Question 1

Graphs such as bar graphs and pie charts are limited in that they

Accepted Answer

A) can only show variables that are positively related. 
B) can only show variables that have a negative correlation. 
C) provide information on only one variable. 
D) provide information on no more than two variables. 
A) can only show variables that are positively related. 
B) can only show variables that have a negative correlation. 
C) provide information on only one variable. 
D) provide information on no more than two variables.

Question 2

Economists have helped modify the debate over the environment

Accepted Answer

A) by pointing out that nature is invaluable. 
B) by focusing discussion on issues of resource allocation. 
C) by lobbying Congress for acid rain legislation. 
D) by arguing against tradeable permits for pollution. 
A) by pointing out that nature is invaluable. 
B) by focusing discussion on issues of resource allocation. 
C) by lobbying Congress for acid rain legislation. 
D) by arguing against tradeable permits for pollution.

Question 3

The scientific method is the dispassionate development and testing of theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is correct?

Accepted Answer

A) Economists almost always find it easy to conduct experiments in order to test their theories. 
B) Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C) Economics is a social science rather than a true science because it cannot employ the scientific method. 
D) Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history. 
A) Economists almost always find it easy to conduct experiments in order to test their theories. 
B) Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C) Economics is a social science rather than a true science because it cannot employ the scientific method. 
D) Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history.

Question 5

For an economist, the idea of making assumptions is regarded generally as a

Accepted Answer

A) bad idea, since doing so leads to the omission of important ideas and variables from economic models. 
B) bad idea, since doing so invariably leads to data-collection problems. 
C) good idea, since doing so helps to simplify the complex world and make it easier to understand. 
D) good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand. 
A) bad idea, since doing so leads to the omission of important ideas and variables from economic models. 
B) bad idea, since doing so invariably leads to data-collection problems. 
C) good idea, since doing so helps to simplify the complex world and make it easier to understand. 
D) good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.

Question 6

For economists, substitutes for laboratory experiments often come in the form of

Accepted Answer

A) natural experiments offered by history. 
B) untested theories. 
C) "rules of thumb" and other such conveniences. 
D) reliance upon the wisdom of elders in the economics profession. 
A) natural experiments offered by history. 
B) untested theories. 
C) "rules of thumb" and other such conveniences. 
D) reliance upon the wisdom of elders in the economics profession.

Question 7

Figure 2-8
  
-Refer to Figure 2-8, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Accepted Answer

A) unemployment. 
B) an improvement in donut production technology. 
C) an improvement in coffee production technology. 
D) an improvement in both donut and coffee production technology. 
A) unemployment. 
B) an improvement in donut production technology. 
C) an improvement in coffee production technology. 
D) an improvement in both donut and coffee production technology.

Question 8

In the circular-flow diagram,

Accepted Answer

A) profit flows from households to firms. 
B) labor flows from households to firms. 
C) services flow from households to firms. 
D) All of the above are correct. 
A) profit flows from households to firms. 
B) labor flows from households to firms. 
C) services flow from households to firms. 
D) All of the above are correct.

Question 9

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Accepted Answer

A) Indiadesh decreased unemployment. 
B) Indiadesh experienced an improvement in textile-making technology. 
C) Indiadesh experienced an improvement in computer-making technology. 
D) Indiadesh experienced a reduction in resources. 
A) Indiadesh decreased unemployment. 
B) Indiadesh experienced an improvement in textile-making technology. 
C) Indiadesh experienced an improvement in computer-making technology. 
D) Indiadesh experienced a reduction in resources.

Question 10

"The US should not restrict employers from outsourcing work to foreign countries" is a normative statement.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is correct?

Accepted Answer

A) Few economic models incorporate assumptions. 
B) Different economic models employ different sets of assumptions. 
C) Good economic models attempt to mimic reality as closely as possible. 
D) Economic models, to be accepted, must be tested by conducting experiments. 
A) Few economic models incorporate assumptions. 
B) Different economic models employ different sets of assumptions. 
C) Good economic models attempt to mimic reality as closely as possible. 
D) Economic models, to be accepted, must be tested by conducting experiments.

Question 12

Which of the following is an example of using the scientific method with a natural experiment?

Accepted Answer

A) Measuring how long it takes a marble to fall from a ten story building. 
B) Comparing plant growth with and without a soil additive. 
C) Tracking the price of oil when a war in the Middle East interrupts the flow of crude oil. 
D) Observing the reaction when two chemicals are mixed together. 
A) Measuring how long it takes a marble to fall from a ten story building. 
B) Comparing plant growth with and without a soil additive. 
C) Tracking the price of oil when a war in the Middle East interrupts the flow of crude oil. 
D) Observing the reaction when two chemicals are mixed together.

Question 13

A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"

Accepted Answer

A) would likely be made by an economist acting as a policy advisor. 
B) would require values and data in order to be evaluated. 
C) would require data but not values in order to be evaluated. 
D) could not be evaluated by economists acting as scientists. 
A) would likely be made by an economist acting as a policy advisor. 
B) would require values and data in order to be evaluated. 
C) would require data but not values in order to be evaluated. 
D) could not be evaluated by economists acting as scientists.

Question 14

In constructing models, economists

Accepted Answer

A) leave out equations, since equations and models tend to contradict one another. 
B) ignore the long run, since models are useful only for short-run analysis. 
C) sometimes make assumptions that are contrary to features of the real world. 
D) try to include every feature of the economy. 
A) leave out equations, since equations and models tend to contradict one another. 
B) ignore the long run, since models are useful only for short-run analysis. 
C) sometimes make assumptions that are contrary to features of the real world. 
D) try to include every feature of the economy.

Question 15

Economic models omit many details to allow us to see what is truly important.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is an example of a positive, as opposed to normative, statement?

Accepted Answer

A) Americans deserve a cleaner environment. 
B) Reducing emissions reduces days missed from school due to asthma. 
C) All Americans are entitled to quality health care. 
D) Economic policies should focus on improving equality. 
A) Americans deserve a cleaner environment. 
B) Reducing emissions reduces days missed from school due to asthma. 
C) All Americans are entitled to quality health care. 
D) Economic policies should focus on improving equality.

Question 17

A production possibilities frontier can shift outward if

Accepted Answer

A) government increases the amount of money in the economy. 
B) there is a technological improvement. 
C) resources are shifted from the production of one good to the production of the other good. 
D) the economy abandons inefficient production methods in favor of efficient production methods. 
A) government increases the amount of money in the economy. 
B) there is a technological improvement. 
C) resources are shifted from the production of one good to the production of the other good. 
D) the economy abandons inefficient production methods in favor of efficient production methods.

Question 18

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

Accepted Answer

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

Question 19

A duty of economists at the Department of Labor is to

Accepted Answer

A) analyze data on workers. 
B) schedule federal holidays. 
C) enforce the nation's antitrust laws. 
D) All of the above are correct. 
A) analyze data on workers. 
B) schedule federal holidays. 
C) enforce the nation's antitrust laws. 
D) All of the above are correct.

Question 20

Figure 2-9
  
-Refer to Figure 2-9, Panel (a). Production is

Accepted Answer

A) possible at points A, B, C, and D, but efficient only at points A, C, and D. 
B) possible at points A, B, C, and D, but efficient only at point B. 
C) possible at points A, C, D, and F, but efficient only at points A, C, and D. 
D) possible at points A, C, D, and F, but efficient only at point F. 
A) possible at points A, B, C, and D, but efficient only at points A, C, and D. 
B) possible at points A, B, C, and D, but efficient only at point B. 
C) possible at points A, C, D, and F, but efficient only at points A, C, and D. 
D) possible at points A, C, D, and F, but efficient only at point F.

Exam 2: Thinking Like an Economist

Graphs such as bar graphs and pie charts are limited in that they

Economists have helped modify the debate over the environment

The scientific method is the dispassionate development and testing of theories about how the world works.

Which of the following statements is correct?

For an economist, the idea of making assumptions is regarded generally as a

For economists, substitutes for laboratory experiments often come in the form of

Figure 2-8 -Refer to Figure 2-8, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

In the circular-flow diagram,

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

"The US should not restrict employers from outsourcing work to foreign countries" is a normative statement.

Which of the following statements is correct?

Which of the following is an example of using the scientific method with a natural experiment?

A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"

In constructing models, economists

Economic models omit many details to allow us to see what is truly important.

Which of the following statements is an example of a positive, as opposed to normative, statement?

A production possibilities frontier can shift outward if

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

A duty of economists at the Department of Labor is to

Figure 2-9 -Refer to Figure 2-9, Panel (a). Production is

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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