Question 1

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

Accepted Answer

A) True 
 B)False

Question 2

Economists regard events from the past as

Accepted Answer

A) irrelevant, since history is unlikely to repeat itself. 
B) of limited interest, since those events seldom provide any useful economic data. 
C) interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories. 
D) interesting and valuable, since those events are capable of helping us to understand the past, the present, and the future. 
A) irrelevant, since history is unlikely to repeat itself. 
B) of limited interest, since those events seldom provide any useful economic data. 
C) interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories. 
D) interesting and valuable, since those events are capable of helping us to understand the past, the present, and the future.

Question 3

The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) the effect of foreign direct investment on economic growth 
B) the effect of a sales tax on the cigarette industry 
C) the effect of an investment tax credit on the economy's capital stock 
D) the effect of a war on government spending 
A) the effect of foreign direct investment on economic growth 
B) the effect of a sales tax on the cigarette industry 
C) the effect of an investment tax credit on the economy's capital stock 
D) the effect of a war on government spending

Question 5

In the circular-flow diagram, factors of production are the goods and services produced by firms.

Accepted Answer

A) True 
 B)False

Question 6

Figure 2-7  
-Refer to Figure 2-7. Point K represents an outcome in which

Accepted Answer

A) production is inefficient. 
B) some of the economy's resources are unemployed. 
C) the economy is using all of its resources to produce hammers. 
D) the economy is using all of its nails to produce hammers. 
A) production is inefficient. 
B) some of the economy's resources are unemployed. 
C) the economy is using all of its resources to produce hammers. 
D) the economy is using all of its nails to produce hammers.

Question 7

Economists at the U.S. Department of the Treasury help design U.S. coins and paper money.

Accepted Answer

A) True 
 B)False

Question 8

Table 2-3
Production Possibilities for Libraryland
 $$\begin{array} { | c | c } 
\hline \text { Bouks } & \text { Naparines } \
\hline 400 & 0 \
\hline 300 & 200 \
\hline 200 & 350 \
\hline 100 & 450 \
\hline 0 & 500 \
\hline
\end{array}$$
-Refer to Table 2-3. What is the opportunity cost to Libraryland of increasing the production of books from 200 to 300?

Accepted Answer

A) 100 magazines 
B) 150 magazines 
C) 200 magazines 
D) 350 magazines 
A) 100 magazines 
B) 150 magazines 
C) 200 magazines 
D) 350 magazines

Question 9

Figure 2-8
  
-Refer to Figure 2-8, Panel (a). The movement from point M to point K could be caused by

Accepted Answer

A) an advance in production technology. 
B) an improvement in efficiency. 
C) economic growth. 
D) unemployment. 
A) an advance in production technology. 
B) an improvement in efficiency. 
C) economic growth. 
D) unemployment.

Question 10

Which of the following is not correct?

Accepted Answer

A) Evaluating statements about how the world should be involves values as well as facts. 
B) Positive statements can, in principle, be confirmed or refuted by examining evidence. 
C) Normative statements can be judged using data alone. 
D) Deciding what is good or bad policy is not just a matter of science. 
A) Evaluating statements about how the world should be involves values as well as facts. 
B) Positive statements can, in principle, be confirmed or refuted by examining evidence. 
C) Normative statements can be judged using data alone. 
D) Deciding what is good or bad policy is not just a matter of science.

Question 11

With respect to how economists study the economy, which of the following statements is most accurate?

Accepted Answer

A) Economists study the past, but they do not try to predict the future. 
B) Economists use "rules of thumb" to predict the future. 
C) Economists devise theories, collect data, and analyze the data to test the theories. 
D) Economists use controlled experiments in much the same way that biologists and physicists do. 
A) Economists study the past, but they do not try to predict the future. 
B) Economists use "rules of thumb" to predict the future. 
C) Economists devise theories, collect data, and analyze the data to test the theories. 
D) Economists use controlled experiments in much the same way that biologists and physicists do.

Question 12

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

Accepted Answer

A) True 
 B)False

Question 13

The duties of the Council of Economic Advisers are to advise the president of the United States and to determine U.S. monetary policy.

Accepted Answer

A) True 
 B)False

Question 14

Economists make use of assumptions, some of which are unrealistic, for the purpose of

Accepted Answer

A) teaching economics to people who have never before studied economics. 
B) advancing their political agendas. 
C) developing models when the scientific method cannot be used. 
D) focusing their thinking. 
A) teaching economics to people who have never before studied economics. 
B) advancing their political agendas. 
C) developing models when the scientific method cannot be used. 
D) focusing their thinking.

Question 15

One thing economists do to help them understand how the real world works is

Accepted Answer

A) make assumptions. 
B) ignore the past. 
C) try to capture every aspect of the real world in the models they construct. 
D) All of the above are correct. 
A) make assumptions. 
B) ignore the past. 
C) try to capture every aspect of the real world in the models they construct. 
D) All of the above are correct.

Question 16

When two variables move in the same direction, 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 17

Figure 2-14  
-Refer to Figure 2-14. Points A, B, and D represent efficient outcomes for this economy.

Accepted Answer

A) True 
 B)False

Question 18

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

Accepted Answer

A) amount of the other good that must be given up. 
B) market price of the additional amount produced. 
C) amount of resources that must be devoted to its production. 
D) number of dollars that must be spent to produce it. 
A) amount of the other good that must be given up. 
B) market price of the additional amount produced. 
C) amount of resources that must be devoted to its production. 
D) number of dollars that must be spent to produce it.

Question 19

A demand curve shows the relationship

Accepted Answer

A) between income and quantity demanded. 
B) between price and income. 
C) between price and quantity demanded. 
D) among income, price, and quantity demanded. 
A) between income and quantity demanded. 
B) between price and income. 
C) between price and quantity demanded. 
D) among income, price, and quantity demanded.

Question 20

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often difficult and sometimes impossible to

Accepted Answer

A) make use of theory and observation. 
B) rely upon the scientific method. 
C) conduct laboratory experiments. 
D) find articles or books that were written before 1900. 
A) make use of theory and observation. 
B) rely upon the scientific method. 
C) conduct laboratory experiments. 
D) find articles or books that were written before 1900.

Exam 2: Thinking Like an Economist

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

Economists regard events from the past as

The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

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

In the circular-flow diagram, factors of production are the goods and services produced by firms.

Figure 2-7 -Refer to Figure 2-7. Point K represents an outcome in which

Economists at the U.S. Department of the Treasury help design U.S. coins and paper money.

Table 2-3 Production Possibilities for Libraryland Bouks Naparines 400 0 300 200 200 350 100 450 0 500 -Refer to Table 2-3. What is the opportunity cost to Libraryland of increasing the production of books from 200 to 300?

Figure 2-8 -Refer to Figure 2-8, Panel (a). The movement from point M to point K could be caused by

Which of the following is not correct?

With respect to how economists study the economy, which of the following statements is most accurate?

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

The duties of the Council of Economic Advisers are to advise the president of the United States and to determine U.S. monetary policy.

Economists make use of assumptions, some of which are unrealistic, for the purpose of

One thing economists do to help them understand how the real world works is

When two variables move in the same direction, the curve relating them is

Figure 2-14 -Refer to Figure 2-14. Points A, B, and D represent efficient outcomes for this economy.

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

A demand curve shows the relationship

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often difficult and sometimes impossible to

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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