Question 1

Graphs such as bar graphs are limited in that they

Accepted Answer

A) can only show variables that are positively related. 
B) can only show variables that have a negative correlation. 
C) provide information on only one variable. 
D) provide information on no more than two variables. 
A) can only show variables that are positively related. 
B) can only show variables that have a negative correlation. 
C) provide information on only one variable. 
D) provide information on no more than two variables.

Question 2

The goal of an economist who formulates new theories is to

Accepted Answer

A) provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works. 
B) provoke stimulating debate in scientific journals. 
C) demonstrate that economists, like other scientists, can formulate testable theories. 
D) contribute to an understanding of how the world works. 
A) provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works. 
B) provoke stimulating debate in scientific journals. 
C) demonstrate that economists, like other scientists, can formulate testable theories. 
D) contribute to an understanding of how the world works.

Question 3

Table 2-1. Production Possibilities for Toyland
  
-Refer to Table 2-1.Which of the following statements accurately describes the production possibilities for Toyland?

Accepted Answer

A) The opportunity cost of an additional 100 dolls is 50 fire trucks. 
B) The opportunity cost of an additional 100 dolls is 100 fire trucks. 
C) Toyland's production possibilities frontier is a straight, downward-sloping line. 
D) The opportunity cost of an additional 100 dolls increases as more dolls are produced. 
A) The opportunity cost of an additional 100 dolls is 50 fire trucks. 
B) The opportunity cost of an additional 100 dolls is 100 fire trucks. 
C) Toyland's production possibilities frontier is a straight, downward-sloping line. 
D) The opportunity cost of an additional 100 dolls increases as more dolls are produced.

Question 4

Economists at the Treasury Department

Accepted Answer

A) write the annual Economic Report of the President. 
B) provide Congress with the annual budget. 
C) enforce the U.S.antitrust laws. 
D) provide advice on tax policy to the President. 
A) write the annual Economic Report of the President. 
B) provide Congress with the annual budget. 
C) enforce the U.S.antitrust laws. 
D) provide advice on tax policy to the President.

Question 5

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

Accepted Answer

A) households and government. 
B) firms and government. 
C) the markets for goods and services and the financial markets. 
D) None of the above are correct. 
A) households and government. 
B) firms and government. 
C) the markets for goods and services and the financial markets. 
D) None of the above are correct.

Question 6

Suppose an economy produces two goods,food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 50 units of food and 30 machines.This year it experienced a technological advance in its machine-making industry.As a result,this year the society wants to produce 55 units of food and 30 machines.Which of the following statements is true?

Accepted Answer

A) Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 30. 
B) Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. 
C) In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. 
D) The technological advance reduced the amount of resources needed to produce 30 machines.These resources could be used to produce more food. 
A) Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 30. 
B) Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. 
C) In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. 
D) The technological advance reduced the amount of resources needed to produce 30 machines.These resources could be used to produce more food.

Question 7

The two loops in the circular-flow diagram represent

Accepted Answer

A) (i) the flow of goods and (ii) the flow of services. 
B) (i) the flow of dollars and (ii) other financial flows. 
C) (i) inputs into production processes and (ii) outputs from production processes. 
D) (i) the flows of inputs and outputs and (ii) the flow of dollars. 
A) (i) the flow of goods and (ii) the flow of services. 
B) (i) the flow of dollars and (ii) other financial flows. 
C) (i) inputs into production processes and (ii) outputs from production processes. 
D) (i) the flows of inputs and outputs and (ii) the flow of dollars.

Question 8

When an economist evaluates a positive statement,he or she is primarily

Accepted Answer

A) examining evidence. 
B) evaluating values as well as facts. 
C) acting as a policy adviser. 
D) concerned with making a sound decision on how the world ought to be. 
A) examining evidence. 
B) evaluating values as well as facts. 
C) acting as a policy adviser. 
D) concerned with making a sound decision on how the world ought to be.

Question 9

Suppose that someone makes the argument that because empty alcohol containers are found at many accidents,the containers cause accidents.This would be an example of

Accepted Answer

A) sound logic. 
B) reverse causality. 
C) omitted variables. 
D) slope. 
A) sound logic. 
B) reverse causality. 
C) omitted variables. 
D) slope.

Question 10

Figure 2-8
  
-Refer to Figure 2-8.If this economy puts all of its resources into the production of bathtubs it could produce

Accepted Answer

A) 20 barrels and 12 bathtubs. 
B) no barrels and 14 bathtubs. 
C) no barrels and 16 bathtubs. 
D) More information is required in order to make this determination. 
A) 20 barrels and 12 bathtubs. 
B) no barrels and 14 bathtubs. 
C) no barrels and 16 bathtubs. 
D) More information is required in order to make this determination.

Question 11

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 12

When examining two variables,one way to determine the direction of causality is to

Accepted Answer

A) assume the two variables move in the same direction. 
B) assume the two variables move in opposite directions. 
C) determine which variable moves first. 
D) determine which variable should be omitted. 
A) assume the two variables move in the same direction. 
B) assume the two variables move in opposite directions. 
C) determine which variable moves first. 
D) determine which variable should be omitted.

Question 13

In 2002,the Bush administration imposed temporary tariffs to protect domestic

Accepted Answer

A) steel producers. 
B) shoe producers. 
C) wine producers. 
D) clothing producers. 
A) steel producers. 
B) shoe producers. 
C) wine producers. 
D) clothing producers.

Question 14

Figure 2-10
  
-Refer to Figure 2-10.The movement from point B to point C could have been caused by

Accepted Answer

A) inflation. 
B) a change in income. 
C) a change in the price of roses. 
D) a change in the cost of producing roses. 
A) inflation. 
B) a change in income. 
C) a change in the price of roses. 
D) a change in the cost of producing roses.

Question 15

An ordered pair is

Accepted Answer

A) the process of checking calculations twice before placing them on a graph. 
B) two numbers that can be represented by a single point on a graph. 
C) two numbers that are represented by side-by-side points on a graph. 
D) two points on a graph that are of equal distance from the origin. 
A) the process of checking calculations twice before placing them on a graph. 
B) two numbers that can be represented by a single point on a graph. 
C) two numbers that are represented by side-by-side points on a graph. 
D) two points on a graph that are of equal distance from the origin.

Question 16

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Accepted Answer

A) controlled experiments that lead to the formulation of scientific theories. 
B) being in the right place at the right time. 
C) an idea whose time had come. 
D) the interplay between observation and theory in science. 
A) controlled experiments that lead to the formulation of scientific theories. 
B) being in the right place at the right time. 
C) an idea whose time had come. 
D) the interplay between observation and theory in science.

Question 17

Figure 2-10
  
-Refer to Figure 2-10.The movement from point A to point B is a(n)

Accepted Answer

A) shift of the curve. 
B) indication of a change in preferences for roses. 
C) movement along the curve. 
D) All of the above are correct. 
A) shift of the curve. 
B) indication of a change in preferences for roses. 
C) movement along the curve. 
D) All of the above are correct.

Question 18

Table 2-1. Production Possibilities for Toyland
  
-Refer to Table 2-1.What is the opportunity cost to Toyland of increasing the production of dolls from 200 to 300?

Accepted Answer

A) 200 fire trucks 
B) 150 fire trucks 
C) 100 fire trucks 
D) It is impossible to tell what the opportunity cost is since in this example costs are not constant. 
A) 200 fire trucks 
B) 150 fire trucks 
C) 100 fire trucks 
D) It is impossible to tell what the opportunity cost is since in this example costs are not constant.

Question 19

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 20

When constructing a production possibilities frontier,which of the following assumptions is not made?

Accepted Answer

A) The economy produces only two goods or two types of goods. 
B) Firms produce goods using factors of production. 
C) The technology available to firms is given. 
D) The quantities of the factors of production that are available are increasing over the relevant time period. 
A) The economy produces only two goods or two types of goods. 
B) Firms produce goods using factors of production. 
C) The technology available to firms is given. 
D) The quantities of the factors of production that are available are increasing over the relevant time period.

Exam 2: Thinking Like an Economist

Graphs such as bar graphs are limited in that they

The goal of an economist who formulates new theories is to

Table 2-1. Production Possibilities for Toyland -Refer to Table 2-1.Which of the following statements accurately describes the production possibilities for Toyland?

Economists at the Treasury Department

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

The two loops in the circular-flow diagram represent

When an economist evaluates a positive statement,he or she is primarily

Suppose that someone makes the argument that because empty alcohol containers are found at many accidents,the containers cause accidents.This would be an example of

Figure 2-8 -Refer to Figure 2-8.If this economy puts all of its resources into the production of bathtubs it could produce

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

When examining two variables,one way to determine the direction of causality is to

In 2002,the Bush administration imposed temporary tariffs to protect domestic

Figure 2-10 -Refer to Figure 2-10.The movement from point B to point C could have been caused by

An ordered pair is

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Figure 2-10 -Refer to Figure 2-10.The movement from point A to point B is a(n)

Table 2-1. Production Possibilities for Toyland -Refer to Table 2-1.What is the opportunity cost to Toyland of increasing the production of dolls from 200 to 300?

The Council of Economic Advisers

When constructing a production possibilities frontier,which of the following assumptions is not made?

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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