Question 1

Figure 2-21  
-Refer to Figure 2-21. Which of the following could be an omitted variable in the graph?

Accepted Answer

A) the price of snowblowers 
B) a change in consumers' incomes 
C) a change in the seasons 
D) All of the above are correct. 
A) the price of snowblowers 
B) a change in consumers' incomes 
C) a change in the seasons 
D) All of the above are correct.

Question 2

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

Accepted Answer

A) The federal government should decrease coverage of unemployment benefits to stimulate the economy out of the recession. 
B) Congress should agree on lower government spending for the next fiscal year. 
C) The Federal Reserve Bank should increase interest rates in response to the higher-than-expected inflation in the economy. 
D) The unemployment rate last year was lower than any other year in the last century. 
A) The federal government should decrease coverage of unemployment benefits to stimulate the economy out of the recession. 
B) Congress should agree on lower government spending for the next fiscal year. 
C) The Federal Reserve Bank should increase interest rates in response to the higher-than-expected inflation in the economy. 
D) The unemployment rate last year was lower than any other year in the last century.

Question 3

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 is(are) efficient production possibilities?

Accepted Answer

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

Question 4

According to the circular-flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

Accepted Answer

A) in the markets for factors of production exchanging labor for income. 
B) in the markets for factors of production exchanging flowers for revenue. 
C) in the markets for goods and services exchanging flowers for wages, rent, and profit. 
D) in the markets for goods and services exchanging labor for income. 
A) in the markets for factors of production exchanging labor for income. 
B) in the markets for factors of production exchanging flowers for revenue. 
C) in the markets for goods and services exchanging flowers for wages, rent, and profit. 
D) in the markets for goods and services exchanging labor for income.

Question 5

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram?

Accepted Answer

A) Dylan receives a salary for his work as a financial analyst for an investment firm. 
B) Kristin buys two business suits to wear to her job as a Chief Information Officer. 
C) Jim receives clean water in his home in exchange for paying his water bill. 
D) Caroline owns a nail salon and receives payments from her clients for her services. 
A) Dylan receives a salary for his work as a financial analyst for an investment firm. 
B) Kristin buys two business suits to wear to her job as a Chief Information Officer. 
C) Jim receives clean water in his home in exchange for paying his water bill. 
D) Caroline owns a nail salon and receives payments from her clients for her services.

Question 6

According to economist John Maynard Keynes, a great economist must also be a(n)

Accepted Answer

A) mathematician. 
B) historian. 
C) philosopher. 
D) All of the above are correct. 
A) mathematician. 
B) historian. 
C) philosopher. 
D) All of the above are correct.

Question 7

In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now?

Accepted Answer

A) The economy experiences economic growth. 
B) There is a technological advance in the toy industry, but the greeting card industry experiences no such advance. 
C) There is a technological advance in the greeting card industry, but the toy industry experiences no such advance. 
D) All of the above are correct. 
A) The economy experiences economic growth. 
B) There is a technological advance in the toy industry, but the greeting card industry experiences no such advance. 
C) There is a technological advance in the greeting card industry, but the toy industry experiences no such advance. 
D) All of the above are correct.

Question 8

Figure 2-4  
-Refer to Figure 2-4. This economy cannot produce at which point(s)?

Accepted Answer

A) Q 
B) Q, S 
C) Q, S, T 
D) S 
A) Q 
B) Q, S 
C) Q, S, T 
D) S

Question 9

Figure 2-9
Panel (a)
Panel (b)    
-Refer to Figure 2-9, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Accepted Answer

A) unemployment. 
B) an improvement in donut production technology. 
C) an improvement in coffee production technology. 
D) an improvement in both donut and coffee production technology. 
A) unemployment. 
B) an improvement in donut production technology. 
C) an improvement in coffee production technology. 
D) an improvement in both donut and coffee production technology.

Question 10

The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place.

Accepted Answer

A) True 
 B)False

Question 11

Almost all economists agree that tariffs and import quotas

Accepted Answer

A) reduces general economic welfare. 
B) increases general economic welfare. 
C) have no effect on general economic welfare. 
D) stimulate a less than fully employed economy. 
A) reduces general economic welfare. 
B) increases general economic welfare. 
C) have no effect on general economic welfare. 
D) stimulate a less than fully employed economy.

Question 12

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

Accepted Answer

A) Most people who study economics are not very bright. 
B) Good economists must possess a rare combination of gifts. 
C) Economics is quite boring; hence, people tend to lose interest in it before mastering it. 
D) Good thinkers become frustrated with economics because it does not make use of the scientific method. 
A) Most people who study economics are not very bright. 
B) Good economists must possess a rare combination of gifts. 
C) Economics is quite boring; hence, people tend to lose interest in it before mastering it. 
D) Good thinkers become frustrated with economics because it does not make use of the scientific method.

Question 13

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 14

Which of the following statements is correct about the extent of disagreement among economists?

Accepted Answer

A) There is a great deal of agreement among economists on virtually every economic issue. 
B) There is a great deal of agreement among economists on many important economic issues. 
C) All disagreements among economists are attributable to differences in their values. 
D) All disagreements among economists are attributable to the fact that different economists have different degrees of faith in the validity of alternative economic theories. 
A) There is a great deal of agreement among economists on virtually every economic issue. 
B) There is a great deal of agreement among economists on many important economic issues. 
C) All disagreements among economists are attributable to differences in their values. 
D) All disagreements among economists are attributable to the fact that different economists have different degrees of faith in the validity of alternative economic theories.

Question 15

Figure 2-14  
-Refer to Figure 2-14. Points B and C represent infeasible outcomes for this economy.

Accepted Answer

A) True 
 B)False

Question 16

Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

Accepted Answer

A) True 
 B)False

Question 17

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Accepted Answer

A) will never be able to produce. 
B) can produce using all available resources and technology. 
C) can produce using some portion, but not all, of its resources and technology. 
D) may be able to produce in the future with more resources and/or superior technology. 
A) will never be able to produce. 
B) can produce using all available resources and technology. 
C) can produce using some portion, but not all, of its resources and technology. 
D) may be able to produce in the future with more resources and/or superior technology.

Question 18

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

Accepted Answer

A) Americans deserve a cleaner environment. 
B) Reducing emissions reduces days missed from school due to asthma. 
C) All Americans are entitled to quality health care. 
D) Economic policies should focus on improving equality. 
A) Americans deserve a cleaner environment. 
B) Reducing emissions reduces days missed from school due to asthma. 
C) All Americans are entitled to quality health care. 
D) Economic policies should focus on improving equality.

Question 19

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.

Question 20

Figure 2-18
Relationship between Price and Restaurant Meals  
-Refer to Figure 2-18. The slope of the line containing points Y and Z is

Accepted Answer

A) -0.5. 
B) -1. 
C) -2. 
D) -4. 
A) -0.5. 
B) -1. 
C) -2. 
D) -4.

Exam 2: Thinking Like an Economist

Figure 2-21 -Refer to Figure 2-21. Which of the following could be an omitted variable in the graph?

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

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 is(are) efficient production possibilities?

According to the circular-flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram?

According to economist John Maynard Keynes, a great economist must also be a(n)

Figure 2-4 -Refer to Figure 2-4. This economy cannot produce at which point(s)?

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place.

Almost all economists agree that tariffs and import quotas

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

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

Which of the following statements is correct about the extent of disagreement among economists?

Figure 2-14 -Refer to Figure 2-14. Points B and C represent infeasible outcomes for this economy.

Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

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

A macroeconomist - as opposed to a microeconomist - would study

Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. The slope of the line containing points Y and Z is

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

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