Question 1

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Accepted Answer

A) have no questions but hundreds of answers. 
B) have 100 questions and 3,000 answers. 
C) have 1,000 questions but no answers. 
D) never produce a winner. 
A) have no questions but hundreds of answers. 
B) have 100 questions and 3,000 answers. 
C) have 1,000 questions but no answers. 
D) never produce a winner.

Question 2

The slope of a fairly flat upward-sloping line will be a

Accepted Answer

A) small positive number. 
B) large positive number. 
C) small negative number. 
D) large negative number. 
A) small positive number. 
B) large positive number. 
C) small negative number. 
D) large negative number.

Question 3

Almost all economists agree that tariffs and import quotas

Accepted Answer

A) reduces general economic welfare. 
B) increases general economic welfare. 
C) have no effect on general economic welfare. 
D) stimulate a less than fully employed economy. 
A) reduces general economic welfare. 
B) increases general economic welfare. 
C) have no effect on general economic welfare. 
D) stimulate a less than fully employed economy.

Question 4

Microeconomics is the study of

Accepted Answer

A) how money affects the economy. 
B) how individual households and firms make decisions. 
C) how government affects the economy. 
D) how the economy as a whole works. 
A) how money affects the economy. 
B) how individual households and firms make decisions. 
C) how government affects the economy. 
D) how the economy as a whole works.

Question 5

The 1990 amendment to the Clean Air Act

Accepted Answer

A) banned all forms of pollution. 
B) implemented tradable allowances for acid rain. 
C) created a research council on asthma. 
D) made global warming a national priority. 
A) banned all forms of pollution. 
B) implemented tradable allowances for acid rain. 
C) created a research council on asthma. 
D) made global warming a national priority.

Question 6

Which of the following is not correct about most economic models?

Accepted Answer

A) They are composed of equations and diagrams. 
B) They contribute very little to economists' understanding of the real world. 
C) They omit many features of the real-world economy. 
D) In constructing models, economists make assumptions. 
A) They are composed of equations and diagrams. 
B) They contribute very little to economists' understanding of the real world. 
C) They omit many features of the real-world economy. 
D) In constructing models, economists make assumptions.

Question 7

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

Accepted Answer

A) True 
 B)False

Question 8

In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 9

A survey of professional economists revealed that more than three-fourths of them agreed with a number of statements, including which of the following?

Accepted Answer

A) Tariffs and import quotas usually reduce general economic welfare. 
B) A large federal budget deficit has an adverse effect on the economy. 
C) Minimum wage increases unemployment among young and unskilled workers. 
D) All of the above are correct. 
A) Tariffs and import quotas usually reduce general economic welfare. 
B) A large federal budget deficit has an adverse effect on the economy. 
C) Minimum wage increases unemployment among young and unskilled workers. 
D) All of the above are correct.

Question 10

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

Accepted Answer

A) The discount rate is the interest rate the Federal Reserve charges banks to borrow funds. 
B) The US income tax rate increases with the amount of income earned. 
C) The government should increase the tax on gasoline. 
D) The US unemployment rate increased to 10 percent in 2009. 
A) The discount rate is the interest rate the Federal Reserve charges banks to borrow funds. 
B) The US income tax rate increases with the amount of income earned. 
C) The government should increase the tax on gasoline. 
D) The US unemployment rate increased to 10 percent in 2009.

Question 11

A microeconomist - as opposed to a macroeconomist - might study

Accepted Answer

A) the effect of borrowing by the federal government on the inflation rate. 
B) the effect of rising oil prices on employment in the airline industry. 
C) changes in the nation's unemployment rate over short periods of time. 
D) alternative policies to promote higher living standards throughout the nation. 
A) the effect of borrowing by the federal government on the inflation rate. 
B) the effect of rising oil prices on employment in the airline industry. 
C) changes in the nation's unemployment rate over short periods of time. 
D) alternative policies to promote higher living standards throughout the nation.

Question 12

Figure 2-14  
-Refer to Figure 2-14. The movement from point B to point C could have been caused by

Accepted Answer

A) inflation. 
B) a change in income. 
C) a change in the price of grapes. 
D) a change in the cost of producing grapes. 
A) inflation. 
B) a change in income. 
C) a change in the price of grapes. 
D) a change in the cost of producing grapes.

Question 13

In economics, capital refers to

Accepted Answer

A) the finances necessary for firms to produce their products. 
B) buildings and machines used in the production process. 
C) the money households use to purchase firms' output. 
D) stocks and bonds. 
A) the finances necessary for firms to produce their products. 
B) buildings and machines used in the production process. 
C) the money households use to purchase firms' output. 
D) stocks and bonds.

Question 14

The slope of a line is equal to

Accepted Answer

A) the change in the value of x divided by the change in the value of y. 
B) the change in the value of y divided by the change in the value of x. 
C) the horizontal distance divided by the vertical distance. 
D) the value of y divided by the value of x. 
A) the change in the value of x divided by the change in the value of y. 
B) the change in the value of y divided by the change in the value of x. 
C) the horizontal distance divided by the vertical distance. 
D) the value of y divided by the value of x.

Question 15

Positive statements are not

Accepted Answer

A) descriptive. 
B) prescriptive. 
C) claims about how the world is. 
D) made by economists speaking as scientists. 
A) descriptive. 
B) prescriptive. 
C) claims about how the world is. 
D) made by economists speaking as scientists.

Question 16

Which of the following is not correct?

Accepted Answer

A) The slope of a line will be a small positive number for a fairly flat upward-sloping line. 
B) The slope of a line will be a large positive number for a steep upward-sloping line. 
C) The slope of a line will be a negative number for a downward-sloping line. 
D) The slope of a line will be infinite for a horizontal line. 
A) The slope of a line will be a small positive number for a fairly flat upward-sloping line. 
B) The slope of a line will be a large positive number for a steep upward-sloping line. 
C) The slope of a line will be a negative number for a downward-sloping line. 
D) The slope of a line will be infinite for a horizontal line.

Question 17

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

Accepted Answer

A) possible at points J, K, L, and M, but efficient only at points J, L, and M. 
B) possible at points J, K, L, and M, but efficient only at point K. 
C) possible at points J, L, M, and N, but efficient only at points J, L, and M. 
D) possible at points J, L, M, and N, but efficient only at point N. 
A) possible at points J, K, L, and M, but efficient only at points J, L, and M. 
B) possible at points J, K, L, and M, but efficient only at point K. 
C) possible at points J, L, M, and N, but efficient only at points J, L, and M. 
D) possible at points J, L, M, and N, but efficient only at point N.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Figure 2-11  
-Refer to Figure 2-11. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

Accepted Answer

A) a decrease in unemployment 
B) a technological advance in the consumer goods industries 
C) a general technological advance 
D) an increase in the availability of capital-producing resources 
A) a decrease in unemployment 
B) a technological advance in the consumer goods industries 
C) a general technological advance 
D) an increase in the availability of capital-producing resources

Question 20

The Economic Report of the President

Accepted Answer

A) discusses recent developments in the economy and presents analysis of current policy issues. 
B) is written by the Council of Economic Advisers. 
C) is the responsibility of the economists at the Office of Management and Budget. 
D) Both a and b are correct. 
A) discusses recent developments in the economy and presents analysis of current policy issues. 
B) is written by the Council of Economic Advisers. 
C) is the responsibility of the economists at the Office of Management and Budget. 
D) Both a and b are correct.

Exam 2: Thinking Like an Economist

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

The slope of a fairly flat upward-sloping line will be a

Almost all economists agree that tariffs and import quotas

Microeconomics is the study of

The 1990 amendment to the Clean Air Act

Which of the following is not correct about most economic models?

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers.

A survey of professional economists revealed that more than three-fourths of them agreed with a number of statements, including which of the following?

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

A microeconomist - as opposed to a macroeconomist - might study

Figure 2-14 -Refer to Figure 2-14. The movement from point B to point C could have been caused by

In economics, capital refers to

The slope of a line is equal to

Positive statements are not

Which of the following is not correct?

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

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

Figure 2-11 -Refer to Figure 2-11. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

The Economic Report of the President

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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