Question 1

Figure 2-2
  
-Refer to Figure 2-2.The figure represents a circular-flow diagram.If the owners of land,labor,and capital are represented by Box B,then

Accepted Answer

A) the government is represented by Box a. 
B) firms are represented by Box C. 
C) firms are represented by Box A. 
D) firms are sellers in Box B. 
A) the government is represented by Box a. 
B) firms are represented by Box C. 
C) firms are represented by Box A. 
D) firms are sellers in Box B.

Question 2

The design of tax policy is one of the responsibilities of economists who work at the

Accepted Answer

A) Council of Economic Advisers. 
B) Federal Reserve. 
C) Department of Treasury. 
D) Department of Labor. 
A) Council of Economic Advisers. 
B) Federal Reserve. 
C) Department of Treasury. 
D) Department of Labor.

Question 3

When economists make normative statements,they are

Accepted Answer

A) speaking as scientists. 
B) speaking as policy advisers. 
C) adhering very strictly to basic economic principles. 
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) adhering very strictly to basic economic principles. 
D) revealing that they are very conservative in their views of how the world works.

Question 4

Figure 2-9
  
-Refer to Figure 2-9.Cups of coffee per day and the hours that someone can go without sleep appear to have

Accepted Answer

A) a positive correlation. 
B) a negative correlation. 
C) a random correlation. 
D) no correlation. 
A) a positive correlation. 
B) a negative correlation. 
C) a random correlation. 
D) no correlation.

Question 5

Historical episodes are

Accepted Answer

A) valuable to economists, primarily because they allow economists to see how the science of economics has evolved. 
B) valuable to economists, primarily because they allow economists to evaluate economic theories of the present. 
C) not of concern to economists, since economics is about predicting the future; economics is not about dwelling on the past. 
D) not of concern to economists, since the exact circumstances of historical episodes are unlikely to be observed again. 
A) valuable to economists, primarily because they allow economists to see how the science of economics has evolved. 
B) valuable to economists, primarily because they allow economists to evaluate economic theories of the present. 
C) not of concern to economists, since economics is about predicting the future; economics is not about dwelling on the past. 
D) not of concern to economists, since the exact circumstances of historical episodes are unlikely to be observed again.

Question 6

Figure 2-2
  
-Refer to Figure 2-2.The figure represents a circular-flow diagram.Marsha works as an attorney for a corporation and is paid a salary in exchange for the legal services she performs.James owns office buildings and rents his buildings to companies in exchange for rent payments.If Marsha's income is represented by a flow of dollars from Box D to Box B,then James's income is represented by a flow of dollars

Accepted Answer

A) from Box A to Box C. 
B) from Box C to Box A. 
C) from Box C to Box B. 
D) from Box D to Box B. 
A) from Box A to Box C. 
B) from Box C to Box A. 
C) from Box C to Box B. 
D) from Box D to Box B.

Question 7

When an economy is operating inside its production possibilities frontier we know that

Accepted Answer

A) there are unused resources or inefficiencies in the economy. 
B) all of the economy's resources are fully employed. 
C) economic growth would have to occur in order for the economy to move to a point on the frontier. 
D) in order to produce more of one good, the economy would have to give up some of the other good. 
A) there are unused resources or inefficiencies in the economy. 
B) all of the economy's resources are fully employed. 
C) economic growth would have to occur in order for the economy to move to a point on the frontier. 
D) in order to produce more of one good, the economy would have to give up some of the other good.

Question 8

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 9

Which of the following concepts can not be illustrated by the production possibilities frontier?

Accepted Answer

A) efficiency 
B) opportunity cost 
C) equity 
D) tradeoffs 
A) efficiency 
B) opportunity cost 
C) equity 
D) tradeoffs

Question 10

In the markets for goods and services,

Accepted Answer

A) households provide firms with savings for investment. 
B) households provide firms with labor, land, and capital. 
C) firms provide households with output. 
D) the government provides firms with inputs for the production process. 
A) households provide firms with savings for investment. 
B) households provide firms with labor, land, and capital. 
C) firms provide households with output. 
D) the government provides firms with inputs for the production process.

Question 11

The x-coordinate in an ordered pair specifies the

Accepted Answer

A) diagonal location of the point. 
B) vertical location of the point. 
C) horizontal location of the point. 
D) quadrant location in which the point is located. 
A) diagonal location of the point. 
B) vertical location of the point. 
C) horizontal location of the point. 
D) quadrant location in which the point is located.

Question 12

Figure 2-6
  
-Refer to Figure 2-6.What is the opportunity cost to society of the movement from point A to point C?

Accepted Answer

A) 50 baseballs 
B) 100 baseballs 
C) 100 bananas 
D) 300 bananas 
A) 50 baseballs 
B) 100 baseballs 
C) 100 bananas 
D) 300 bananas

Question 13

Economists in which cabinet-level department help enforce antitrust laws?

Accepted Answer

A) Department of Labor 
B) Department of Justice 
C) Department of Treasury 
D) Department of Commerce 
A) Department of Labor 
B) Department of Justice 
C) Department of Treasury 
D) Department of Commerce

Question 14

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Accepted Answer

A) performing an experiment in an economic system. 
B) applying mathematical methods to economic analysis. 
C) analyzing available data. 
D) formulating theories about economic events. 
A) performing an experiment in an economic system. 
B) applying mathematical methods to economic analysis. 
C) analyzing available data. 
D) formulating theories about economic events.

Question 15

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 16

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 17

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

Accepted Answer

A) scarcity is a fact of life. 
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) an assumption that is made in constructing a production possibilities frontier is that tradeoffs are unimportant. 
A) scarcity is a fact of life. 
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) an assumption that is made in constructing a production possibilities frontier is that tradeoffs are unimportant.

Question 18

Which of the following is not a positive statement?

Accepted Answer

A) Higher gasoline prices will reduce gasoline consumption. 
B) Equity is more important than efficiency. 
C) Trade restrictions lower our standard of living. 
D) If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money. 
A) Higher gasoline prices will reduce gasoline consumption. 
B) Equity is more important than efficiency. 
C) Trade restrictions lower our standard of living. 
D) If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money.

Question 19

Duties of the Council of Economic Advisers include

Accepted Answer

A) advising the president and writing the annual Economic Report of the President. 
B) implementing the president's tax policies. 
C) tracking the behavior of the nation's money supply. 
D) All of the above are correct. 
A) advising the president and writing the annual Economic Report of the President. 
B) implementing the president's tax policies. 
C) tracking the behavior of the nation's money supply. 
D) All of the above are correct.

Question 20

Economists build economic models by

Accepted Answer

A) generating data. 
B) conducting controlled experiments in a lab. 
C) making assumptions. 
D) reviewing statistical forecasts. 
A) generating data. 
B) conducting controlled experiments in a lab. 
C) making assumptions. 
D) reviewing statistical forecasts.

Exam 2: Thinking Like an Economist

Figure 2-2 -Refer to Figure 2-2.The figure represents a circular-flow diagram.If the owners of land,labor,and capital are represented by Box B,then

The design of tax policy is one of the responsibilities of economists who work at the

When economists make normative statements,they are

Figure 2-9 -Refer to Figure 2-9.Cups of coffee per day and the hours that someone can go without sleep appear to have

Historical episodes are

When an economy is operating inside its production possibilities frontier we know that

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

Which of the following concepts can not be illustrated by the production possibilities frontier?

In the markets for goods and services,

The x-coordinate in an ordered pair specifies the

Figure 2-6 -Refer to Figure 2-6.What is the opportunity cost to society of the movement from point A to point C?

Economists in which cabinet-level department help enforce antitrust laws?

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

The x-coordinate is the

The y-coordinate is the

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

Which of the following is not a positive statement?

Duties of the Council of Economic Advisers include

Economists build economic models by

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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