Exam 2: Thinking Like an Economist

Bill has noticed that increases in unemployment insurance claims are associated with recessions,and therefore advocates limits on unemployment insurance so as to prevent recessions.Martha has noticed that most drug addicts once attended schools,and therefore advocates getting rid of schools so as to prevent drug addiction.What do we know about the reasoning of Bill and Martha

Figure 2-5 -Refer to Figure 2-5.What most likely caused the shift of the production possibilities frontier from A to B

Figure 2-2 -Refer to Figure 2-2.What does the inner loop represent

What did John Maynard Keynes believe the ideas of economists to be

Why are historical episodes valuable to economists

The country of Econoland produces two goods:textbooks and widgets.Last year,it produced at a point inside its production possibilities frontier and currently it is operating at a point on the (same) production possibilities frontier.Which statement best explains the change

Figure 2-10 -Refer to Figure 2-10.What is the movement from point B to point C

In the factors of production market,how do households and firms interact

The country of Econoland produces two goods: textbooks and widgets.Last year,it produced 200 textbooks and 500 widgets.This year,it produced 250 textbooks and 600 widgets.Given no other information,which of the following could NOT explain the change

In a simple circular-flow diagram,firms own the factors of production and use them to produce goods and services.

What is a characteristic of a good theory

When economists are trying to explain the world they are acting as scientists,and when they are trying to improve it,they are policymakers.

What do good economic models do

Two economists,Adam and Joan,are discussing the possibility of substantially reforming the current federal tax system.Adam thinks the current system is fine,but Joan is in favour of reform.Which statement is the least likely explanation for the disagreement

Figure 2-6 -Refer to Figure 2-6.If this economy put all available resources into the production of bananas,how many could it produce

Which of the following statements are positive and which are normative a.The minimum wage creates unemployment among young and unskilled workers. b.The minimum wage rates should be increased. c.If the price of a product in a market decreases,other things equal,quantity supplied will increase. d.A little bit of inflation is worse for society than a little bit of unemployment. e.The price of bonds is inversely related to the interest rate. f.If consumer income increases,other things equal,the demand for automobiles will increase. g.The Canadian income distribution is not equitable. h.Canadian workers deserve more liberal unemployment benefits. i.If the money supply increases,interest rates will fall. j.Students who study more are better students.

In the simple circular-flow diagram,in which market are households sellers

Figure 2-6 -Refer to Figure 2-6.What was the most likely cause of the movement from point C to point D

What would be considered a topic of study in macroeconomics

What do almost all economists agree on about rent control