Question 1

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Accepted Answer

A) True 
 B)False

Question 2

Alfonso has noticed that increases in unemployment insurance claims are associated with recessions,and therefore he advocates limits on unemployment insurance so as to prevent recessions.Mary has noticed that most drug addicts once attended schools,and therefore she advocates getting rid of schools so as to prevent drug addiction.

Accepted Answer

A)  The reasoning of both Alfonso and Mary suffers from the omitted variable problem. 
B)  The reasoning of both Alfonso and Mary suffers from the reverse causality problem. 
C)  Alfonso's reasoning suffers from the reverse causality problem, and Mary's reasoning suffers from the omitted variable problem. 
D)  Mary's reasoning suffers from the reverse causality problem, and Alfonso's reasoning suffers from the omitted variable problem. 
A)  The reasoning of both Alfonso and Mary suffers from the omitted variable problem. 
B)  The reasoning of both Alfonso and Mary suffers from the reverse causality problem. 
C)  Alfonso's reasoning suffers from the reverse causality problem, and Mary's reasoning suffers from the omitted variable problem. 
D)  Mary's reasoning suffers from the reverse causality problem, and Alfonso's reasoning suffers from the omitted variable problem.

Question 3

Figure 2-7
  
-Refer to Figure 2-7.For this economy,as more and more hammers are produced,the opportunity cost of an additional hammers produced,in terms of nails,

Accepted Answer

A)  remains constant. 
B)  increases. 
C)  decreases. 
D)  This cannot be determined from the graph. 
A)  remains constant. 
B)  increases. 
C)  decreases. 
D)  This cannot be determined from the graph.

Question 4

All scientific models,including economic models,simplify reality in order to improve our understanding of it.

Accepted Answer

A) True 
 B)False

Question 5

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 6

In the circular-flow diagram,payments for labor,land,and capital flow from firms to households through the markets for the factors of production.

Accepted Answer

A) True 
 B)False

Question 7

In the simple circular-flow diagram,households

Accepted Answer

A)  are the only decision makers. 
B)  own the factors of production. 
C)  are buyers of inputs. 
D)  consume only some of the goods and services that firms produce. 
A)  are the only decision makers. 
B)  own the factors of production. 
C)  are buyers of inputs. 
D)  consume only some of the goods and services that firms produce.

Question 8

Which of these statements about economic models is correct?

Accepted Answer

A)  For economists, economic models provide insights about the world. 
B)  Economic models are built with assumptions. 
C)  Economic models are often composed of equations and diagrams. 
D)  All of the above are correct. 
A)  For economists, economic models provide insights about the world. 
B)  Economic models are built with assumptions. 
C)  Economic models are often composed of equations and diagrams. 
D)  All of the above are correct.

Question 9

Who said,"The whole of science is nothing more than the refinement of everyday thinking"?

Accepted Answer

A)  Isaac Newton 
B)  Albert Einstein 
C)  Adam Smith 
D)  Benjamin Franklin 
A)  Isaac Newton 
B)  Albert Einstein 
C)  Adam Smith 
D)  Benjamin Franklin

Question 10

"Other things equal,an increase in supply causes a decrease in price" is a normative statement,not a positive statement.

Accepted Answer

A) True 
 B)False

Question 11

Good assumptions simplify a problem without substantially affecting the answer.

Accepted Answer

A) True 
 B)False

Question 12

The slope of a steep upward-sloping line will be a

Accepted Answer

A)  small positive number. 
B)  large positive number. 
C)  small negative number. 
D)  large negative number. 
A)  small positive number. 
B)  large positive number. 
C)  small negative number. 
D)  large negative number.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

Because it is difficult for economists to use experiments to generate data,they generally must

Accepted Answer

A)  do without data. 
B)  substitute assumptions for data when data are unavailable. 
C)  rely upon hypothetical data that were previously concocted by other economists. 
D)  use whatever data the world gives them. 
A)  do without data. 
B)  substitute assumptions for data when data are unavailable. 
C)  rely upon hypothetical data that were previously concocted by other economists. 
D)  use whatever data the world gives them.

Question 16

A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"

Accepted Answer

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

Question 17

The x-coordinate is the

Accepted Answer

A)  first number of an ordered pair and represents the point's horizontal location. 
B)  second number of an ordered pair and represents the point's horizontal location. 
C)  first number of an ordered pair and represents the point's vertical location. 
D)  second number of an ordered pair and represents the point's vertical location. 
A)  first number of an ordered pair and represents the point's horizontal location. 
B)  second number of an ordered pair and represents the point's horizontal location. 
C)  first number of an ordered pair and represents the point's vertical location. 
D)  second number of an ordered pair and represents the point's vertical location.

Question 18

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 19

The bowed shape of the production possibilities frontier can be explained by the fact that

Accepted Answer

A)  all resources are scarce. 
B)  economic growth is always occurring. 
C)  the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing. 
D)  the only way to get more of one good is to get less of the other. 
A)  all resources are scarce. 
B)  economic growth is always occurring. 
C)  the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing. 
D)  the only way to get more of one good is to get less of the other.

Question 20

Figure 2-14
  
-Refer to Figure 2-14.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.

Exam 2: Thinking Like an Economist.

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Figure 2-7 -Refer to Figure 2-7.For this economy,as more and more hammers are produced,the opportunity cost of an additional hammers produced,in terms of nails,

All scientific models,including economic models,simplify reality in order to improve our understanding of it.

In the circular-flow diagram,

In the circular-flow diagram,payments for labor,land,and capital flow from firms to households through the markets for the factors of production.

In the simple circular-flow diagram,households

Which of these statements about economic models is correct?

Who said,"The whole of science is nothing more than the refinement of everyday thinking"?

"Other things equal,an increase in supply causes a decrease in price" is a normative statement,not a positive statement.

Good assumptions simplify a problem without substantially affecting the answer.

The slope of a steep upward-sloping line will be a

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

A macroeconomist - as opposed to a microeconomist - would study

Because it is difficult for economists to use experiments to generate data,they generally must

A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"

The x-coordinate is the

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.

The bowed shape of the production possibilities frontier can be explained by the fact that

Figure 2-14 -Refer to Figure 2-14.The movement from point A to point B is a(n)

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.

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.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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