Exam 2: Thinking Like an Economist

Trade-offs are involved in most policy decisions.

Figure 2-10 ​ ​ ​ ​ ​ -Refer to Figure 2-10. When this economy produces 30 doghouses and 25 dishwashers there is full employment.

Figure 2-12 ​ ​ ​ ​ ​ ​ -Refer to Figure 2-12. What do the rectangles represent in the figure?

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.

Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

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

Points inside the production possibilities frontier represent inefficient levels of production.

In the simple-circular flow diagram, the flow of money from the firms to the markets for factors of production is called

Figure 2-11 ​ -Refer to Figure 2-11. The opportunity cost of producing an additional pair of shoes increases as more shoes are produced.

Which of the following is correct?

The inner loop of the circular-flow diagram represents the flow of inputs and outputs. Which of the following does not appear on the inner loop?

The point where both x and y are zero is known as the

"The US should not restrict employers from outsourcing work to foreign countries" is a normative statement.

Figure 2-4 Graph (a) Graph (b) -Refer to Figure 2-4, Graph (a). The opportunity cost of moving from point S to point R is

When economists disagree about whether the government should tax a household's income or its consumption, they are expressing a difference in

Figure 2-10 ​ ​ ​ ​ ​ -Refer to Figure 2-10. Points A, B, and D represent efficient outcomes for this economy.

Economists at which administrative department help formulate spending plans and regulatory policies?

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

Figure 2-11 ​ -Refer to Figure 2-11. This economy fully employs its resources when it produces 4000 shoes and zero t-shirts.