Exam 2: Thinking Like an Economist

In the markets for factors of production in the circular-flow diagram,

Which two groups of decision makers are included in the simple circular-flow diagram?

President Truman once said the wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Figure 2-6 -Refer to Figure 2-6. This economy has the ability to produce at which point(s)?

Macroeconomics is the study of economy-wide phenomena.

Duties of the Council of Economic Advisers include

Economists believe that production possibilities frontiers rarely have a bowed shape.

The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

Which of the following is not an example of a positive, as opposed to normative, statement?

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth.

In the simple circular-flow diagram,

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

Normative statements are

Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

Economists speaking like policy advisers make

Figure 2-9 -Refer to Figure 2-9, Panel (a). The movement from point C to point B could be caused by