Question 1

Economists speaking like policy advisers make

Accepted Answer

A) claims about how the world is. 
B) descriptive statements. 
C) normative statements. 
D) More than one of the above is correct. 
A) claims about how the world is. 
B) descriptive statements. 
C) normative statements. 
D) More than one of the above is correct.

Question 2

Factors of production are

Accepted Answer

A) used to produce goods and services. 
B) also called output. 
C) abundant in most economies. 
D) assumed to be owned by firms in the circular-flow diagram. 
A) used to produce goods and services. 
B) also called output. 
C) abundant in most economies. 
D) assumed to be owned by firms in the circular-flow diagram.

Question 3

"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a

Accepted Answer

A) normative economic statement. 
B) positive economic statement. 
C) statement made by an economist working as a scientist. 
D) judgment based on evaluation of evidence, not values. 
A) normative economic statement. 
B) positive economic statement. 
C) statement made by an economist working as a scientist. 
D) judgment based on evaluation of evidence, not values.

Question 4

Figure 2-3  
-Refer to Figure 2-3. What do the outer arrows represent in the figure?

Accepted Answer

The answer of Figure 2-3  
-Refer to Figure 2-3....

Question 5

The slope of a fairly flat upward-sloping line will be a

Accepted Answer

A) small positive number. 
B) large positive number. 
C) small negative number. 
D) large negative number. 
A) small positive number. 
B) large positive number. 
C) small negative number. 
D) large negative number.

Question 6

Economists believe that production possibilities frontiers

Accepted Answer

A) never have a bowed shape. 
B) rarely have a bowed shape. 
C) often have a bowed shape. 
D) always have a bowed shape. 
A) never have a bowed shape. 
B) rarely have a bowed shape. 
C) often have a bowed shape. 
D) always have a bowed shape.

Question 7

Macroeconomics is the study of economy-wide phenomena.

Accepted Answer

A) True 
 B)False

Question 8

Economic models

Accepted Answer

A) cannot be useful if they are based on false assumptions. 
B) were once thought to be useful, but that is no longer true. 
C) must incorporate all aspects of the economy if they are to be useful. 
D) can be useful, even if they are not particularly realistic. 
A) cannot be useful if they are based on false assumptions. 
B) were once thought to be useful, but that is no longer true. 
C) must incorporate all aspects of the economy if they are to be useful. 
D) can be useful, even if they are not particularly realistic.

Question 9

Figure 2-10
Panel (a)
Panel (b)    
-Refer to Figure 2-10, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Accepted Answer

A) unemployment. 
B) an improvement in sofa production technology. 
C) an improvement in tractor production technology. 
D) an improvement in both sofa and tractor production technology. 
A) unemployment. 
B) an improvement in sofa production technology. 
C) an improvement in tractor production technology. 
D) an improvement in both sofa and tractor production technology.

Question 10

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Accepted Answer

A) True 
 B)False

Question 11

In the early 19th century, the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic. The villagers noticed that wherever doctors appeared, people died. Therefore, many doctors were chased away from villages, and some were even killed. This reaction to the correlation between doctors and deaths is most likely a problem of

Accepted Answer

A) omitted variables. 
B) reverse causality. 
C) government propaganda. 
D) medical incompetence. 
A) omitted variables. 
B) reverse causality. 
C) government propaganda. 
D) medical incompetence.

Question 12

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. 
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.

Question 13

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements about the circular-flow diagram is correct?

Accepted Answer

A) One must imagine that the economy operates without money in order to make sense of the diagram. 
B) The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. 
C) The government cannot be excluded as a decision maker in a circular-flow diagram. 
D) All of the above are correct. 
A) One must imagine that the economy operates without money in order to make sense of the diagram. 
B) The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. 
C) The government cannot be excluded as a decision maker in a circular-flow diagram. 
D) All of the above are correct.

Question 15

Figure 2-8  
-Refer to Figure 2-8. Efficient production is represented by which point(s)?

Accepted Answer

A) J 
B) J, K 
C) J, K, L 
D) J, K, M 
A) J 
B) J, K 
C) J, K, L 
D) J, K, M

Question 16

In the circular-flow diagram, which of the following items flows from firms to households through the markets for goods and services?

Accepted Answer

A) goods and services 
B) dollars paid to land, labor, and capital 
C) dollars spent on goods and services 
D) wages, rent, and profit 
A) goods and services 
B) dollars paid to land, labor, and capital 
C) dollars spent on goods and services 
D) wages, rent, and profit

Question 17

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

Accepted Answer

A) True 
 B)False

Question 18

When an economy is operating inside its production possibilities frontier, we know that

Accepted Answer

A) there are unused resources or inefficiencies in the economy. 
B) all of the economy's resources are fully employed. 
C) economic growth would have to occur in order for the economy to move to a point on the frontier. 
D) in order to produce more of one good, the economy would have to give up some of the other good. 
A) there are unused resources or inefficiencies in the economy. 
B) all of the economy's resources are fully employed. 
C) economic growth would have to occur in order for the economy to move to a point on the frontier. 
D) in order to produce more of one good, the economy would have to give up some of the other good.

Question 19

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Accepted Answer

A) A ceiling on rents reduces the quantity and quality of housing available. 
B) Fiscal policy has a significant stimulative impact on a less than fully employed economy. 
C) The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. 
D) The United States should implement universal health care for its citizens. 
A) A ceiling on rents reduces the quantity and quality of housing available. 
B) Fiscal policy has a significant stimulative impact on a less than fully employed economy. 
C) The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. 
D) The United States should implement universal health care for its citizens.

Question 20

For an economist, the idea of making assumptions is regarded generally as a

Accepted Answer

A) bad idea, since doing so leads to the omission of important ideas and variables from economic models. 
B) bad idea, since doing so invariably leads to data-collection problems. 
C) good idea, since doing so helps to simplify the complex world and make it easier to understand. 
D) good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand. 
A) bad idea, since doing so leads to the omission of important ideas and variables from economic models. 
B) bad idea, since doing so invariably leads to data-collection problems. 
C) good idea, since doing so helps to simplify the complex world and make it easier to understand. 
D) good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.

Exam 2: Thinking Like an Economist

Economists speaking like policy advisers make

Factors of production are

"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a

Figure 2-3 -Refer to Figure 2-3. What do the outer arrows represent in the figure?

The slope of a fairly flat upward-sloping line will be a

Economists believe that production possibilities frontiers

Macroeconomics is the study of economy-wide phenomena.

Economic models

Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

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

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

Which of the following statements about the circular-flow diagram is correct?

Figure 2-8 -Refer to Figure 2-8. Efficient production is represented by which point(s)?

In the circular-flow diagram, which of the following items flows from firms to households through the markets for goods and services?

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

When an economy is operating inside its production possibilities frontier, we know that

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

For an economist, the idea of making assumptions is regarded generally as 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

Filters