Question 1

In the circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 2

Two variables that have a positive correlation move in the same direction.

Accepted Answer

A) True 
 B)False

Question 3

Who would be more likely to study the effects of foreign competition on the accounting industry, a macroeconomist or a microeconomist?

Accepted Answer

The answer of Who would be more likely to study...

Question 4

In the circular-flow diagram, firms produce

Accepted Answer

A) goods and services using factors of production. 
B) output using inputs. 
C) factors of production using goods and services. 
D) Both (a) and (b) are correct. 
A) goods and services using factors of production. 
B) output using inputs. 
C) factors of production using goods and services. 
D) Both (a) and (b) are correct.

Question 5

Figure 2-22  
-Refer to Figure 2-22. How are price and quantity related in this graph?

Accepted Answer

negatively

Question 6

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 7

Which markets are represented in the simple circular-flow diagram?

Accepted Answer

A) markets for goods and services and markets for financial assets 
B) markets for factors of production and markets for financial assets 
C) markets for goods and services and markets for factors of production 
D) markets for goods and services and markets for imports and exports 
A) markets for goods and services and markets for financial assets 
B) markets for factors of production and markets for financial assets 
C) markets for goods and services and markets for factors of production 
D) markets for goods and services and markets for imports and exports

Question 8

Trade-offs are involved in most policy decisions.

Accepted Answer

A) True 
 B)False

Question 9

Is the following a positive or normative statement? The United States government should mandate that every citizen purchases health insurance.

Accepted Answer

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

Question 10

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

Accepted Answer

A) True 
 B)False

Question 11

An example of a price that changes only infrequently is the price of

Accepted Answer

A) stocks on the New York Stock Exchange. 
B) crude oil. 
C) residential real estate. 
D) magazines sold at newsstands. 
A) stocks on the New York Stock Exchange. 
B) crude oil. 
C) residential real estate. 
D) magazines sold at newsstands.

Question 12

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

Accepted Answer

A) Universal health care would be good for U.S. citizens. 
B) An increase in the cigarette tax would cause a decrease in the number of smokers. 
C) A decrease in the minimum wage would decrease unemployment. 
D) A law requiring the federal government to balance its budget would increase economic growth. 
A) Universal health care would be good for U.S. citizens. 
B) An increase in the cigarette tax would cause a decrease in the number of smokers. 
C) A decrease in the minimum wage would decrease unemployment. 
D) A law requiring the federal government to balance its budget would increase economic growth.

Question 13

When economists make

Accepted Answer

A) positive statements, they are speaking not as scientists but as policy advisers. 
B) positive statements, they are speaking not as scientists but as forecasters. 
C) normative statements, they are speaking not as scientists but as policy advisers. 
D) normative statements, they are speaking not as policy advisers but as model-builders. 
A) positive statements, they are speaking not as scientists but as policy advisers. 
B) positive statements, they are speaking not as scientists but as forecasters. 
C) normative statements, they are speaking not as scientists but as policy advisers. 
D) normative statements, they are speaking not as policy advisers but as model-builders.

Question 14

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Accepted Answer

A) a controlled experiment that lead to the formulation of a scientific theory. 
B) being in the right place at the right time. 
C) an idea whose time had come. 
D) the interplay between observation and theory in science. 
A) a controlled experiment that lead to the formulation of a scientific theory. 
B) being in the right place at the right time. 
C) an idea whose time had come. 
D) the interplay between observation and theory in science.

Question 15

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Accepted Answer

A) True 
 B)False

Question 16

Economists sometimes give conflicting advice because

Accepted Answer

A) graduate students in economics are encouraged to argue with each other. 
B) economists have different values and scientific judgment. 
C) economists acting as scientists do not like to agree with economists acting as policy advisers. 
D) economics is more of a belief system than a science. 
A) graduate students in economics are encouraged to argue with each other. 
B) economists have different values and scientific judgment. 
C) economists acting as scientists do not like to agree with economists acting as policy advisers. 
D) economics is more of a belief system than a science.

Question 17

The design of tax policy is one of the responsibilities of economists who work at the

Accepted Answer

A) Council of Economic Advisers. 
B) Federal Reserve. 
C) Department of the Treasury. 
D) Congressional Budget Office. 
A) Council of Economic Advisers. 
B) Federal Reserve. 
C) Department of the Treasury. 
D) Congressional Budget Office.

Question 18

The ordered pair that represents the origin on a graph is

Accepted Answer

A) (1, 1). 
B) (0, 0). 
C) (-1, -1). 
D) (  
)) 
A) (1, 1). 
B) (0, 0). 
C) (-1, -1). 
D) (  
))

Question 19

A positive economic statement such as "Pollution taxes decrease the quantity of pollution firms generate"

Accepted Answer

A) would likely be made by an economist acting as a policy adviser. 
B) would require values and data to be evaluated. 
C) would require data but not values to be evaluated. 
D) could not be evaluated by economists acting as scientists. 
A) would likely be made by an economist acting as a policy adviser. 
B) would require values and data to be evaluated. 
C) would require data but not values to be evaluated. 
D) could not be evaluated by economists acting as scientists.

Question 20

A macroeconomist - as opposed to a microeconomist - would study

Accepted Answer

A) the effects of rent control on housing in New York City. 
B) the effects of foreign competition on the US auto industry. 
C) the effects of borrowing by the federal government. 
D) the effects of raising the gasoline tax on transit ridership. 
A) the effects of rent control on housing in New York City. 
B) the effects of foreign competition on the US auto industry. 
C) the effects of borrowing by the federal government. 
D) the effects of raising the gasoline tax on transit ridership.

Exam 2: Thinking Like an Economist

In the circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Two variables that have a positive correlation move in the same direction.

Who would be more likely to study the effects of foreign competition on the accounting industry, a macroeconomist or a microeconomist?

In the circular-flow diagram, firms produce

Figure 2-22 -Refer to Figure 2-22. How are price and quantity related in this graph?

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

Which markets are represented in the simple circular-flow diagram?

Trade-offs are involved in most policy decisions.

Is the following a positive or normative statement? The United States government should mandate that every citizen purchases health insurance.

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

An example of a price that changes only infrequently is the price of

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

When economists make

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Economists sometimes give conflicting advice because

The design of tax policy is one of the responsibilities of economists who work at the

The ordered pair that represents the origin on a graph is

A positive economic statement such as "Pollution taxes decrease the quantity of pollution firms generate"

A macroeconomist - as opposed to a microeconomist - would study

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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