Question 1

For economists, historical episodes

Accepted Answer

A) are not worthy of study because they offer few insights into current economic events and problems. 
B) are not worthy of study because laboratory experiments provide more reliable data. 
C) are worthy of study because economists rely entirely on observation, rather than on theory. 
D) are worthy of study because they serve as valuable substitutes for laboratory experiments. 
A) are not worthy of study because they offer few insights into current economic events and problems. 
B) are not worthy of study because laboratory experiments provide more reliable data. 
C) are worthy of study because economists rely entirely on observation, rather than on theory. 
D) are worthy of study because they serve as valuable substitutes for laboratory experiments.

Question 2

Figure 2-12  
-Refer to Figure 2-12. Which of the following statements is true about point B for this economy?

Accepted Answer

A) Point B is currently unattainable. 
B) Point B is efficient. 
C) At point B, more pillows are produced than blankets. 
D) There is unemployment at point B. 
A) Point B is currently unattainable. 
B) Point B is efficient. 
C) At point B, more pillows are produced than blankets. 
D) There is unemployment at point B.

Question 3

Economists make assumptions to

Accepted Answer

A) provide issues for political discussion. 
B) make a complex world easier to understand. 
C) make it easier to teach economic concepts and analysis. 
D) create policy alternatives that are incomplete or subject to criticism. 
A) provide issues for political discussion. 
B) make a complex world easier to understand. 
C) make it easier to teach economic concepts and analysis. 
D) create policy alternatives that are incomplete or subject to criticism.

Question 4

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

Accepted Answer

A) the nation is producing beyond its capacity, so inflation will occur. 
B) the nation is not using all available resources or is using inferior technology or both. 
C) the nation is producing an efficient combination of goods. 
D) there will be a large opportunity cost if the nation tries to increase production of any good. 
A) the nation is producing beyond its capacity, so inflation will occur. 
B) the nation is not using all available resources or is using inferior technology or both. 
C) the nation is producing an efficient combination of goods. 
D) there will be a large opportunity cost if the nation tries to increase production of any good.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Accepted Answer

A) True 
 B)False

Question 7

Figure 2-8
  
-Refer to Figure 2-8, Panel (a). Production at point K is

Accepted Answer

A) possible and efficient. 
B) possible but inefficient. 
C) impossible but efficient. 
D) impossible and inefficient. 
A) possible and efficient. 
B) possible but inefficient. 
C) impossible but efficient. 
D) impossible and inefficient.

Question 8

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Accepted Answer

A) rotation of the curve. 
B) shift of the curve. 
C) movement along the curve. 
D) change in the slope of the curve. 
A) rotation of the curve. 
B) shift of the curve. 
C) movement along the curve. 
D) change in the slope of the curve.

Question 9

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

Accepted Answer

A) Most people who study economics are not very bright. 
B) Good economists must possess a rare combination of gifts. 
C) Economics is quite boring; hence, people tend to lose interest in it before mastering it. 
D) Good thinkers become frustrated with economics because it does not make use of the scientific method. 
A) Most people who study economics are not very bright. 
B) Good economists must possess a rare combination of gifts. 
C) Economics is quite boring; hence, people tend to lose interest in it before mastering it. 
D) Good thinkers become frustrated with economics because it does not make use of the scientific method.

Question 10

If an economy can produce more of one good without giving up any of another good, then the economy's current production point is inefficient.

Accepted Answer

A) True 
 B)False

Question 11

Economists speaking like policy advisers make

Accepted Answer

A) positive statements. 
B) descriptive statements. 
C) claims about how the world is. 
D) claims about how the world should be. 
A) positive statements. 
B) descriptive statements. 
C) claims about how the world is. 
D) claims about how the world should be.

Question 12

Another term for factors of production is

Accepted Answer

A) inputs. 
B) output. 
C) goods. 
D) services. 
A) inputs. 
B) output. 
C) goods. 
D) services.

Question 13

Table 2-2
The following table contains some production possibilities for an economy for a given year:
 $$\begin{array} { | c | c | } 
\hline \text { Cakes } & \text { Rolls (in dozens) } \
\hline 100 & 5000 \
\hline 120 & 4600 \
\hline 140 & ? \
\hline
\end{array}$$
-Refer to Table 2-2. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)  4400. 
B)  4300 
C)  4200. 
D)  4100. 
A)  4400. 
B)  4300 
C)  4200. 
D)  4100.

Question 14

Figure 2-6  
-Refer to Figure 2-6. If this economy devotes all of its resources to the production of clocks, then it will produce

Accepted Answer

A) 0 clocks and 35 candles. 
B) 10 clocks and 25 candles. 
C) 16 clocks and 0 candles. 
D) 16 clocks and 35 candles. 
A) 0 clocks and 35 candles. 
B) 10 clocks and 25 candles. 
C) 16 clocks and 0 candles. 
D) 16 clocks and 35 candles.

Question 15

The art in scientific thinking -- whether in chemistry, economics, or biology -- is

Accepted Answer

A) the design and implementation of laboratory experiments. 
B) knowing when to stop collecting data and when to start analyzing the data. 
C) deciding which assumptions to make. 
D) being able to mathematically model natural phenomena. 
A) the design and implementation of laboratory experiments. 
B) knowing when to stop collecting data and when to start analyzing the data. 
C) deciding which assumptions to make. 
D) being able to mathematically model natural phenomena.

Question 16

The essence of science is

Accepted Answer

A) the laboratory experiment. 
B) the scientific method. 
C) the study of nature, but not the study of society. 
D) All of the above are correct. 
A) the laboratory experiment. 
B) the scientific method. 
C) the study of nature, but not the study of society. 
D) All of the above are correct.

Question 17

Economists hold many positions advising the president and Congress including

Accepted Answer

A) being a member of the Council of Economic Advisers. 
B) helping to enforce antitrust laws at the Department of Justice. 
C) conducting research at the Congressional Budget Office. 
D) All of these are possible positions that economists hold. 
A) being a member of the Council of Economic Advisers. 
B) helping to enforce antitrust laws at the Department of Justice. 
C) conducting research at the Congressional Budget Office. 
D) All of these are possible positions that economists hold.

Question 18

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

Accepted Answer

A) True 
 B)False

Question 19

Figure 2-2  
-Refer to Figure 2-2. Carla regularly buys fruits and vegetables at a grocery store. Roberto regularly pays a lawn-care company to mow his lawn. If the flow of fruits and vegetables from the grocery store to Carla is represented by an arrow from Box C to Box B of this circular-flow diagram, then the money paid by Roberto to the lawn-care company is represented by an arrow

Accepted Answer

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

Question 20

"Prices rise when the quantity of money rises rapidly" is an example of a

Accepted Answer

A) negative economic statement. 
B) positive economic statement. 
C) normative economic statement. 
D) statement that contradicts one of the basic principles of economics. 
A) negative economic statement. 
B) positive economic statement. 
C) normative economic statement. 
D) statement that contradicts one of the basic principles of economics.

Exam 2: Thinking Like an Economist

For economists, historical episodes

Figure 2-12 -Refer to Figure 2-12. Which of the following statements is true about point B for this economy?

Economists make assumptions to

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

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

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Figure 2-8 -Refer to Figure 2-8, Panel (a). Production at point K is

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

If an economy can produce more of one good without giving up any of another good, then the economy's current production point is inefficient.

Economists speaking like policy advisers make

Another term for factors of production is

Table 2-2 The following table contains some production possibilities for an economy for a given year: Cakes Rolls (in dozens) 100 5000 120 4600 140 ? -Refer to Table 2-2. If the production possibilities frontier is bowed outward, then "?" could be

Figure 2-6 -Refer to Figure 2-6. If this economy devotes all of its resources to the production of clocks, then it will produce

The art in scientific thinking -- whether in chemistry, economics, or biology -- is

The essence of science is

Economists hold many positions advising the president and Congress including

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

"Prices rise when the quantity of money rises rapidly" is an example of a

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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