Question 1

The slope of a line that passes through the points (20, 30) and (40, 14) is

Accepted Answer

A) -5/4. 
B) -4/5. 
C) 4/5. 
D) 5/4. 
A) -5/4. 
B) -4/5. 
C) 4/5. 
D) 5/4.

Question 2

Economic models

Accepted Answer

A) are people who act out the behavior of firms and households so that economists can study this behavior. 
B) are usually detailed replications of reality. 
C) incorporate simplifying assumptions that often contradict reality, but also help economists better understand reality. 
D) are useful to researchers but not to teachers because economic models omit many details of the real-world economy. 
A) are people who act out the behavior of firms and households so that economists can study this behavior. 
B) are usually detailed replications of reality. 
C) incorporate simplifying assumptions that often contradict reality, but also help economists better understand reality. 
D) are useful to researchers but not to teachers because economic models omit many details of the real-world economy.

Question 3

Figure 2-14  
-Refer to Figure 2-14. The opportunity cost of moving from point B to point D is 15 doghouses.

Accepted Answer

A) True 
 B)False

Question 4

Which of these terms are used interchangeably?

Accepted Answer

A) "goods and services" and "inputs" 
B) "goods and services" and "factors of production" 
C) "inputs" and "factors of production" 
D) "land, labor, and capital" and "goods and services" 
A) "goods and services" and "inputs" 
B) "goods and services" and "factors of production" 
C) "inputs" and "factors of production" 
D) "land, labor, and capital" and "goods and services"

Question 5

An economic outcome is said to be efficient if the economy is

Accepted Answer

A) using all of the scarce resources it has available. 
B) conserving on resources, rather than using all available resources. 
C) getting all it can get from the scarce resources it has available. 
D) able to produce more than what is currently being produced without additional resources. 
A) using all of the scarce resources it has available. 
B) conserving on resources, rather than using all available resources. 
C) getting all it can get from the scarce resources it has available. 
D) able to produce more than what is currently being produced without additional resources.

Question 6

Which of the following is not correct?

Accepted Answer

A) When developing economic theories, graphs offer a way to visually express ideas that might be less clear if described with equations or words. 
B) Graphs are one way of expressing the relationships among variables. 
C) When studying the relationship between two economic variables, graphs allow economists to draw indisputable conclusions about causes and effects. 
D) When analyzing economic data, graphs provide a powerful way of finding and interpreting patterns. 
A) When developing economic theories, graphs offer a way to visually express ideas that might be less clear if described with equations or words. 
B) Graphs are one way of expressing the relationships among variables. 
C) When studying the relationship between two economic variables, graphs allow economists to draw indisputable conclusions about causes and effects. 
D) When analyzing economic data, graphs provide a powerful way of finding and interpreting patterns.

Question 7

Microeconomics is the study of

Accepted Answer

A) how money affects the economy. 
B) how individual households and firms make decisions. 
C) how government affects the economy. 
D) how the economy as a whole works. 
A) how money affects the economy. 
B) how individual households and firms make decisions. 
C) how government affects the economy. 
D) how the economy as a whole works.

Question 8

The production possibilities frontier provides an illustration of the principle that

Accepted Answer

A) trade can make everyone better off. 
B) governments can sometimes improve market outcomes. 
C) people face trade-offs. 
D) people respond to incentives. 
A) trade can make everyone better off. 
B) governments can sometimes improve market outcomes. 
C) people face trade-offs. 
D) people respond to incentives.

Question 9

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

Accepted Answer

A) When the minimum wage is increased, unemployment is a predictable consequence. 
B) The income tax rate should be increased to offset the budget deficit. 
C) Increasing government spending is the best way to help the economy move out of a recession. 
D) More than one of the above are positive statements. 
A) When the minimum wage is increased, unemployment is a predictable consequence. 
B) The income tax rate should be increased to offset the budget deficit. 
C) Increasing government spending is the best way to help the economy move out of a recession. 
D) More than one of the above are positive statements.

Question 10

Figure 2-14  
-Refer to Figure 2-14. The opportunity cost of an additional doghouse increases as more doghouses are produced.

Accepted Answer

A) True 
 B)False

Question 11

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

Accepted Answer

A) the Department of Labor 
B) the Department of the Treasury 
C) the Congressional Budget Office 
D) the Council of Economic Advisers 
A) the Department of Labor 
B) the Department of the Treasury 
C) the Congressional Budget Office 
D) the Council of Economic Advisers

Question 12

When constructing a production possibilities frontier, which of the following assumptions is not made?

Accepted Answer

A) The economy produces only two goods or two types of goods. 
B) Firms produce goods using factors of production. 
C) The technology available to firms is given. 
D) The quantities of the factors of production that are available are increasing over the relevant time period. 
A) The economy produces only two goods or two types of goods. 
B) Firms produce goods using factors of production. 
C) The technology available to firms is given. 
D) The quantities of the factors of production that are available are increasing over the relevant time period.

Question 13

Which of the following is not correct about most economic models?

Accepted Answer

A) They are composed of equations and diagrams. 
B) They contribute very little to economists' understanding of the real world. 
C) They omit many features of the real-world economy. 
D) In constructing models, economists make assumptions. 
A) They are composed of equations and diagrams. 
B) They contribute very little to economists' understanding of the real world. 
C) They omit many features of the real-world economy. 
D) In constructing models, economists make assumptions.

Question 14

The circular-flow diagram is an example of

Accepted Answer

A) a laboratory experiment. 
B) an economic model. 
C) a mathematical model. 
D) All of the above are correct. 
A) a laboratory experiment. 
B) an economic model. 
C) a mathematical model. 
D) All of the above are correct.

Question 15

Another term for factors of production is

Accepted Answer

A) inputs. 
B) output. 
C) goods. 
D) services. 
A) inputs. 
B) output. 
C) goods. 
D) services.

Question 16

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

Accepted Answer

A) is rooted in the principle that people face tradeoffs. 
B) indicates that economists recognize that there are opportunity costs associated with policy decisions. 
C) confirms that economists are not suited to be presidential advisers. 
D) More than one of the above is correct. 
A) is rooted in the principle that people face tradeoffs. 
B) indicates that economists recognize that there are opportunity costs associated with policy decisions. 
C) confirms that economists are not suited to be presidential advisers. 
D) More than one of the above is correct.

Question 17

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

Accepted Answer

A) shift of the demand curve. 
B) indication of a change in preferences for grapes. 
C) movement along the demand curve. 
D) indication of an increase in income. 
A) shift of the demand curve. 
B) indication of a change in preferences for grapes. 
C) movement along the demand curve. 
D) indication of an increase in income.

Question 18

Figure 2-2  
-Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent

Accepted Answer

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

Question 19

In the circular-flow diagram,

Accepted Answer

A) factors of production flow from government to firms. 
B) goods and services flow from households to firms. 
C) income paid to the factors of production flows from firms to households. 
D) spending on goods and services flows from firms to households. 
A) factors of production flow from government to firms. 
B) goods and services flow from households to firms. 
C) income paid to the factors of production flows from firms to households. 
D) spending on goods and services flows from firms to households.

Question 20

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Accepted Answer

A) any misunderstandings in communicating the policy to the public. 
B) whether the policy will affect his standing among different groups in the electorate. 
C) what amendments will be suggested by members of Congress. 
D) All of the above are correct. 
A) any misunderstandings in communicating the policy to the public. 
B) whether the policy will affect his standing among different groups in the electorate. 
C) what amendments will be suggested by members of Congress. 
D) All of the above are correct.

Exam 2: Thinking Like an Economist

The slope of a line that passes through the points (20, 30) and (40, 14) is

Economic models

Figure 2-14 -Refer to Figure 2-14. The opportunity cost of moving from point B to point D is 15 doghouses.

Which of these terms are used interchangeably?

An economic outcome is said to be efficient if the economy is

Which of the following is not correct?

Microeconomics is the study of

The production possibilities frontier provides an illustration of the principle that

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

Figure 2-14 -Refer to Figure 2-14. The opportunity cost of an additional doghouse increases as more doghouses are produced.

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

When constructing a production possibilities frontier, which of the following assumptions is not made?

Which of the following is not correct about most economic models?

The circular-flow diagram is an example of

Another term for factors of production is

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

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

Figure 2-2 -Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent

In the circular-flow diagram,

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

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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