Question 1

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Accepted Answer

A) the impact of minimum-wage laws on employment in the fast food industry 
B) the effect of changes in household saving rates on the growth rate of national income 
C) the impact of faster money growth on the rate of inflation 
D) a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth 
A) the impact of minimum-wage laws on employment in the fast food industry 
B) the effect of changes in household saving rates on the growth rate of national income 
C) the impact of faster money growth on the rate of inflation 
D) a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth

Question 2

Figure 2-7  
-Refer to Figure 2-7. Inefficient production is represented by which point(s)?

Accepted Answer

A) L, M 
B) N, O, P, Q 
C) N, O, P 
D) Q 
A) L, M 
B) N, O, P, Q 
C) N, O, P 
D) Q

Question 3

Is the following a positive or normative statement? The unemployment rate in Nevada is higher than the unemployment rate in New York.

Accepted Answer

The answer of Is the following a positive or normative...

Question 4

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

Accepted Answer

A) the nation is producing beyond its capacity, so inflation will occur. 
B) the nation is not using all available resources or is using inferior technology or both. 
C) the nation is producing an efficient combination of goods. 
D) there will be a large opportunity cost if the nation tries to increase production of any good. 
A) the nation is producing beyond its capacity, so inflation will occur. 
B) the nation is not using all available resources or is using inferior technology or both. 
C) the nation is producing an efficient combination of goods. 
D) there will be a large opportunity cost if the nation tries to increase production of any good.

Question 5

Which of the following is an example of using the scientific method with a natural experiment?

Accepted Answer

A) measuring how long it takes a marble to fall from a ten story building 
B) comparing plant growth with and without a soil additive 
C) tracking the price of oil when a war in the Middle East interrupts the flow of crude oil 
D) observing the reaction when two chemicals are mixed together 
A) measuring how long it takes a marble to fall from a ten story building 
B) comparing plant growth with and without a soil additive 
C) tracking the price of oil when a war in the Middle East interrupts the flow of crude oil 
D) observing the reaction when two chemicals are mixed together

Question 6

In the ordered pair (10,30), 10 is the y-coordinate and 30 is the z-coordinate.

Accepted Answer

A) True 
 B)False

Question 7

Congressman Dearmark justified spending $3 million on a new entertainment complex in his district because it will create 450 new jobs for his residents. As a student of economics, you know that

Accepted Answer

A) this is a case of the "broken window fallacy." 
B) this is a great use of taxpayer dollars. 
C) this policy diverts money from spending somewhere else in the economy. 
D) Both a and c are correct. 
A) this is a case of the "broken window fallacy." 
B) this is a great use of taxpayer dollars. 
C) this policy diverts money from spending somewhere else in the economy. 
D) Both a and c are correct.

Question 8

Figure 2-3  
-Refer to Figure 2-3. What is flowing from rectangle 1 to oval A?

Accepted Answer

A) revenue 
B) goods and services sold 
C) factors of production 
D) labor, land, and capital 
A) revenue 
B) goods and services sold 
C) factors of production 
D) labor, land, and capital

Question 9

Historical episodes are

Accepted Answer

A) valuable to economists because they allow economists to see how the science of economics has evolved. 
B) valuable to economists because they allow economists to evaluate economic theories. 
C) not of concern to economists because economics is about predicting the future, not dwelling on the past. 
D) not of concern to economists because the exact circumstances of historical episodes are unlikely to be observed again. 
A) valuable to economists because they allow economists to see how the science of economics has evolved. 
B) valuable to economists because they allow economists to evaluate economic theories. 
C) not of concern to economists because economics is about predicting the future, not dwelling on the past. 
D) not of concern to economists because the exact circumstances of historical episodes are unlikely to be observed again.

Question 10

Table 2-1
The following table contains some production possibilities for an economy for a given month.  
-Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A) 400. 
B) 450. 
C) 600. 
D) 750. 
A) 400. 
B) 450. 
C) 600. 
D) 750.

Question 11

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

Accepted Answer

A) interest 
B) capital 
C) spending by households on goods 
D) spending by households on services 
A) interest 
B) capital 
C) spending by households on goods 
D) spending by households on services

Question 12

Among economic models, the circular-flow diagram is unusual in that it

Accepted Answer

A) drastically simplifies the real world. 
B) features more than one type of market. 
C) features flows of dollars. 
D) does not involve mathematics. 
A) drastically simplifies the real world. 
B) features more than one type of market. 
C) features flows of dollars. 
D) does not involve mathematics.

Question 13

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Accepted Answer

A) will never be able to produce. 
B) can produce using all available resources and technology. 
C) can produce using some portion, but not all, of its resources and technology. 
D) may be able to produce in the future with more resources and/or superior technology. 
A) will never be able to produce. 
B) can produce using all available resources and technology. 
C) can produce using some portion, but not all, of its resources and technology. 
D) may be able to produce in the future with more resources and/or superior technology.

Question 16

Which of the following is an example of a positive, as opposed to normative, statement?

Accepted Answer

A) When the minimum wage is increased, unemployment is a predictable consequence. 
B) The income tax rate should be increased to offset the budget deficit. 
C) Increasing government spending is the best way to help the economy move out of a recession. 
D) More than one of the above are positive statements. 
A) When the minimum wage is increased, unemployment is a predictable consequence. 
B) The income tax rate should be increased to offset the budget deficit. 
C) Increasing government spending is the best way to help the economy move out of a recession. 
D) More than one of the above are positive statements.

Question 17

With the resources it has, an economy can produce at any point on or outside the production possibilities frontier, but it cannot produce at points inside the frontier.

Accepted Answer

A) True 
 B)False

Question 18

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

Accepted Answer

A) amount of the other good that must be given up. 
B) market price of the additional amount produced. 
C) amount of resources that must be devoted to its production. 
D) number of dollars that must be spent to produce it. 
A) amount of the other good that must be given up. 
B) market price of the additional amount produced. 
C) amount of resources that must be devoted to its production. 
D) number of dollars that must be spent to produce it.

Question 19

Economists try to address their subject with a scientist's objectivity.

Accepted Answer

A) True 
 B)False

Question 20

"Prices rise when the quantity of money rises rapidly" is an example of a

Accepted Answer

A) negative economic statement. 
B) positive economic statement. 
C) normative economic statement. 
D) statement that contradicts one of the basic principles of economics. 
A) negative economic statement. 
B) positive economic statement. 
C) normative economic statement. 
D) statement that contradicts one of the basic principles of economics.

Exam 2: Thinking Like an Economist

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Figure 2-7 -Refer to Figure 2-7. Inefficient production is represented by which point(s)?

Is the following a positive or normative statement? The unemployment rate in Nevada is higher than the unemployment rate in New York.

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

Which of the following is an example of using the scientific method with a natural experiment?

In the ordered pair (10,30), 10 is the y-coordinate and 30 is the z-coordinate.

Congressman Dearmark justified spending $3 million on a new entertainment complex in his district because it will create 450 new jobs for his residents. As a student of economics, you know that

Figure 2-3 -Refer to Figure 2-3. What is flowing from rectangle 1 to oval A?

Historical episodes are

Table 2-1 The following table contains some production possibilities for an economy for a given month. -Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

Among economic models, the circular-flow diagram is unusual in that it

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

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

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Which of the following is an example of a positive, as opposed to normative, statement?

With the resources it has, an economy can produce at any point on or outside the production possibilities frontier, but it cannot produce at points inside the frontier.

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

Economists try to address their subject with a scientist's objectivity.

"Prices rise when the quantity of money rises rapidly" is an example of a

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

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