Question 1

When a government program is justified not on its merits but on the number of jobs it will create,

Accepted Answer

A) the program is an efficient use of taxpayer dollars. 
B) it should be approved only if the unemployment rate is low. 
C) taxes should be raised to fund the program. 
D) it is known as the "broken window fallacy." 
A) the program is an efficient use of taxpayer dollars. 
B) it should be approved only if the unemployment rate is low. 
C) taxes should be raised to fund the program. 
D) it is known as the "broken window fallacy."

Question 2

John Maynard Keynes described economics as an easy subject at which very few excel. Which of the following is not one of the reasons Keynes gave for why so few people excel at the study of economics?

Accepted Answer

A) An economist must also be a mathematician, historian, statesman, and philosopher in some degree. 
B) An economist must understand symbols and speak in words. 
C) An economist must be purposeful and disinterested in a simultaneous mood. 
D) An economist must understand environmental science, regulation, and political science. 
A) An economist must also be a mathematician, historian, statesman, and philosopher in some degree. 
B) An economist must understand symbols and speak in words. 
C) An economist must be purposeful and disinterested in a simultaneous mood. 
D) An economist must understand environmental science, regulation, and political science.

Question 3

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Accepted Answer

A) any misunderstandings in communicating the policy to the public. 
B) whether the policy will affect his standing among different groups in the electorate. 
C) what amendments will be suggested by members of Congress. 
D) All of the above are correct. 
A) any misunderstandings in communicating the policy to the public. 
B) whether the policy will affect his standing among different groups in the electorate. 
C) what amendments will be suggested by members of Congress. 
D) All of the above are correct.

Question 4

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

Accepted Answer

A) Gasoline prices ought to be lower than they are now. 
B) The federal government should raise taxes on wealthy people. 
C) The social security system is a good system and it deserves to be preserved as it is. 
D) All of the above are normative statements. 
A) Gasoline prices ought to be lower than they are now. 
B) The federal government should raise taxes on wealthy people. 
C) The social security system is a good system and it deserves to be preserved as it is. 
D) All of the above are normative statements.

Question 5

Figure 2-14   Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two
-Refer to Figure 2-14. Which combination of points show production possibilities only achievable with improvements in technology or increases in resources?

Accepted Answer

A) Q, R, U, and V 
B) S and X 
C) T and W 
D) None of the above is correct. 
A) Q, R, U, and V 
B) S and X 
C) T and W 
D) None of the above is correct.

Question 6

The Council of Economic Advisers

Accepted Answer

A) was created in 1776 and consists of three members and a staff of several dozen economists. 
B) was created in 1776 and consists of thirty members and a staff of a dozen economists. 
C) was created in 1946 and consists of three members and a staff of several dozen economists. 
D) was created in 1946 and consists of thirty members and a staff of a dozen economists. 
A) was created in 1776 and consists of three members and a staff of several dozen economists. 
B) was created in 1776 and consists of thirty members and a staff of a dozen economists. 
C) was created in 1946 and consists of three members and a staff of several dozen economists. 
D) was created in 1946 and consists of thirty members and a staff of a dozen economists.

Question 7

Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

Accepted Answer

A) President Truman received input from so many economists that he only wanted one view from each. 
B) President Truman thought economists should analyze policies but not make or enforce them. 
C) Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies. 
D) A one-armed economist would conduct only positive analysis and no normative analysis. 
A) President Truman received input from so many economists that he only wanted one view from each. 
B) President Truman thought economists should analyze policies but not make or enforce them. 
C) Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies. 
D) A one-armed economist would conduct only positive analysis and no normative analysis.

Question 8

Which of the following is correct?

Accepted Answer

A) A horizontal line has an infinite slope, and a vertical line has a zero slope. 
B) A horizontal line has a slope of 1, and a vertical line has a slope of -1. 
C) A horizontal line has a zero slope, and a vertical line has an infinite slope. 
D) A horizontal line has a slope of -1, and a vertical line has a slope of 1. 
A) A horizontal line has an infinite slope, and a vertical line has a zero slope. 
B) A horizontal line has a slope of 1, and a vertical line has a slope of -1. 
C) A horizontal line has a zero slope, and a vertical line has an infinite slope. 
D) A horizontal line has a slope of -1, and a vertical line has a slope of 1.

Question 9

Figure 2-10
Panel (a)
Panel (b)    
-Refer to Figure 2-10, Panel (a). To gain 2 tractors by moving from point W to point V, society must sacrifice

Accepted Answer

A) 12 sofas. 
B) employment. 
C) efficiency. 
D) More than one of the above is correct. 
A) 12 sofas. 
B) employment. 
C) efficiency. 
D) More than one of the above is correct.

Question 10

Figure 2-9
Panel (a)
Panel (b)    
-Refer to Figure 2-9, Panel (a). The opportunity cost of moving from point K to point L is

Accepted Answer

A) 0 cups of coffee. 
B) 1 donut. 
C) 2 donuts. 
D) 4 cups of coffee. 
A) 0 cups of coffee. 
B) 1 donut. 
C) 2 donuts. 
D) 4 cups of coffee.

Question 11

Figure 2-3  
-Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Accepted Answer

government

Question 12

Figure 2-14   Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two.
-Refer to Figure 2-14. Which point(s) on the graph show unemployment of resources?

Accepted Answer

The answer of Figure 2-14   Consider the production...

Question 13

Efficiency is illustrated by

Accepted Answer

A) both the production possibilities frontier and the circular-flow diagram. 
B) neither the production possibilities frontier nor the circular-flow diagram. 
C) the production possibilities frontier only. 
D) the circular-flow diagram only. 
A) both the production possibilities frontier and the circular-flow diagram. 
B) neither the production possibilities frontier nor the circular-flow diagram. 
C) the production possibilities frontier only. 
D) the circular-flow diagram only.

Question 14

Which of the following is not correct?

Accepted Answer

A) Economists use some familiar words in specialized ways. 
B) Economics has its own language and its own way of thinking, but few other fields of study do. 
C) Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language. 
D) The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live. 
A) Economists use some familiar words in specialized ways. 
B) Economics has its own language and its own way of thinking, but few other fields of study do. 
C) Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language. 
D) The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live.

Question 15

Which of the following allows you to provide information about the relationship between two variables?

Accepted Answer

A) coordinate system. 
B) pie chart 
C) bar graph 
D) time-series graph 
A) coordinate system. 
B) pie chart 
C) bar graph 
D) time-series graph

Question 16

When two variables have a negative correlation,

Accepted Answer

A) when the x-variable decreases, the y-variable decreases. 
B) when the x-variable decreases, the y-variable increases. 
C) when the x-variable increases, the y-variable increases. 
D) More than one of the above is correct. 
A) when the x-variable decreases, the y-variable decreases. 
B) when the x-variable decreases, the y-variable increases. 
C) when the x-variable increases, the y-variable increases. 
D) More than one of the above is correct.

Question 17

On a bowed production possibilities frontier, as you move down along the curve

Accepted Answer

A) more of one good must be given up to receive one unit of the other good. 
B) the available production technology does not change. 
C) the opportunity cost increases. 
D) All of the above are correct. 
A) more of one good must be given up to receive one unit of the other good. 
B) the available production technology does not change. 
C) the opportunity cost increases. 
D) All of the above are correct.

Question 18

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

Accepted Answer

A) Inflation is more harmful to the economy than unemployment is. 
B) If welfare payments increase, the world will be a better place. 
C) Prices rise when the government prints too much money. 
D) When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency. 
A) Inflation is more harmful to the economy than unemployment is. 
B) If welfare payments increase, the world will be a better place. 
C) Prices rise when the government prints too much money. 
D) When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.

Question 19

Figure 2-5  
-Refer to Figure 2-5. This economy cannot currently produce 70 washers and 70 dryers because

Accepted Answer

A) it is not using all of its resources. 
B) it is not using the most efficient production process. 
C) it does not have the resources and technology to produce that level of output. 
D) All of the above are correct. 
A) it is not using all of its resources. 
B) it is not using the most efficient production process. 
C) it does not have the resources and technology to produce that level of output. 
D) All of the above are correct.

Question 20

Just like other scientific models, economic models simplify reality using

Accepted Answer

The answer of Just like other scientific models, economic models...

Exam 2: Thinking Like an Economist

When a government program is justified not on its merits but on the number of jobs it will create,

John Maynard Keynes described economics as an easy subject at which very few excel. Which of the following is not one of the reasons Keynes gave for why so few people excel at the study of economics?

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

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

The Council of Economic Advisers

Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

Which of the following is correct?

Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a). To gain 2 tractors by moving from point W to point V, society must sacrifice

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a). The opportunity cost of moving from point K to point L is

Figure 2-3 -Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two. -Refer to Figure 2-14. Which point(s) on the graph show unemployment of resources?

Efficiency is illustrated by

Which of the following is not correct?

Which of the following allows you to provide information about the relationship between two variables?

When two variables have a negative correlation,

On a bowed production possibilities frontier, as you move down along the curve

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

Figure 2-5 -Refer to Figure 2-5. This economy cannot currently produce 70 washers and 70 dryers because

Just like other scientific models, economic models simplify reality using

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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