Question 1

When economists make positive statements, they are

Accepted Answer

A) speaking as scientists. 
B) speaking as policy advisers. 
C) making claims about how the world should be. 
D) revealing that they are very conservative in their views of how the world works. 
A) speaking as scientists. 
B) speaking as policy advisers. 
C) making claims about how the world should be. 
D) revealing that they are very conservative in their views of how the world works.

Question 2

The production possibilities frontier is used to illustrate some basic economic ideas, including

Accepted Answer

A) scarcity. 
B) opportunity cost. 
C) economic growth. 
D) All of the above are correct. 
A) scarcity. 
B) opportunity cost. 
C) economic growth. 
D) All of the above are correct.

Question 3

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

Accepted Answer

A) True 
 B)False

Question 4

John Maynard Keynes believed the ideas of economists to be

Accepted Answer

A) generally incorrect. 
B) powerful. 
C) academic and without practical application. 
D) rantings of madmen. 
A) generally incorrect. 
B) powerful. 
C) academic and without practical application. 
D) rantings of madmen.

Question 5

Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

Accepted Answer

A) the effects of rent control on the availability of housing in New York City 
B) the economic impact of tornadoes on cities and towns in Oklahoma 
C) how tariffs on shoes affects the shoe industry 
D) the effect on the economy of changes in the nation's unemployment rate 
A) the effects of rent control on the availability of housing in New York City 
B) the economic impact of tornadoes on cities and towns in Oklahoma 
C) how tariffs on shoes affects the shoe industry 
D) the effect on the economy of changes in the nation's unemployment rate

Question 6

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

Accepted Answer

A) If the price of a product decreases, people's willingness to buy that product will increase. 
B) Reducing tax rates on the wealthy would benefit the nation. 
C) If the national saving rate were to increase, so would the rate of economic growth. 
D) The elimination of trade restrictions would increase an economy's standard of living. 
A) If the price of a product decreases, people's willingness to buy that product will increase. 
B) Reducing tax rates on the wealthy would benefit the nation. 
C) If the national saving rate were to increase, so would the rate of economic growth. 
D) The elimination of trade restrictions would increase an economy's standard of living.

Question 7

Economic models omit many details to allow us to see what is truly important.

Accepted Answer

A) True 
 B)False

Question 8

Economists make assumptions to

Accepted Answer

A) mimic the methodologies employed by other scientists. 
B) minimize the number of experiments that yield no useful data. 
C) minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D) focus their thinking on the essence of the problem at hand. 
A) mimic the methodologies employed by other scientists. 
B) minimize the number of experiments that yield no useful data. 
C) minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D) focus their thinking on the essence of the problem at hand.

Question 9

For economists, historical episodes

Accepted Answer

A) are not worthy of study because they offer few insights into current economic events and problems. 
B) are not worthy of study because laboratory experiments provide more reliable data. 
C) are worthy of study because economists rely entirely on observation, rather than on theory. 
D) are worthy of study because they serve as valuable substitutes for laboratory experiments. 
A) are not worthy of study because they offer few insights into current economic events and problems. 
B) are not worthy of study because laboratory experiments provide more reliable data. 
C) are worthy of study because economists rely entirely on observation, rather than on theory. 
D) are worthy of study because they serve as valuable substitutes for laboratory experiments.

Question 10

One thing economists do to help them understand how the real world works is

Accepted Answer

A) make assumptions. 
B) ignore the past. 
C) try to capture every aspect of the real world in the models they construct. 
D) All of the above are correct. 
A) make assumptions. 
B) ignore the past. 
C) try to capture every aspect of the real world in the models they construct. 
D) All of the above are correct.

Question 11

Figure 2-14  
-Refer to Figure 2-14. Points A, B, and D represent feasible outcomes for this economy.

Accepted Answer

A) True 
 B)False

Question 12

Figure 2-8  
-Refer to Figure 2-8. To reach point L, the economy would have to

Accepted Answer

A) acquire more resources or experience a technological advance. 
B) begin using its available resources more efficiently than it is currently using them. 
C) shift resources away from the production of nails and toward the production of hammers. 
D) None of the above are correct; the economy will never be able to reach point L. 
A) acquire more resources or experience a technological advance. 
B) begin using its available resources more efficiently than it is currently using them. 
C) shift resources away from the production of nails and toward the production of hammers. 
D) None of the above are correct; the economy will never be able to reach point L.

Question 13

Macroeconomics is the study of

Accepted Answer

A) individual decision makers. 
B) international trade. 
C) economy-wide phenomena. 
D) markets for large products. 
A) individual decision makers. 
B) international trade. 
C) economy-wide phenomena. 
D) markets for large products.

Question 14

Normative statements are not

Accepted Answer

A) descriptive. 
B) prescriptive. 
C) claims about how the world should be. 
D) made by economists speaking as policy advisers. 
A) descriptive. 
B) prescriptive. 
C) claims about how the world should be. 
D) made by economists speaking as policy advisers.

Question 15

"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a

Accepted Answer

A) normative economic statement. 
B) positive economic statement. 
C) statement made by an economist working as a scientist. 
D) judgment based on evaluation of evidence, not values. 
A) normative economic statement. 
B) positive economic statement. 
C) statement made by an economist working as a scientist. 
D) judgment based on evaluation of evidence, not values.

Question 16

John Maynard Keynes referred to economics as an easy subject,

Accepted Answer

A) at which very few excel. 
B) but not as easy as philosophy or the pure sciences. 
C) which very few can enjoy. 
D) which deals primarily with common sense. 
A) at which very few excel. 
B) but not as easy as philosophy or the pure sciences. 
C) which very few can enjoy. 
D) which deals primarily with common sense.

Question 17

A normative economic statement such as "The minimum wage should be abolished"

Accepted Answer

A) would likely be made by an economist acting as a scientist. 
B) would require values and data to be evaluated. 
C) would require data but not values to be evaluated. 
D) could not be evaluated by economists acting as policy advisers. 
A) would likely be made by an economist acting as a scientist. 
B) would require values and data to be evaluated. 
C) would require data but not values to be evaluated. 
D) could not be evaluated by economists acting as policy advisers.

Question 18

Since 1946, the president of the United States has received guidance from a group comprised of three members and a staff of a few dozen economists known as the

Accepted Answer

Council of

Question 19

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

Accepted Answer

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

Question 20

Figure 2-1  
-Refer to Figure 2-1. Which arrow represents the flow of goods and services?

Accepted Answer

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

Exam 2: Thinking Like an Economist

When economists make positive statements, they are

The production possibilities frontier is used to illustrate some basic economic ideas, including

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

John Maynard Keynes believed the ideas of economists to be

Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

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

Economic models omit many details to allow us to see what is truly important.

Economists make assumptions to

For economists, historical episodes

One thing economists do to help them understand how the real world works is

Figure 2-14 -Refer to Figure 2-14. Points A, B, and D represent feasible outcomes for this economy.

Figure 2-8 -Refer to Figure 2-8. To reach point L, the economy would have to

Macroeconomics is the study of

Normative statements are not

"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a

John Maynard Keynes referred to economics as an easy subject,

A normative economic statement such as "The minimum wage should be abolished"

Since 1946, the president of the United States has received guidance from a group comprised of three members and a staff of a few dozen economists known as the

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

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of goods and services?

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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