Question 1

The production possibilities frontier illustrates that it is not feasible for an economy to produce an output that is outside the frontier.

Accepted Answer

A) True 
 B)False

Question 2

Governments hire economic advisers because they know they will give them positive advice.

Accepted Answer

A) True 
 B)False

Question 3

The circular-flow diagram and the production possibilities frontier both illustrate such concepts as opportunity cost, economic growth and efficiency.

Accepted Answer

A) True 
 B)False

Question 4

Economists try to avoid looking at history in case it will unduly influence their judgment.

Accepted Answer

A) True 
 B)False

Question 5

Graph 2-9  
-Refer to Graph 2-9.In the graph, the curves shown are:

Accepted Answer

A) cost curves 
B) supply curves 
C) demand curves 
D) production possibilities frontiers 
A) cost curves 
B) supply curves 
C) demand curves 
D) production possibilities frontiers

Question 6

In the markets for goods and services, as in the markets for the factors of production, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 7

A survey of business, government and academic economists revealed widespread disagreement on ten propositions about economic policy.

Accepted Answer

A) True 
 B)False

Question 8

Graphs, charts and equations can be useful to:

Accepted Answer

A) represent normative statements 
B) represent economic concepts in a simple and clear way 
C) represent economic concepts to children 
D) represent mathematical concepts in a simple way 
A) represent normative statements 
B) represent economic concepts in a simple and clear way 
C) represent economic concepts to children 
D) represent mathematical concepts in a simple way

Question 9

The circular flow diagram illustrates the:

Accepted Answer

A) flow of goods and services from households to firms 
B) flow of spending on goods and services from households to firms 
C) flow of factors of production from firms to households 
D) flow of spending on goods and services flows from firms to households 
A) flow of goods and services from households to firms 
B) flow of spending on goods and services from households to firms 
C) flow of factors of production from firms to households 
D) flow of spending on goods and services flows from firms to households

Question 10

Graph 2-2  
-Refer to Graph 2-2.In the circular-flow diagram shown, which arrow shows the flow of the inputs for production?

Accepted Answer

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

Question 11

If Lauren builds a circular-flow diagram including markets for goods and services, markets for factors of production and firms, will the model be able to accurately represent a simple economy?

Accepted Answer

A) No, it is missing the government 
B) No, it is missing international trade 
C) No, it is missing households 
D) Yes 
A) No, it is missing the government 
B) No, it is missing international trade 
C) No, it is missing households 
D) Yes

Question 12

Economics differs from some of the natural sciences like physics because:

Accepted Answer

A) experimentation is difficult to perform on an economic system where the researcher is unable to control for the influence of many of the variables 
B) it is difficult to evaluate the results of an economic experiment 
C) physicists get much larger research grants than economists 
D) economists don't have economic laws to test 
A) experimentation is difficult to perform on an economic system where the researcher is unable to control for the influence of many of the variables 
B) it is difficult to evaluate the results of an economic experiment 
C) physicists get much larger research grants than economists 
D) economists don't have economic laws to test

Question 13

The circular-flow diagram has two loops to illustrate the flows of:

Accepted Answer

A) goods and the flow of dollars 
B) energy and wastes 
C) dollars and the flow of services 
D) dollars and the flow of goods and services 
A) goods and the flow of dollars 
B) energy and wastes 
C) dollars and the flow of services 
D) dollars and the flow of goods and services

Question 14

The demand curve demonstrates:

Accepted Answer

A) there is a fixed price of the product 
B) there is a cause and effect 
C) the coordinates of the tastes and preferences of consumers 
D) all of the above 
A) there is a fixed price of the product 
B) there is a cause and effect 
C) the coordinates of the tastes and preferences of consumers 
D) all of the above

Question 15

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Accepted Answer

A) True 
 B)False

Question 16

Table 2-1
 $\text { Production possibilities for Poland }$
$\begin{array}{|l|l|}
\hline \text { Vodka (l) } & \text { Potatoes (kg) } \
\hline 1000 & 0 \
\hline 850 & 400 \
\hline 650 & 760 \
\hline 430 & 900 \
\hline 175 & 1200 \
\hline 0 & 1700 \
\hline
\end{array}$
-Refer to Table 2-1.What is the most accurate statement about the opportunity cost of producing an additional 25 litres of vodka in Poland?

Accepted Answer

A) the opportunity cost of an additional 25 litres of vodka is 30kg of potatoes 
B) the opportunity cost of an additional 25 litres of vodka changes depending on how many potatoes are produced 
C) it is impossible to determine the opportunity cost of an additional 25 litres of vodka 
D) the opportunity cost of an additional 25 litres of vodka increases as more potatoes are produced 
A) the opportunity cost of an additional 25 litres of vodka is 30kg of potatoes 
B) the opportunity cost of an additional 25 litres of vodka changes depending on how many potatoes are produced 
C) it is impossible to determine the opportunity cost of an additional 25 litres of vodka 
D) the opportunity cost of an additional 25 litres of vodka increases as more potatoes are produced

Question 17

Graph 2-9  
-Refer to Graph 2-9.In the graph shown, the slope of the curve between points A and B is:

Accepted Answer

A) -2 
B) -1/2 
C) 1/2 
D) 2 
A) -2 
B) -1/2 
C) 1/2 
D) 2

Question 18

Points outside the production possibilities frontier represent inefficient outcomes for the economy.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) using all of the resources it has available, which means producing on the production possibilities frontier 
B) conserving resources and not using all it has, which means producing on the production possibilities frontier 
C) using all of the resources it has available, which means producing inside the production possibilities frontier 
D) conserving resources and not using all it has, which means producing inside the production possibilities frontier 
A) using all of the resources it has available, which means producing on the production possibilities frontier 
B) conserving resources and not using all it has, which means producing on the production possibilities frontier 
C) using all of the resources it has available, which means producing inside the production possibilities frontier 
D) conserving resources and not using all it has, which means producing inside the production possibilities frontier

Question 20

In constructing models, economists must:

Accepted Answer

A) employ simplifying assumptions 
B) include as much detail as possible 
C) use very complex mathematical equations 
D) use very large datasets 
A) employ simplifying assumptions 
B) include as much detail as possible 
C) use very complex mathematical equations 
D) use very large datasets

Exam 2: Thinking Like an Economist

The production possibilities frontier illustrates that it is not feasible for an economy to produce an output that is outside the frontier.

Governments hire economic advisers because they know they will give them positive advice.

The circular-flow diagram and the production possibilities frontier both illustrate such concepts as opportunity cost, economic growth and efficiency.

Economists try to avoid looking at history in case it will unduly influence their judgment.

Graph 2-9 -Refer to Graph 2-9.In the graph, the curves shown are:

In the markets for goods and services, as in the markets for the factors of production, households are buyers and firms are sellers.

A survey of business, government and academic economists revealed widespread disagreement on ten propositions about economic policy.

Graphs, charts and equations can be useful to:

The circular flow diagram illustrates the:

Graph 2-2 -Refer to Graph 2-2.In the circular-flow diagram shown, which arrow shows the flow of the inputs for production?

If Lauren builds a circular-flow diagram including markets for goods and services, markets for factors of production and firms, will the model be able to accurately represent a simple economy?

Economics differs from some of the natural sciences like physics because:

The circular-flow diagram has two loops to illustrate the flows of:

The demand curve demonstrates:

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Graph 2-9 -Refer to Graph 2-9.In the graph shown, the slope of the curve between points A and B is:

Points outside the production possibilities frontier represent inefficient outcomes for the economy.

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

In constructing models, economists must:

Ten Lessons From 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

Application: 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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