Exam 2: Thinking Like an Economist

Using this outline, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

On a production possibilities frontier, when is production efficient?

When constructing a production possibilities frontier, which of the following is NOT an assumption?

What is a model?

What does The Bank of Canada do?

What happens when a relevant variable that is not named on either axis changes?

Why are historical episodes valuable to economists?

What is another name for goods and services produced by firms?

What does macroeconomics study?

When a production possibilities frontier is linear, what does it show?

What are the 2 basic reasons why economists often appear to give conflicting advice to policymakers?

Figure 2-1 -Refer to Figure 2-1. Which arrow shows the flow of the factors of production?

Table 2-1 Production Possibilities for Toyland -Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of dolls from 100 to 200?

What type of statement is "Prices rise when the government prints too much money"?

What does a relatively steep demand curve mean?

When studying the effects of public policy changes, what do economists do?

What is the x-coordinate?

Where do the most common data for testing economic theories come from?

Which of the following is the best explanation for why policies such as rent control and import quotas persist in spite of the fact that experts are united in their opposition to such policies?

Which is true about the art of scientific thinking?