Question 1

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

Accepted Answer

A) True 
 B)False

Question 2

Normative conclusions

Accepted Answer

A) come from positive analysis alone. 
B) are based on ignorance of positive analysis. 
C) involve value judgments. 
D) reflect the economist's role as scientist. 
A) come from positive analysis alone. 
B) are based on ignorance of positive analysis. 
C) involve value judgments. 
D) reflect the economist's role as scientist.

Question 3

Trade-offs are involved in most policy decisions.

Accepted Answer

A) True 
 B)False

Question 4

Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

Accepted Answer

A) Isaac Newton 
B) Albert Einstein 
C) Adam Smith 
D) Benjamin Franklin 
A) Isaac Newton 
B) Albert Einstein 
C) Adam Smith 
D) Benjamin Franklin

Question 5

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 6

In the simple circular flow diagram, the flow of money from the markets for goods and services to the firms is called

Accepted Answer

A) spending. 
B) revenue. 
C) income. 
D) wages, rent, and profit. 
A) spending. 
B) revenue. 
C) income. 
D) wages, rent, and profit.

Question 7

Figure 2-14  
-Refer to Figure 2-14. It is possible for this economy to produce 45 doghouses and 30 dishwashers.

Accepted Answer

A) True 
 B)False

Question 8

Figure 2-16​  
-Refer to Figure 2-16. The opportunity cost of obtaining approximately 10 additional gadgets by moving from point C to point A is

Accepted Answer

A) 10 gadgets. 
B) 30 widgets 
C) 10 gadgets and 30 widgets. 
D) 0 gadgets. 
A) 10 gadgets. 
B) 30 widgets 
C) 10 gadgets and 30 widgets. 
D) 0 gadgets.

Question 9

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Accepted Answer

A) rotation of the curve. 
B) shift of the curve. 
C) movement along the curve. 
D) change in the slope of the curve. 
A) rotation of the curve. 
B) shift of the curve. 
C) movement along the curve. 
D) change in the slope of the curve.

Question 10

Analysis of data on workers and those looking for work is conducted by economists at the

Accepted Answer

A) Office of Management and Budget. 
B) Department of Labor. 
C) Congressional Budget Office. 
D) Department of the Treasury. 
A) Office of Management and Budget. 
B) Department of Labor. 
C) Congressional Budget Office. 
D) Department of the Treasury.

Question 11

Figure 2-17  
-Refer to Figure 2-17. The curves shown are

Accepted Answer

A) supply curves. 
B) demand curves. 
C) preference curves. 
D) income-consumption curves. 
A) supply curves. 
B) demand curves. 
C) preference curves. 
D) income-consumption curves.

Question 12

Which two groups of decision makers are included in the simple circular-flow diagram?

Accepted Answer

A) markets and government 
B) households and government 
C) firms and government 
D) households and firms 
A) markets and government 
B) households and government 
C) firms and government 
D) households and firms

Question 13

Figure 2-22  
-Refer to Figure 2-22. Given that price is measured on the vertical axis, quantity is measured on the horizontal axis, and that the curves are downward-sloping, what type of curves are depicted here?

Accepted Answer

The answer of Figure 2-22  
-Refer to Figure 2-22....

Question 14

Figure 2-17  
-Refer to Figure 2-17. The movement from point B to point C is a(n)

Accepted Answer

A) shift of the demand curve. 
B) movement along the demand curve. 
C) indication that the price of grapes has changed. 
D) indication that the costs incurred by firms that produce grapes have changed. 
A) shift of the demand curve. 
B) movement along the demand curve. 
C) indication that the price of grapes has changed. 
D) indication that the costs incurred by firms that produce grapes have changed.

Question 15

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

Accepted Answer

A) households provide firms with labor, land, and capital. 
B) households provide firms with savings for investment. 
C) firms provide households with goods and services. 
D) firms provide households with revenue. 
A) households provide firms with labor, land, and capital. 
B) households provide firms with savings for investment. 
C) firms provide households with goods and services. 
D) firms provide households with revenue.

Question 16

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

Accepted Answer

A) goods 
B) services 
C) capital 
D) profit 
A) goods 
B) services 
C) capital 
D) profit

Question 17

Figure 2-7  
-Refer to Figure 2-7. What is the opportunity cost of moving from point L to point M?

Accepted Answer

A) zero 
B) 15 tvs 
C) 20 engines and 15 tvs 
D) 20 engines 
A) zero 
B) 15 tvs 
C) 20 engines and 15 tvs 
D) 20 engines

Question 18

Economists build economic models by

Accepted Answer

A) generating data. 
B) conducting controlled experiments in a lab. 
C) making assumptions. 
D) reviewing statistical forecasts. 
A) generating data. 
B) conducting controlled experiments in a lab. 
C) making assumptions. 
D) reviewing statistical forecasts.

Question 19

Economists use some familiar terms in specialized ways

Accepted Answer

A) to make the subject sound more complex than it is. 
B) because every respectable field of study has its own language. 
C) to provide a new and useful way of thinking about the world. 
D) because it was too difficult to come up with new terms. 
A) to make the subject sound more complex than it is. 
B) because every respectable field of study has its own language. 
C) to provide a new and useful way of thinking about the world. 
D) because it was too difficult to come up with new terms.

Question 20

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.

Exam 2: Thinking Like an Economist

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

Normative conclusions

Trade-offs are involved in most policy decisions.

Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

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

In the simple circular flow diagram, the flow of money from the markets for goods and services to the firms is called

Figure 2-14 -Refer to Figure 2-14. It is possible for this economy to produce 45 doghouses and 30 dishwashers.

Figure 2-16​ -Refer to Figure 2-16. The opportunity cost of obtaining approximately 10 additional gadgets by moving from point C to point A is

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Analysis of data on workers and those looking for work is conducted by economists at the

Figure 2-17 -Refer to Figure 2-17. The curves shown are

Which two groups of decision makers are included in the simple circular-flow diagram?

Figure 2-22 -Refer to Figure 2-22. Given that price is measured on the vertical axis, quantity is measured on the horizontal axis, and that the curves are downward-sloping, what type of curves are depicted here?

Figure 2-17 -Refer to Figure 2-17. The movement from point B to point C is a(n)

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

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

Figure 2-7 -Refer to Figure 2-7. What is the opportunity cost of moving from point L to point M?

Economists build economic models by

Economists use some familiar terms in specialized ways

Which of the following is an example of a positive, as opposed to normative, 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 2-16 -Refer to Figure 2-16. The opportunity cost of obtaining approximately 10 additional gadgets by moving from point C to point A is