Question 1

In the circular-flow diagram,one loop represents the flow of goods and services,and the other loop represents the flow of factors of production.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Figure 2-13
  
-Refer to Figure 2-13.Taking cause and effect into account,which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

Accepted Answer

A)  The less coffee a person drinks per day, the more time he can go without sleep. 
B)  There is no relationship between how much coffee per day a person drinks and how long he can go without sleep. 
C)  The more coffee a person drinks per day, the more time he can go without sleep. 
D)  The more coffee a person drinks per day, the less time he can go without sleep. 
A)  The less coffee a person drinks per day, the more time he can go without sleep. 
B)  There is no relationship between how much coffee per day a person drinks and how long he can go without sleep. 
C)  The more coffee a person drinks per day, the more time he can go without sleep. 
D)  The more coffee a person drinks per day, the less time he can go without sleep.

Question 4

Figure 2-14
  
-Refer to Figure 2-14.This economy fully employs its resources when it produces 35 dishwashers and zero doghouses.

Accepted Answer

A) True 
 B)False

Question 5

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 6

The Council of Economic Advisers

Accepted Answer

A)  was created in 1946. 
B)  advises the president of the United States on economic policy matters. 
C)  writes the annual Economic Report of the President. 
D)  All of the above are correct. 
A)  was created in 1946. 
B)  advises the president of the United States on economic policy matters. 
C)  writes the annual Economic Report of the President. 
D)  All of the above are correct.

Question 7

Figure 2-1
  
-Refer to Figure 2-1.Which arrow represents the flow of spending by households?

Accepted Answer

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

Question 8

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies,probably because

Accepted Answer

A)  economists have not yet convinced the general public that the policies are undesirable. 
B)  economists engage in positive analysis, not normative analysis. 
C)  economists have values that are different from the values of most non-economists. 
D)  economists' theories are not easily confirmed or refuted in laboratory analysis. 
A)  economists have not yet convinced the general public that the policies are undesirable. 
B)  economists engage in positive analysis, not normative analysis. 
C)  economists have values that are different from the values of most non-economists. 
D)  economists' theories are not easily confirmed or refuted in laboratory analysis.

Question 9

"Prices rise when the quantity of money rises rapidly" is an example of a

Accepted Answer

A)  negative economic statement. 
B)  positive economic statement. 
C)  normative economic statement. 
D)  statement that contradicts one of the basic principles of economics. 
A)  negative economic statement. 
B)  positive economic statement. 
C)  normative economic statement. 
D)  statement that contradicts one of the basic principles of economics.

Question 10

Economists hold many positions advising the president and Congress including

Accepted Answer

A)  being a member of the Council of Economic Advisers. 
B)  helping to enforce antitrust laws at the Department of Justice. 
C)  conducting research at the Congressional Budget Office. 
D)  All of these are possible positions that economists hold. 
A)  being a member of the Council of Economic Advisers. 
B)  helping to enforce antitrust laws at the Department of Justice. 
C)  conducting research at the Congressional Budget Office. 
D)  All of these are possible positions that economists hold.

Question 11

The second number in any ordered pair is

Accepted Answer

A)  the x-coordinate. 
B)  the y-coordinate. 
C)  the horizontal location of the point. 
D)  the slope. 
A)  the x-coordinate. 
B)  the y-coordinate. 
C)  the horizontal location of the point. 
D)  the slope.

Question 12

President Truman once said the 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 13

The y-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 14

An economy's production of two goods is efficient if

Accepted Answer

A)  all members of society consume equal portions of the goods. 
B)  the goods are produced using only some of society's available resources. 
C)  it is impossible to produce more of one good without producing less of the other. 
D)  the opportunity cost of producing more of one good is zero. 
A)  all members of society consume equal portions of the goods. 
B)  the goods are produced using only some of society's available resources. 
C)  it is impossible to produce more of one good without producing less of the other. 
D)  the opportunity cost of producing more of one good is zero.

Question 15

The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.

Accepted Answer

A) True 
 B)False

Question 16

One way to characterize the difference between positive statements and normative statements is as follows:

Accepted Answer

A)  Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future. 
B)  Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. 
C)  Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation. 
D)  Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements. 
A)  Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future. 
B)  Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. 
C)  Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation. 
D)  Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements.

Question 17

The art in scientific thinking -- whether in chemistry,economics,or biology -- is

Accepted Answer

A)  the design and implementation of laboratory experiments. 
B)  knowing when to stop collecting data and when to start analyzing the data. 
C)  deciding which assumptions to make. 
D)  being able to mathematically model natural phenomena. 
A)  the design and implementation of laboratory experiments. 
B)  knowing when to stop collecting data and when to start analyzing the data. 
C)  deciding which assumptions to make. 
D)  being able to mathematically model natural phenomena.

Question 18

Economists make assumptions to

Accepted Answer

A)  provide issues for political discussion. 
B)  make a complex world easier to understand. 
C)  make it easier to teach economic concepts and analysis. 
D)  create policy alternatives that are incomplete or subject to criticism. 
A)  provide issues for political discussion. 
B)  make a complex world easier to understand. 
C)  make it easier to teach economic concepts and analysis. 
D)  create policy alternatives that are incomplete or subject to criticism.

Question 19

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 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 policy advisers. 
A)  would likely be made by an economist acting as a scientist. 
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 policy advisers.

Question 20

Economists work both inside and outside the administrative branch of the U.S.government.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist.

In the circular-flow diagram,one loop represents the flow of goods and services,and the other loop represents the flow of factors of production.

When economists make positive statements,they are

Figure 2-13 -Refer to Figure 2-13.Taking cause and effect into account,which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

Figure 2-14 -Refer to Figure 2-14.This economy fully employs its resources when it produces 35 dishwashers and zero doghouses.

The Council of Economic Advisers

Figure 2-1 -Refer to Figure 2-1.Which arrow represents the flow of spending by households?

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies,probably because

"Prices rise when the quantity of money rises rapidly" is an example of a

Economists hold many positions advising the president and Congress including

The second number in any ordered pair is

President Truman once said the 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

The y-coordinate is the

An economy's production of two goods is efficient if

The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.

One way to characterize the difference between positive statements and normative statements is as follows:

The art in scientific thinking -- whether in chemistry,economics,or biology -- is

Economists make assumptions to

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

Economists work both inside and outside the administrative branch of the U.S.government.

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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