Question 1

Factors of production are

Accepted Answer

A) used to produce goods and services. 
B) also called output. 
C) abundant in most economies. 
D) assumed to be owned by firms in the circular-flow diagram. 
A) used to produce goods and services. 
B) also called output. 
C) abundant in most economies. 
D) assumed to be owned by firms in the circular-flow diagram.

Question 2

Which of the following statements is (are)correct?

Accepted Answer

A) Relative to other scientists, economists find it more difficult to generate useful data. 
B) Theory and observation are important in economics as well as in other sciences. 
C) To obtain data, economists often rely upon the natural experiments offered by history. 
D) All of the above are correct. 
A) Relative to other scientists, economists find it more difficult to generate useful data. 
B) Theory and observation are important in economics as well as in other sciences. 
C) To obtain data, economists often rely upon the natural experiments offered by history. 
D) All of the above are correct.

Question 3

The second number in any ordered pair is

Accepted Answer

A) the x-coordinate. 
B) the y-coordinate. 
C) quantity demanded. 
D) price. 
A) the x-coordinate. 
B) the y-coordinate. 
C) quantity demanded. 
D) price.

Question 4

Figure 2-2
  
-Refer to Figure 2-2.The figure represents a circular-flow diagram.If Box A represents firms,then which box represents households?

Accepted Answer

A) Box B 
B) Box C 
C) Box D 
D) Any one of the other boxes (B, C, or 
D)  could represent households. 
A) Box B 
B) Box C 
C) Box D 
D) Any one of the other boxes (B, C, or 
D)  could represent households.

Question 5

"Society would be better if the welfare system were abolished" is a normative statement,not a positive statement.

Accepted Answer

A) True 
 B)False

Question 6

The art in scientific thinking is

Accepted Answer

A) finding the right problem to study. 
B) deciding which assumptions to make. 
C) the ability to make an abstract subject easy to understand. 
D) not something in which economists have to be skilled. 
A) finding the right problem to study. 
B) deciding which assumptions to make. 
C) the ability to make an abstract subject easy to understand. 
D) not something in which economists have to be skilled.

Question 7

Factors of production are

Accepted Answer

A) the mathematical calculations firms make in determining their optimal production levels. 
B) social and political conditions that affect production. 
C) the physical relationships between economic inputs and outputs. 
D) inputs into the production process. 
A) the mathematical calculations firms make in determining their optimal production levels. 
B) social and political conditions that affect production. 
C) the physical relationships between economic inputs and outputs. 
D) inputs into the production process.

Question 8

When a relevant variable that is not named on either axis changes,

Accepted Answer

A) there will be a movement along the curve. 
B) the curve will rotate clockwise about the original point. 
C) the curve will be unaffected since only the variables on the axis affect the curve. 
D) the curve will shift. 
A) there will be a movement along the curve. 
B) the curve will rotate clockwise about the original point. 
C) the curve will be unaffected since only the variables on the axis affect the curve. 
D) the curve will shift.

Question 9

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Accepted Answer

A) the impact of minimum-wage laws on employment in the fast food industry 
B) the effect of changes in household saving rates on the growth rate of national income 
C) the impact of faster money growth on the rate of inflation 
D) a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth 
A) the impact of minimum-wage laws on employment in the fast food industry 
B) the effect of changes in household saving rates on the growth rate of national income 
C) the impact of faster money growth on the rate of inflation 
D) a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth

Question 10

Figure 2-2
  
-Refer to Figure 2-2.The figure represents a circular-flow diagram.If households are sellers in the markets represented by Box D,then

Accepted Answer

A) Box D must represent the markets for factors of production. 
B) Box C must represent the markets for goods and services. 
C) firms are buyers in the markets represented by Box D. 
D) All of the above are correct. 
A) Box D must represent the markets for factors of production. 
B) Box C must represent the markets for goods and services. 
C) firms are buyers in the markets represented by Box D. 
D) All of the above are correct.

Question 11

Which of the following is an example of a positive statement?

Accepted Answer

A) Prices rise when the government prints too much money. 
B) If welfare payments increase, the world will be a better place. 
C) Inflation is more harmful to the economy than is unemployment. 
D) When public policies are evaluated, the benefits to the economy of improved equity should be considered more important than the costs of reduced efficiency. 
A) Prices rise when the government prints too much money. 
B) If welfare payments increase, the world will be a better place. 
C) Inflation is more harmful to the economy than is unemployment. 
D) When public policies are evaluated, the benefits to the economy of improved equity should be considered more important than the costs of reduced efficiency.

Question 12

In the early 19th century,the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic.The villagers noticed that wherever doctors appeared,people died.Therefore,many doctors were chased away from villages,and some were even killed.This reaction to the correlation between doctors and deaths is most likely a problem of

Accepted Answer

A) omitted variables. 
B) reverse causality. 
C) government propaganda. 
D) medical incompetence. 
A) omitted variables. 
B) reverse causality. 
C) government propaganda. 
D) medical incompetence.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

An economic model can accurately explain how the economy is organized because it is designed to include,to the extent possible,all features of the real world.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an example of a normative statement?

Accepted Answer

A) If the price of a product decreases, people's willingness to buy that product will increase. 
B) Reducing tax rates on the wealthy would benefit the nation. 
C) If the national saving rate were to increase, so would the rate of economic growth. 
D) All of the above are correct. 
A) If the price of a product decreases, people's willingness to buy that product will increase. 
B) Reducing tax rates on the wealthy would benefit the nation. 
C) If the national saving rate were to increase, so would the rate of economic growth. 
D) All of the above are correct.

Question 16

Almost all economists agree that rent control

Accepted Answer

A) has no effect on the rental income of landlords. 
B) allows the market for housing to work more efficiently. 
C) adversely affects the availability and quality of housing. 
D) is a very inexpensive way to help the most needy members of society. 
A) has no effect on the rental income of landlords. 
B) allows the market for housing to work more efficiently. 
C) adversely affects the availability and quality of housing. 
D) is a very inexpensive way to help the most needy members of society.

Question 17

Figure 2-5
  
-Refer to Figure 2-5.The shift of the production possibilities frontier from A to B illustrates

Accepted Answer

A) simultaneous technological advances in the battery and bagel industries. 
B) a reallocation of resources away from the production of bagels and toward the production of batteries. 
C) economic growth. 
D) All of the above are correct. 
A) simultaneous technological advances in the battery and bagel industries. 
B) a reallocation of resources away from the production of bagels and toward the production of batteries. 
C) economic growth. 
D) All of the above are correct.

Question 18

Figure 2-2
  
-Refer to Figure 2-2.The figure represents a circular-flow diagram.Boxes A and B represent

Accepted Answer

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

Question 19

Which of the following statements is correct?

Accepted Answer

A) Microeconomics and macroeconomics are two separate divisions of economics, completely independent of each other. 
B) Microeconomists focus their attention on markets for small products, while macroeconomics focus their attention on markets for large products. 
C) Microeconomics and macroeconomics are two distinct but closely intertwined fields of economics. 
D) It is possible to understand macroeconomics without understanding microeconomics, but not vice versa. 
A) Microeconomics and macroeconomics are two separate divisions of economics, completely independent of each other. 
B) Microeconomists focus their attention on markets for small products, while macroeconomics focus their attention on markets for large products. 
C) Microeconomics and macroeconomics are two distinct but closely intertwined fields of economics. 
D) It is possible to understand macroeconomics without understanding microeconomics, but not vice versa.

Question 20

Sometimes economists disagree because their values differ.Which of the following instances best reflects this source of disagreement?

Accepted Answer

A) One economist believes the North American Free Trade Agreement (NAFT
A)  has led to a loss of American jobs; another economist disputes this claim. 
B) One economist believes that, when income taxes are cut, people will increase their spending; another economist believes that, when income taxes are cut, people will increase their saving. 
C) One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people. 
D) One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth. 
A) One economist believes the North American Free Trade Agreement (NAFT
A)  has led to a loss of American jobs; another economist disputes this claim. 
B) One economist believes that, when income taxes are cut, people will increase their spending; another economist believes that, when income taxes are cut, people will increase their saving. 
C) One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people. 
D) One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth.

Exam 2: Thinking Like an Economist

Factors of production are

Which of the following statements is (are)correct?

The second number in any ordered pair is

Figure 2-2 -Refer to Figure 2-2.The figure represents a circular-flow diagram.If Box A represents firms,then which box represents households?

"Society would be better if the welfare system were abolished" is a normative statement,not a positive statement.

The art in scientific thinking is

Factors of production are

When a relevant variable that is not named on either axis changes,

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Figure 2-2 -Refer to Figure 2-2.The figure represents a circular-flow diagram.If households are sellers in the markets represented by Box D,then

Which of the following is an example of a positive statement?

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

An economic model can accurately explain how the economy is organized because it is designed to include,to the extent possible,all features of the real world.

Which of the following is an example of a normative statement?

Almost all economists agree that rent control

Figure 2-5 -Refer to Figure 2-5.The shift of the production possibilities frontier from A to B illustrates

Figure 2-2 -Refer to Figure 2-2.The figure represents a circular-flow diagram.Boxes A and B represent

Which of the following statements is correct?

Sometimes economists disagree because their values differ.Which of the following instances best reflects this source of disagreement?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

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 Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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