Question 1

In a simple circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 2

Figure 2-6  
-Refer to Figure 2-6. If this economy put all available resources into the production of bananas, how many could it produce?

Accepted Answer

A) 200 bananas and also 150 baseballs 
B) 300 bananas and also 100 baseballs 
C) 400 bananas and no baseballs 
D) It is impossible to know unless we know the quantity of resources available. 
A) 200 bananas and also 150 baseballs 
B) 300 bananas and also 100 baseballs 
C) 400 bananas and no baseballs 
D) It is impossible to know unless we know the quantity of resources available.

Question 3

How do economists begin building an economic model?

Accepted Answer

A) by writing grants for government funding 
B) by conducting controlled experiments in a lab 
C) by making assumptions 
D) by reviewing statistical forecasts 
A) by writing grants for government funding 
B) by conducting controlled experiments in a lab 
C) by making assumptions 
D) by reviewing statistical forecasts

Question 4

Figure 2-9  
-Refer to Figure 2-9. What would you say about 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 they can go without sleep. 
C) The more coffee a person drinks per day, the longer he can go without sleep. 
D) The relationship between cups of coffee per day and time without sleep is too unpredictable to consider. 
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 they can go without sleep. 
C) The more coffee a person drinks per day, the longer he can go without sleep. 
D) The relationship between cups of coffee per day and time without sleep is too unpredictable to consider.

Question 5

Which of the following is an example of a normative statement?

Accepted Answer

A) If the price of a product decreases, quantity demanded increases. 
B) Reducing tax rates on the wealthy would be good for the country. 
C) If the national saving rate were to increase, so would the rate of economic growth. 
D) An increase in minimum wages will increase unemployment. 
A) If the price of a product decreases, quantity demanded increases. 
B) Reducing tax rates on the wealthy would be good for the country. 
C) If the national saving rate were to increase, so would the rate of economic growth. 
D) An increase in minimum wages will increase unemployment.

Question 6

Which of the following statements about slope is NOT correct?

Accepted Answer

A) Slope explains how much one variable responds to changes in another variable. 
B) Slope can be computed by delta x/delta y. 
C) Slope is positive if the 2 variables are moving in the same direction. 
D) Slope does not change if the line is linear. 
A) Slope explains how much one variable responds to changes in another variable. 
B) Slope can be computed by delta x/delta y. 
C) Slope is positive if the 2 variables are moving in the same direction. 
D) Slope does not change if the line is linear.

Question 7

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Accepted Answer

A) True 
 B)False

Question 8

What does evaluating a positive statement involve?

Accepted Answer

A) evaluating values as well as facts 
B) examining evidence 
C) our views on ethics and religion 
D) consideration of the government's policy goals 
A) evaluating values as well as facts 
B) examining evidence 
C) our views on ethics and religion 
D) consideration of the government's policy goals

Question 9

What happens in the markets for factors of production?

Accepted Answer

A) Households provide firms with labour, land, and capital. 
B) Households provide firms with savings for investment. 
C) Firms provide households with goods and services. 
D) The government provides firms with inputs for the production process. 
A) Households provide firms with labour, land, and capital. 
B) Households provide firms with savings for investment. 
C) Firms provide households with goods and services. 
D) The government provides firms with inputs for the production process.

Question 10

Figure 2-3  
-Refer to Figure 2-3. At which point or points can the economy NOT produce?

Accepted Answer

A) point A 
B) point C 
C) point A, C 
D) point A, C, D 
A) point A 
B) point C 
C) point A, C 
D) point A, C, D

Question 11

What happens when a variable on an axis of a graph changes?

Accepted Answer

A) The curve will not shift. 
B) The curve will shift. 
C) The curve may or may not change. It depends on how the variables are related. 
D) The curve will shift if the variable is on the vertical axis, but not on the horizontal axis. 
A) The curve will not shift. 
B) The curve will shift. 
C) The curve may or may not change. It depends on how the variables are related. 
D) The curve will shift if the variable is on the vertical axis, but not on the horizontal axis.

Question 12

A circular-flow diagram is a visual model of how an economy is organized.

Accepted Answer

A) True 
 B)False

Question 13

What is a common thread between economics and other sciences such as physics?

Accepted Answer

A) Experiments are most often conducted in a lab. 
B) Real-world observations often lead to theories. 
C) A Ph.D. is required to truly understand any science. 
D) Both deal primarily with abstract concepts. 
A) Experiments are most often conducted in a lab. 
B) Real-world observations often lead to theories. 
C) A Ph.D. is required to truly understand any science. 
D) Both deal primarily with abstract concepts.

Question 14

If Steven chooses to buy more bagels per month at each price, what will happen to his demand curve?

Accepted Answer

A) shift inward 
B) shift outward 
C) not shift, but he will move along his demand curve from left to right 
D) not shift, but he will move along his demand curve from right to left 
A) shift inward 
B) shift outward 
C) not shift, but he will move along his demand curve from left to right 
D) not shift, but he will move along his demand curve from right to left

Question 15

In the simple circular-flow diagram, what do markets consist of?

Accepted Answer

A) the market for goods and services, the financial market, and the market for the factors of production 
B) factors of production and the financial market 
C) the market for goods and services and the financial market 
D) the market for goods and services and the market for factors of production 
A) the market for goods and services, the financial market, and the market for the factors of production 
B) factors of production and the financial market 
C) the market for goods and services and the financial market 
D) the market for goods and services and the market for factors of production

Question 16

Because it is difficult for economists to use experiments to generate data, what must they generally do?

Accepted Answer

A) do without data 
B) use whatever data the world gives them 
C) select a committee of economists to make up data for all economists to use 
D) use hypothetical, computer-generated data 
A) do without data 
B) use whatever data the world gives them 
C) select a committee of economists to make up data for all economists to use 
D) use hypothetical, computer-generated data

Question 17

What is one difficulty economists face that some other scientists do not?

Accepted Answer

A) Unlike other sciences, economic studies must include the largest economic player, the government. 
B) Economists unfortunately receive less government funding than other scientists. 
C) Corporations are reluctant to disclose necessary information for economic research. 
D) Experiments are often difficult in economics. 
A) Unlike other sciences, economic studies must include the largest economic player, the government. 
B) Economists unfortunately receive less government funding than other scientists. 
C) Corporations are reluctant to disclose necessary information for economic research. 
D) Experiments are often difficult in economics.

Question 18

Figure 2-6  
-When is the production possibilities frontier bowed outward?

Accepted Answer

A) if resources are not perfectly shiftable 
B) if the amount of resources increases 
C) if the level of technology increases 
D) if opportunity costs are constant 
A) if resources are not perfectly shiftable 
B) if the amount of resources increases 
C) if the level of technology increases 
D) if opportunity costs are constant

Question 19

What are the foundation stones from which economic models are built?

Accepted Answer

A) economic policies 
B) the legal system 
C) assumptions 
D) statistical forecasts 
A) economic policies 
B) the legal system 
C) assumptions 
D) statistical forecasts

Question 20

Which of the following statements are positive, and which are normative?
a.The minimum wage creates unemployment among young and unskilled workers.
b.The minimum wage ought to be abolished.
c.If the price of a product in a market decreases, other things equal, quantity demanded will increase.
d.A little bit of inflation is worse for society than a little bit of unemployment.
e.There is a tradeoff between inflation and unemployment in the short run.
f. If consumer income increases, other things equal, the demand for automobiles will increase.g. The Canadian income distribution is not equitable.h. Canadian workers deserve more liberal unemployment benefits.
i. If interest rates increase, investment will decrease.j. If welfare benefits were reduced, the country would be better off.

Accepted Answer

a, c, e, f, and i ar

In a simple circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Figure 2-6 -Refer to Figure 2-6. If this economy put all available resources into the production of bananas, how many could it produce?

How do economists begin building an economic model?

Figure 2-9 -Refer to Figure 2-9. What would you say about the relationship between coffee and hours without sleep?

Which of the following is an example of a normative statement?

Which of the following statements about slope is NOT correct?

Normative statements describe how the world is, while positive statements prescribe how the world should be.

What does evaluating a positive statement involve?

What happens in the markets for factors of production?

Figure 2-3 -Refer to Figure 2-3. At which point or points can the economy NOT produce?

What happens when a variable on an axis of a graph changes?

A circular-flow diagram is a visual model of how an economy is organized.

What is a common thread between economics and other sciences such as physics?

If Steven chooses to buy more bagels per month at each price, what will happen to his demand curve?

In the simple circular-flow diagram, what do markets consist of?

Because it is difficult for economists to use experiments to generate data, what must they generally do?

What is one difficulty economists face that some other scientists do not?

Figure 2-6 -When is the production possibilities frontier bowed outward?

What are the foundation stones from which economic models are built?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 2: Thinking Like an Economist

In a simple circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Figure 2-6 -Refer to Figure 2-6. If this economy put all available resources into the production of bananas, how many could it produce?

How do economists begin building an economic model?

Figure 2-9 -Refer to Figure 2-9. What would you say about the relationship between coffee and hours without sleep?

Which of the following is an example of a normative statement?

Which of the following statements about slope is NOT correct?

Normative statements describe how the world is, while positive statements prescribe how the world should be.

What does evaluating a positive statement involve?

What happens in the markets for factors of production?

Figure 2-3 -Refer to Figure 2-3. At which point or points can the economy NOT produce?

What happens when a variable on an axis of a graph changes?

A circular-flow diagram is a visual model of how an economy is organized.

What is a common thread between economics and other sciences such as physics?

If Steven chooses to buy more bagels per month at each price, what will happen to his demand curve?

In the simple circular-flow diagram, what do markets consist of?

Because it is difficult for economists to use experiments to generate data, what must they generally do?

What is one difficulty economists face that some other scientists do not?

Figure 2-6 -When is the production possibilities frontier bowed outward?

What are the foundation stones from which economic models are built?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters