Exam 2: Thinking Like an Economist

The Council of Economic Advisers' Economic Report of the President discusses recent developments in the economy and presents the council's analysis of current policy issues.

Economists hold many positions advising the president and Congress including

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

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.

"Minimum wage laws result in unemployment" is a normative statement, while "the minimum wage should be higher" is a positive statement.

Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1050 units of food and 47 machines. Which of the following statements is correct?

The circular-flow diagram is a

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. The opportunity cost of moving from point U to point R is

Economists speaking like scientists make

A statement describing how the world should be

In the markets for the factors of production in the circular-flow diagram,

Positive statements can be evaluated using data alone, but normative statements cannot.

The most common data for testing economic theories come from

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

While the scientific method is applicable to studying natural sciences, it is not applicable to studying a nation's economy.

Suppose that someone makes the argument that because empty alcohol containers are found at many accidents, the containers cause accidents. This would be an example of

Positive statements are descriptive, while normative statements are prescriptive.

Joe and Fred are economists. Joe thinks that the wealthiest 10% of the US population should be taxed a rate higher than the rest of society because they can better afford it. Fred thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred

Figure 2-16​ -Refer to Figure 2-16. The opportunity cost of obtaining 20 additional widgets by moving from point C to point D is

Figure 2-14 -Refer to Figure 2-14. This economy fully employs its resources when it produces 35 dishwashers and zero doghouses.