Exam 2: Thinking Like an Economist

Why do economists make assumptions?

What did John Maynard Keynes believe the ideas of economists to be?

Figure 2-7 -Refer to Figure 2-7. What would best describe the movement from frontier A to B?

Which is true about models used by economists?

Figure 2-7 -What would unemployment cause an economy to do?

An economy is being efficient if it is impossible to produce more of one good without producing less of another.

Figure 2-2 -Refer to Figure 2-2. What do boxes A and B represent?

While the scientific method is applicable to studying natural sciences, it is not useful in studying an economic system.

Figure 2-6 -Refer to Figure 2-6. What is the opportunity cost to society of the movement from point A to point C?

What are tariffs and quotas?

Figure 2-2 -Refer to Figure 2-2. What does the inner loop represent?

Table 2-1 Production Possibilities for Toyland -Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of fire trucks from 0 to 200?

What does it mean if an economy is producing efficiently?

What does a point on a country's production possibilities frontier represent?

For what reason are production possibilities frontiers usually bowed outward?

What is the first number in an ordered pair?

What are the 3 propositions about which most economists agree most often (in order from first to third)?

What is the single most important purpose of your textbook?

For economists, what are often used as substitutes for laboratory experiments?

What does a circular-flow diagram do?