Question 1

Economic models are built with

Accepted Answer

A) recommendations concerning public policies. 
B) facts about the legal system. 
C) assumptions. 
D) statistical forecasts. 
A) recommendations concerning public policies. 
B) facts about the legal system. 
C) assumptions. 
D) statistical forecasts.

Question 2

When two variables move in opposite directions, the curve relating them is

Accepted Answer

A) upward sloping, and we say the variables are positively related. 
B) upward sloping, and we say the variables are negatively related. 
C) downward sloping, and we say the variables are positively related. 
D) downward sloping, and we say the variables are negatively related. 
A) upward sloping, and we say the variables are positively related. 
B) upward sloping, and we say the variables are negatively related. 
C) downward sloping, and we say the variables are positively related. 
D) downward sloping, and we say the variables are negatively related.

Question 3

If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

Accepted Answer

A) True 
 B)False

Question 4

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 ought to be abolished.
c.If the price of a product in a market decreases, then, other things equal, quantity demanded will increase.
d.A little bit of inflation is worse for society than a little bit of unemployment.
e.There is a tradeoff between inflation and unemployment in the short run. 
f. If consumer income increases, then, other things equal, the demand for automobiles will increase.g. The U.S. income distribution is not fair.h. U.S. workers deserve more liberal unemployment benefits.i. If interest rates increase, then investment will decrease.j. If welfare benefits were reduced, then the country would be better off.

Accepted Answer

a, c, e, f, and i ar

Question 5

Just like models constructed in other areas of science, economic models

Accepted Answer

A) incorporate assumptions that contradict reality. 
B) incorporate all details of the real world. 
C) complicate reality. 
D) avoid the use of diagrams and equations. 
A) incorporate assumptions that contradict reality. 
B) incorporate all details of the real world. 
C) complicate reality. 
D) avoid the use of diagrams and equations.

Question 6

You know an economist has crossed the line from scientist to policy adviser when he or she

Accepted Answer

A) claims that the problem at hand is widely misunderstood by non-economists. 
B) talks about the evidence. 
C) makes normative statements. 
D) makes a claim about how the world is. 
A) claims that the problem at hand is widely misunderstood by non-economists. 
B) talks about the evidence. 
C) makes normative statements. 
D) makes a claim about how the world is.

Question 7

Economists believe that production possibilities frontiers are often bowed because

Accepted Answer

A) trade-offs inevitably create unemployment. 
B) resources are not completely adaptable. 
C) opportunity costs are constant. 
D) of improvements in technology. 
A) trade-offs inevitably create unemployment. 
B) resources are not completely adaptable. 
C) opportunity costs are constant. 
D) of improvements in technology.

Question 8

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

Accepted Answer

A) the Department of Labor 
B) the Department of the Treasury 
C) the Congressional Budget Office 
D) the Council of Economic Advisers 
A) the Department of Labor 
B) the Department of the Treasury 
C) the Congressional Budget Office 
D) the Council of Economic Advisers

Question 9

Positive statements are descriptive, while normative statements are prescriptive.

Accepted Answer

A) True 
 B)False

Question 10

Figure 2-6  
-Refer to Figure 2-6. If this economy moved from point C to point F, then

Accepted Answer

A) it still would not be producing efficiently. 
B) there would be no gain in either candles or clocks. 
C) it would be producing more candles and more clocks than at point C. 
D) It is not possible for this economy to move from point C to point F without additional resources. 
A) it still would not be producing efficiently. 
B) there would be no gain in either candles or clocks. 
C) it would be producing more candles and more clocks than at point C. 
D) It is not possible for this economy to move from point C to point F without additional resources.

Question 11

When economists are trying to help improve the world, they are

Accepted Answer

A) in the realm of positive economics rather than normative economics. 
B) in the realm of macroeconomics rather than microeconomics. 
C) scientists. 
D) policy advisers. 
A) in the realm of positive economics rather than normative economics. 
B) in the realm of macroeconomics rather than microeconomics. 
C) scientists. 
D) policy advisers.

Question 12

Economic models

Accepted Answer

A) are not useful because they omit many real-world details. 
B) are usually composed of diagrams and equations. 
C) are useful because they do not omit any real-world details. 
D) are usually plastic representations of the economy. 
A) are not useful because they omit many real-world details. 
B) are usually composed of diagrams and equations. 
C) are useful because they do not omit any real-world details. 
D) are usually plastic representations of the economy.

Question 13

Economists usually have to make do with whatever data the world happens to give them.

Accepted Answer

A) True 
 B)False

Question 14

Policies such as rent control and trade barriers persist

Accepted Answer

A) because economists are about evenly divided as to the merits of those policies. 
B) because almost all economists agree that those policies have no discernible economic effects. 
C) because almost all economists agree that those policies are desirable. 
D) despite the fact that almost all economists agree that those policies are undesirable. 
A) because economists are about evenly divided as to the merits of those policies. 
B) because almost all economists agree that those policies have no discernible economic effects. 
C) because almost all economists agree that those policies are desirable. 
D) despite the fact that almost all economists agree that those policies are undesirable.

Question 15

Economists, like mathematicians, physicists, and biologists,

Accepted Answer

A) make use of the scientific method. 
B) try to address their subject with a scientist's objectivity. 
C) devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories. 
D) All of the above are correct. 
A) make use of the scientific method. 
B) try to address their subject with a scientist's objectivity. 
C) devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories. 
D) All of the above are correct.

Question 16

Historical episodes are

Accepted Answer

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

Question 17

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

Accepted Answer

@#IMG-DLM& This diagram should duplicate the essen

Question 18

In the ordered pair (10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.

Accepted Answer

A) True 
 B)False

Question 19

Figure 2-14  
-Refer to Figure 2-14. The curves shown are

Accepted Answer

A) supply curves. 
B) demand curves. 
C) preference curves. 
D) income-consumption curves. 
A) supply curves. 
B) demand curves. 
C) preference curves. 
D) income-consumption curves.

Question 20

Economists speaking like scientists make

Accepted Answer

A) positive statements. 
B) prescriptive statements. 
C) claims about how the world should be. 
D) More than one of the above is correct. 
A) positive statements. 
B) prescriptive statements. 
C) claims about how the world should be. 
D) More than one of the above is correct.

Exam 2: Thinking Like an Economist

Economic models are built with

When two variables move in opposite directions, the curve relating them is

If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

Just like models constructed in other areas of science, economic models

You know an economist has crossed the line from scientist to policy adviser when he or she

Economists believe that production possibilities frontiers are often bowed because

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

Positive statements are descriptive, while normative statements are prescriptive.

Figure 2-6 -Refer to Figure 2-6. If this economy moved from point C to point F, then

When economists are trying to help improve the world, they are

Economic models

Economists usually have to make do with whatever data the world happens to give them.

Policies such as rent control and trade barriers persist

Economists, like mathematicians, physicists, and biologists,

Historical episodes are

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

In the ordered pair (10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.

Figure 2-14 -Refer to Figure 2-14. The curves shown are

Economists speaking like scientists make

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

Filters