Question 1

The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop?

Accepted Answer

A) wages 
B) land 
C) capital 
D) goods and services sold 
A) wages 
B) land 
C) capital 
D) goods and services sold

Question 2

Figure 2-17​  
-Refer to Figure 2-17. It is possible for this economy to produce 1000 shoes.

Accepted Answer

A) True 
 B)False

Question 3

Figure 2-10
Panel (a)
Panel (b)    
-Refer to Figure 2-10, Panel (a). The opportunity cost of one sofa is highest when the economy produces

Accepted Answer

A) 0 sofas. 
B) 12 sofas. 
C) 20 sofas. 
D) 24 sofas. 
A) 0 sofas. 
B) 12 sofas. 
C) 20 sofas. 
D) 24 sofas.

Question 4

Figure 2-7  
-Refer to Figure 2-7. This economy has the ability to produce at which point(s)?

Accepted Answer

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

Question 5

In the circular-flow diagram, which of the following items does not flow from households to firms?

Accepted Answer

A) revenue 
B) land, labor, and capital 
C) factors of production 
D) profit 
A) revenue 
B) land, labor, and capital 
C) factors of production 
D) profit

Question 6

Alfonso has noticed that increases in unemployment insurance claims are associated with recessions, and therefore he advocates limits on unemployment insurance so as to prevent recessions. Mary has noticed that most drug addicts once attended schools, and therefore she advocates getting rid of schools so as to prevent drug addiction.

Accepted Answer

A) The reasoning of both Alfonso and Mary suffers from the omitted variable problem. 
B) The reasoning of both Alfonso and Mary suffers from the reverse causality problem. 
C) Alfonso's reasoning suffers from the reverse causality problem, and Mary's reasoning suffers from the omitted variable problem. 
D) Mary's reasoning suffers from the reverse causality problem, and Alfonso's reasoning suffers from the omitted variable problem. 
A) The reasoning of both Alfonso and Mary suffers from the omitted variable problem. 
B) The reasoning of both Alfonso and Mary suffers from the reverse causality problem. 
C) Alfonso's reasoning suffers from the reverse causality problem, and Mary's reasoning suffers from the omitted variable problem. 
D) Mary's reasoning suffers from the reverse causality problem, and Alfonso's reasoning suffers from the omitted variable problem.

Question 7

A relatively flat demand curve indicates that

Accepted Answer

A) quantity demanded will adjust only slightly to a price change. 
B) quantity demanded will adjust significantly to a price change. 
C) quantity demanded will not adjust to a price change. 
D) the change in quantity demanded will exactly equal a change in price. 
A) quantity demanded will adjust only slightly to a price change. 
B) quantity demanded will adjust significantly to a price change. 
C) quantity demanded will not adjust to a price change. 
D) the change in quantity demanded will exactly equal a change in price.

Question 8

Figure 2-7  
-Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Accepted Answer

A) 0 engines and 40 tvs. 
B) 10 engines and 35 tvs. 
C) 40 engines and 0 tvs. 
D) 40 engines and 40 tvs. 
A) 0 engines and 40 tvs. 
B) 10 engines and 35 tvs. 
C) 40 engines and 0 tvs. 
D) 40 engines and 40 tvs.

Question 9

Table 2-6  
-Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of pizzas from 4,000 to 6,000?

Accepted Answer

The answer of Table 2-6  
-Refer to Table 2-6....

Question 10

In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

Accepted Answer

A) the effect of foreign direct investment on economic growth 
B) the effect of a sales tax on the cigarette industry 
C) the effect of an investment tax credit on the economy's capital stock 
D) the effect of a war on government spending 
A) the effect of foreign direct investment on economic growth 
B) the effect of a sales tax on the cigarette industry 
C) the effect of an investment tax credit on the economy's capital stock 
D) the effect of a war on government spending

Question 12

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 13

A pie chart is a way to display information regarding two variables.

Accepted Answer

A) True 
 B)False

Question 14

It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a correct statement about production possibilities frontiers?

Accepted Answer

A) An economy can produce only on the production possibilities frontier. 
B) An economy can produce at any point inside or outside a production possibilities frontier. 
C) An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. 
D) An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier. 
A) An economy can produce only on the production possibilities frontier. 
B) An economy can produce at any point inside or outside a production possibilities frontier. 
C) An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. 
D) An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.

Question 16

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. If this economy devotes all of its available resources to producing apples, then it will produce

Accepted Answer

A) 0 bushels of apples and 200 sweaters. 
B) 80 bushels of apples and 160 sweaters 
C) 180 bushels of apples and 200 sweaters. 
D) 180 bushels of apples and 0 sweaters. 
A) 0 bushels of apples and 200 sweaters. 
B) 80 bushels of apples and 160 sweaters 
C) 180 bushels of apples and 200 sweaters. 
D) 180 bushels of apples and 0 sweaters.

Question 17

Figure 2-14  
-Refer to Figure 2-14. When this economy produces 30 doghouses and 25 dishwashers there is full employment.

Accepted Answer

A) True 
 B)False

Question 18

Figure 2-2  
-Refer to Figure 2-2. If households are buyers in the markets represented by Box C of this circular-flow diagram, then

Accepted Answer

A) Box C must represent the markets for the factors of production. 
B) Box D must represent the markets for goods and services. 
C) firms are sellers in the markets represented by Box C. 
D) All of the above are correct. 
A) Box C must represent the markets for the factors of production. 
B) Box D must represent the markets for goods and services. 
C) firms are sellers in the markets represented by Box C. 
D) All of the above are correct.

Question 19

Historical episodes allow economists to illustrate and evaluate current economic theories.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) Following the most recent recession, the economy is recovering at a slower than usual pace. 
B) To stimulate the economy during the most recent recession, the federal government increased spending. 
C) In response to the most recent recession, the federal government extended the duration of unemployment benefits. 
D) The federal government's responses to the most recent recession were insufficient. 
A) Following the most recent recession, the economy is recovering at a slower than usual pace. 
B) To stimulate the economy during the most recent recession, the federal government increased spending. 
C) In response to the most recent recession, the federal government extended the duration of unemployment benefits. 
D) The federal government's responses to the most recent recession were insufficient.

Exam 2: Thinking Like an Economist

The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop?

Figure 2-17​ -Refer to Figure 2-17. It is possible for this economy to produce 1000 shoes.

Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a). The opportunity cost of one sofa is highest when the economy produces

Figure 2-7 -Refer to Figure 2-7. This economy has the ability to produce at which point(s)?

In the circular-flow diagram, which of the following items does not flow from households to firms?

A relatively flat demand curve indicates that

Figure 2-7 -Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Table 2-6 -Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of pizzas from 4,000 to 6,000?

In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers.

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

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?

A pie chart is a way to display information regarding two variables.

It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories.

Which of the following is a correct statement about production possibilities frontiers?

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. If this economy devotes all of its available resources to producing apples, then it will produce

Figure 2-14 -Refer to Figure 2-14. When this economy produces 30 doghouses and 25 dishwashers there is full employment.

Figure 2-2 -Refer to Figure 2-2. If households are buyers in the markets represented by Box C of this circular-flow diagram, then

Historical episodes allow economists to illustrate and evaluate current economic theories.

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

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Figure 2-17 -Refer to Figure 2-17. It is possible for this economy to produce 1000 shoes.