \\ -(Figure: Guns and Butter) Use Figure: Guns and Butter. This production possibility frontier is:$ -(Figure: Guns and Butter) Use Figure: Guns and Butter. This production possibility frontier is:

Because Casey can type reports faster and more accurately than Ahmet, Casey has a(n) _____ in typing reports.

Use the following to answer questions: \\ $Use the following to answer questions: \\ -(Figure: Guns and Butter) Use Figure: Guns and Butter. On this figure, points A, B, E, and F:$ -(Figure: Guns and Butter) Use Figure: Guns and Butter. On this figure, points A, B, E, and F:

First Principles

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

Exam 2: Economic Models: Trade-Offs and Trade

The circular-flow diagram shows the flow of _____, the flow of _____, and the flow of_______.

Use the following to answer questions: \\ -(Figure: Comparative Advantage) Use Figure: Comparative Advantage. The opportunity cost of producing 1 box of peaches for Eastland is _____ box(es) of oranges.

Economists are generally in support of:

Statements that make value judgments are:

Which of the following is sold in the product market?

Use the following to answer questions: \\ -(Table: Production Possibilities Schedule I) Use Table: Production Possibilities Schedule I. If the economy produces 24 units of capital goods per period, it also can produce, at MOST, _____ units of consumer goods per period.

If two variables are negatively related, they will always be represented by a:

Use the following to answer questions: \\ -(Figure: Consumer and Capital Goods) Use Figure: Consumer and Capital Goods. The movement from curve 1 to curve 2 indicates a(n):

Households buy goods and services in the _____ markets.

A simplified representation that is used to study a real situation is called a(n):

The financial crisis of 2008 showed that:

If LeRoyce trades two cookies for one of Amir's brownies, we say that they are engaging in:

It is impossible for economists to use computers to simulate how the economy works.

Use the following to answer questions: \\ -(Figure: Guns and Butter) Use Figure: Guns and Butter. This production possibility frontier is:

Because Casey can type reports faster and more accurately than Ahmet, Casey has a(n) _____ in typing reports.

Use the following to answer questions: \\ -(Figure: Guns and Butter) Use Figure: Guns and Butter. On this figure, points A, B, E, and F:

First Principles

Supply and Demand

Price Controls and Quotas: Meddling With Markets

International Trade

Macroeconomics: the Big Picture

GDP and the CPI: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial Syst

Income and Expenditure

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Macroeconomics: Events and Ideas

International Macroeconomics

Filters

The circular-flow diagram shows the flow of ___, the flow of _, and the flow of_____.

Use the following to answer questions: \\ $Use the following to answer questions: \\ -(Figure: Guns and Butter) Use Figure: Guns and Butter. This production possibility frontier is:$ -(Figure: Guns and Butter) Use Figure: Guns and Butter. This production possibility frontier is:

Use the following to answer questions: \\ $Use the following to answer questions: \\ -(Figure: Guns and Butter) Use Figure: Guns and Butter. On this figure, points A, B, E, and F:$ -(Figure: Guns and Butter) Use Figure: Guns and Butter. On this figure, points A, B, E, and F: