Question 1

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A) households and firms are both buyers. 
B) households and firms are both sellers. 
C) households are buyers and firms are sellers. 
D) households are sellers and firms are buyers. 
A) households and firms are both buyers. 
B) households and firms are both sellers. 
C) households are buyers and firms are sellers. 
D) households are sellers and firms are buyers.

Question 2

When two variables have a negative correlation,

Accepted Answer

A) they tend to move in opposite directions. 
B) they tend to move in the same direction. 
C) one variable will move while the other remains constant. 
D) the variables' values are never positive. 
A) they tend to move in opposite directions. 
B) they tend to move in the same direction. 
C) one variable will move while the other remains constant. 
D) the variables' values are never positive.

Question 3

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 4

Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.

Accepted Answer

A) True 
 B)False

Question 5

Economists speaking like scientists make

Accepted Answer

A) normative statements. 
B) prescriptive statements. 
C) claims about how the world is. 
D) claims about how the world should be. 
A) normative statements. 
B) prescriptive statements. 
C) claims about how the world is. 
D) claims about how the world should be.

Question 6

Figure 2-4  
-Refer to Figure 2-4. Suppose this economy is producing at point W. Which of the following statements would best explain this situation?

Accepted Answer

A) The economy lacks the resources to produce at a more desirable point. 
B) The economy's available technology prevents it from producing at a more desirable point. 
C) There is widespread unemployment in the economy. 
D) Any of the above statements would be a legitimate explanation for this situation. 
A) The economy lacks the resources to produce at a more desirable point. 
B) The economy's available technology prevents it from producing at a more desirable point. 
C) There is widespread unemployment in the economy. 
D) Any of the above statements would be a legitimate explanation for this situation.

Question 7

When economists make

Accepted Answer

A) positive statements, they are speaking not as scientists but as policy advisers. 
B) positive statements, they are speaking not as scientists but as forecasters. 
C) normative statements, they are speaking not as scientists but as policy advisers. 
D) normative statements, they are speaking not as policy advisers but as model-builders. 
A) positive statements, they are speaking not as scientists but as policy advisers. 
B) positive statements, they are speaking not as scientists but as forecasters. 
C) normative statements, they are speaking not as scientists but as policy advisers. 
D) normative statements, they are speaking not as policy advisers but as model-builders.

Question 8

On a bowed production possibilities frontier, as you move down along the curve

Accepted Answer

A) more of one good must be given up to receive one unit of the other good. 
B) the available production technology does not change. 
C) the opportunity cost increases. 
D) All of the above are correct. 
A) more of one good must be given up to receive one unit of the other good. 
B) the available production technology does not change. 
C) the opportunity cost increases. 
D) All of the above are correct.

Question 9

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

Accepted Answer

A) goods and services 
B) land, labor, and capital 
C) dollars spent on goods and services 
D) wages, rent, and profit 
A) goods and services 
B) land, labor, and capital 
C) dollars spent on goods and services 
D) wages, rent, and profit

Question 10

An economic outcome is said to be efficient if the economy is

Accepted Answer

A) using all of the scarce resources it has available. 
B) conserving on resources, rather than using all available resources. 
C) getting all it can get from the scarce resources it has available. 
D) able to produce more than what is currently being produced without additional resources. 
A) using all of the scarce resources it has available. 
B) conserving on resources, rather than using all available resources. 
C) getting all it can get from the scarce resources it has available. 
D) able to produce more than what is currently being produced without additional resources.

Question 11

Figure 2-8
  
-Refer to Figure 2-8, Panel (a). The opportunity cost of one cup of coffee is highest when the economy produces

Accepted Answer

A) 0 cups of coffee. 
B) 2 cups of coffee. 
C) 4 cups of coffee. 
D) 6 cups of coffee. 
A) 0 cups of coffee. 
B) 2 cups of coffee. 
C) 4 cups of coffee. 
D) 6 cups of coffee.

Question 12

Table 2-5
 $$\begin{array} { | c | c | } 
\hline \text { Cooki=s (in dazens) } & \text { Caffe (inguund) } \
\hline 1000 & 0 \
\hline 800 & 350 \
\hline 600 & 650 \
\hline 400 & 800 \
\hline 200 & 1000 \
\hline 0 & 1150 \
\hline
\end{array}$$
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an increase in the production of coffee from 350 pounds to 650 pounds?

Accepted Answer

A) 400 dozen cookies 
B) 300 dozen cookies 
C) 200 dozen cookies 
D) 200 pounds of coffee 
A) 400 dozen cookies 
B) 300 dozen cookies 
C) 200 dozen cookies 
D) 200 pounds of coffee

Question 13

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 two 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 two points on a graph. 
D) two points on a graph that are of equal distance from the origin.

Question 14

Different values are not a reason for disagreement among economists.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Figure 2-2  
-Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, 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 17

In the simple circular-flow diagram, households

Accepted Answer

A) are the only decision makers. 
B) own the factors of production. 
C) are buyers of inputs. 
D) consume only some of the goods and services that firms produce. 
A) are the only decision makers. 
B) own the factors of production. 
C) are buyers of inputs. 
D) consume only some of the goods and services that firms produce.

Question 18

According to economist John Maynard Keynes, a great economist must also be a(n)

Accepted Answer

A) mathematician. 
B) historian. 
C) philosopher. 
D) All of the above are correct. 
A) mathematician. 
B) historian. 
C) philosopher. 
D) All of the above are correct.

Question 19

In the circular-flow diagram, the two types of markets in which households and firms interact are the markets for goods and services and the markets for factors of production.

Accepted Answer

A) True 
 B)False

Question 20

Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

In the markets for goods and services in the circular-flow diagram,

When two variables have a negative correlation,

The Council of Economic Advisers

Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.

Economists speaking like scientists make

Figure 2-4 -Refer to Figure 2-4. Suppose this economy is producing at point W. Which of the following statements would best explain this situation?

When economists make

On a bowed production possibilities frontier, as you move down along the curve

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

An economic outcome is said to be efficient if the economy is

Figure 2-8 -Refer to Figure 2-8, Panel (a). The opportunity cost of one cup of coffee is highest when the economy produces

Table 2-5 Cooki=s (in dazens) Caffe (inguund) 1000 0 800 350 600 650 400 800 200 1000 0 1150 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an increase in the production of coffee from 350 pounds to 650 pounds?

An ordered pair is

Different values are not a reason for disagreement among economists.

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

Figure 2-2 -Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

In the simple circular-flow diagram, households

According to economist John Maynard Keynes, a great economist must also be a(n)

In the circular-flow diagram, the two types of markets in which households and firms interact are the markets for goods and services and the markets for factors of production.

Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

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 Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

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