Question 1

Figure 2-8
  
-Refer to Figure 2-8, Panel (a). In order to gain 2 donuts by moving from point L to point M, society must sacrifice

Accepted Answer

A) efficiency. 
B) employment. 
C) 4 cups of coffee. 
D) More than one of the above is correct. 
A) efficiency. 
B) employment. 
C) 4 cups of coffee. 
D) More than one of the above is correct.

Question 2

The slope of a steep 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

In the circular-flow diagram, another name for goods and services produced by firms is

Accepted Answer

A) factors of production. 
B) output. 
C) inputs. 
D) resources. 
A) factors of production. 
B) output. 
C) inputs. 
D) resources.

Question 4

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

Accepted Answer

A) True 
 B)False

Question 5

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Accepted Answer

A) True 
 B)False

Question 6

Figure 2-13  
-Refer to Figure 2-13. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

Accepted Answer

A) The less coffee a person drinks per day, the more time he can go without sleep. 
B) There is no relationship between how much coffee per day a person drinks and how long he can go without sleep. 
C) The more coffee a person drinks per day, the more time he can go without sleep. 
D) The more coffee a person drinks per day, the less time he can go without sleep. 
A) The less coffee a person drinks per day, the more time he can go without sleep. 
B) There is no relationship between how much coffee per day a person drinks and how long he can go without sleep. 
C) The more coffee a person drinks per day, the more time he can go without sleep. 
D) The more coffee a person drinks per day, the less time he can go without sleep.

Question 7

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Accepted Answer

A) True 
 B)False

Question 8

Figure 2-6  
-Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B?

Accepted Answer

A) zero 
B) 6 clocks 
C) 6 clocks and 15 candles 
D) 15 candles 
A) zero 
B) 6 clocks 
C) 6 clocks and 15 candles 
D) 15 candles

Question 9

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

Accepted Answer

A) True 
 B)False

Question 10

The y-coordinate of an ordered pair specifies the

Accepted Answer

A) diagonal location of the point. 
B) vertical location of the point. 
C) horizontal location of the point. 
D) quadrant location in which the point is located. 
A) diagonal location of the point. 
B) vertical location of the point. 
C) horizontal location of the point. 
D) quadrant location in which the point is located.

Question 11

"Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement.

Accepted Answer

A) True 
 B)False

Question 12

Economists at the Department of Justice

Accepted Answer

A) track the behavior of the nation's money supply. 
B) advise Congress on economic matters. 
C) help enforce the nation's antitrust laws. 
D) prepare the federal budget. 
A) track the behavior of the nation's money supply. 
B) advise Congress on economic matters. 
C) help enforce the nation's antitrust laws. 
D) prepare the federal budget.

Question 13

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

Accepted Answer

A) True 
 B)False

Question 14

In the circular-flow diagram, factors of production include land, labor, and capital.

Accepted Answer

A) True 
 B)False

Question 15

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

Accepted Answer

A) One economist believes the North American Free Trade Agreement (NAFT
A)  has led to a loss of American jobs; another economist disputes this claim. 
B) One economist believes that when income taxes are cut, people will increase their spending; another economist believes that when income taxes are cut, people will increase their saving. 
C) One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people. 
D) One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth. 
A) One economist believes the North American Free Trade Agreement (NAFT
A)  has led to a loss of American jobs; another economist disputes this claim. 
B) One economist believes that when income taxes are cut, people will increase their spending; another economist believes that when income taxes are cut, people will increase their saving. 
C) One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people. 
D) One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth.

Question 16

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

Accepted Answer

A) Inflation is more harmful to the economy than unemployment is. 
B) If welfare payments increase, the world will be a better place. 
C) Prices rise when the government prints too much money. 
D) When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency. 
A) Inflation is more harmful to the economy than unemployment is. 
B) If welfare payments increase, the world will be a better place. 
C) Prices rise when the government prints too much money. 
D) When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.

Question 17

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Accepted Answer

A) True 
 B)False

Question 18

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

Accepted Answer

A) True 
 B)False

Question 19

The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop?

Accepted Answer

A) Wages 
B) Land 
C) Capital 
D) Goods and services sold 
A) Wages 
B) Land 
C) Capital 
D) Goods and services sold

Question 20

Figure 2-14  
-Refer to Figure 2-14. The opportunity cost of moving from point B to point A is zero.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Figure 2-8 -Refer to Figure 2-8, Panel (a). In order to gain 2 donuts by moving from point L to point M, society must sacrifice

The slope of a steep upward-sloping line will be a

In the circular-flow diagram, another name for goods and services produced by firms is

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Figure 2-13 -Refer to Figure 2-13. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Figure 2-6 -Refer to Figure 2-6. What is the opportunity cost of moving from point A to point B?

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

The y-coordinate of an ordered pair specifies the

"Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement.

Economists at the Department of Justice

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

In the circular-flow diagram, factors of production include land, labor, and capital.

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

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

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop?

Figure 2-14 -Refer to Figure 2-14. The opportunity cost of moving from point B to point A is zero.

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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