Question 1

When two variables move in the same direction, the curve relating them is

Accepted Answer

A) upward sloping, and we say the variables are positively related. 
B) upward sloping, and we say the variables are negatively related. 
C) downward sloping, and we say the variables are positively related. 
D) downward sloping, and we say the variables are negatively related. 
A) upward sloping, and we say the variables are positively related. 
B) upward sloping, and we say the variables are negatively related. 
C) downward sloping, and we say the variables are positively related. 
D) downward sloping, and we say the variables are negatively related.

Question 2

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

Accepted Answer

A) True 
 B)False

Question 3

Figure 2-9
Panel (a)
Panel (b)    
-Refer to Figure 2-9, Panel (a). The movement from point M to point K could be caused by

Accepted Answer

A) an advance in production technology. 
B) an improvement in efficiency. 
C) economic growth. 
D) unemployment. 
A) an advance in production technology. 
B) an improvement in efficiency. 
C) economic growth. 
D) unemployment.

Question 4

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 is producing 1050 units of food and 52 machines. Which of the following events could not explain the increase in output?

Accepted Answer

A) a reduction in unemployment 
B) an increase in available labor 
C) an improvement in technology 
D) Any of these events could explain the increase in output. 
A) a reduction in unemployment 
B) an increase in available labor 
C) an improvement in technology 
D) Any of these events could explain the increase in output.

Question 5

In the circular-flow diagram,

Accepted Answer

A) taxes flow from households to firms, and transfer payments flow from firms to households. 
B) income payments flow from firms to households, and sales revenue flows from households to firms. 
C) resources flow from firms to households, and goods and services flow from households to firms. 
D) inputs and outputs flow in the same direction as the flow of dollars, from firms to households. 
A) taxes flow from households to firms, and transfer payments flow from firms to households. 
B) income payments flow from firms to households, and sales revenue flows from households to firms. 
C) resources flow from firms to households, and goods and services flow from households to firms. 
D) inputs and outputs flow in the same direction as the flow of dollars, from firms to households.

Question 6

Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik

Accepted Answer

A) hold different normative views about the tax system. 
B) disagree about the validity of a positive theory. 
C) have a fundamental misunderstanding of the tax system. 
D) More than one of the above is correct. 
A) hold different normative views about the tax system. 
B) disagree about the validity of a positive theory. 
C) have a fundamental misunderstanding of the tax system. 
D) More than one of the above is correct.

Question 7

Economists may disagree about the validity of alternative positive theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 8

Different values are not a reason for disagreement among economists.

Accepted Answer

A) True 
 B)False

Question 9

Figure 2-2  
-Refer to Figure 2-2. Boxes A and B of this circular-flow diagram represent

Accepted Answer

A) firms and households. 
B) households and government. 
C) the markets for goods and services and the markets for financial assets. 
D) the markets for goods and the markets for services. 
A) firms and households. 
B) households and government. 
C) the markets for goods and services and the markets for financial assets. 
D) the markets for goods and the markets for services.

Question 10

The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

Accepted Answer

A) True 
 B)False

Question 11

If an economy can produce more of one good without giving up any of another good, then the economy's current production point is inefficient.

Accepted Answer

A) True 
 B)False

Question 12

In the ordered pair (10,30), 10 is the y-coordinate and 30 is the z-coordinate.

Accepted Answer

A) True 
 B)False

Question 13

The use of the coordinate system allows

Accepted Answer

A) for the display of the flows of dollars, goods and services, and factors of production in an economic system. 
B) for the display of how labor and other resources are organized in the production process. 
C) for the display of two variables on a single graph. 
D) for the creation of pie charts and bar graphs. 
A) for the display of the flows of dollars, goods and services, and factors of production in an economic system. 
B) for the display of how labor and other resources are organized in the production process. 
C) for the display of two variables on a single graph. 
D) for the creation of pie charts and bar graphs.

Question 14

Figure 2-5  
-Refer to Figure 2-5. It is not possible for this economy to produce at point

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
A) A. 
B) B. 
C) C. 
D) D.

Question 15

Which of the following statements about models is correct?

Accepted Answer

A) The more details a model includes, the better the model. 
B) Models assume away irrelevant details. 
C) Models cannot be used to explain how the economy functions. 
D) Models cannot be used to make predictions. 
A) The more details a model includes, the better the model. 
B) Models assume away irrelevant details. 
C) Models cannot be used to explain how the economy functions. 
D) Models cannot be used to make predictions.

Question 16

In the markets for goods and services in the circular flow diagram, households act as

Accepted Answer

The answer of In the markets for goods and services...

Question 17

When an economist evaluates a positive statement, he or she is primarily

Accepted Answer

A) examining evidence. 
B) acting as a scientist. 
C) concerned with verifying how the world is. 
D) All of the above are correct. 
A) examining evidence. 
B) acting as a scientist. 
C) concerned with verifying how the world is. 
D) All of the above are correct.

Question 18

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not held constant when looking at an individual's demand curve?

Accepted Answer

A) income 
B) price 
C) preferences 
D) the availability of alternative goods 
A) income 
B) price 
C) preferences 
D) the availability of alternative goods

Question 20

Suppose an economist advises a city's mayor to begin charging drivers a fee to drive on a busy highway during congested times. The mayor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the scenario?

Accepted Answer

A) This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons. 
B) This is a common occurrence. The policymaker usually disregards an economist's advice because they do not believe it is the most efficient policy. 
C) This is an unlikely occurrence. Most of the time, policymakers follow the advice of economists and institute the most efficient policies. 
D) This would never happen. Policymakers always follow the advice of economists. 
A) This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons. 
B) This is a common occurrence. The policymaker usually disregards an economist's advice because they do not believe it is the most efficient policy. 
C) This is an unlikely occurrence. Most of the time, policymakers follow the advice of economists and institute the most efficient policies. 
D) This would never happen. Policymakers always follow the advice of economists.

Exam 2: Thinking Like an Economist

When two variables move in the same direction, the curve relating them is

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a). The movement from point M to point K could be caused by

In the circular-flow diagram,

Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik

Economists may disagree about the validity of alternative positive theories about how the world works.

Different values are not a reason for disagreement among economists.

Figure 2-2 -Refer to Figure 2-2. Boxes A and B of this circular-flow diagram represent

The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

If an economy can produce more of one good without giving up any of another good, then the economy's current production point is inefficient.

In the ordered pair (10,30), 10 is the y-coordinate and 30 is the z-coordinate.

The use of the coordinate system allows

Figure 2-5 -Refer to Figure 2-5. It is not possible for this economy to produce at point

Which of the following statements about models is correct?

In the markets for goods and services in the circular flow diagram, households act as

When an economist evaluates a positive statement, he or she is primarily

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Which of the following is not held constant when looking at an individual's demand curve?

Suppose an economist advises a city's mayor to begin charging drivers a fee to drive on a busy highway during congested times. The mayor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the scenario?

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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