Question 1

Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

Accepted Answer

A)  the effects of rent control on the availability of housing in New York City 
B)  the economic impact of tornadoes on cities and towns in Oklahoma 
C)  how tariffs on shoes affects the shoe industry 
D)  the effect on the economy of changes in the nation's unemployment rate 
A)  the effects of rent control on the availability of housing in New York City 
B)  the economic impact of tornadoes on cities and towns in Oklahoma 
C)  how tariffs on shoes affects the shoe industry 
D)  the effect on the economy of changes in the nation's unemployment rate

Question 2

Figure 2-6  
-Refer to Figure 2-6.Efficient production is represented by which point(s)?

Accepted Answer

A)  A,B 
B)  A,B,C,F,G 
C)  C,F,G 
D)  D 
A)  A,B 
B)  A,B,C,F,G 
C)  C,F,G 
D)  D

Question 3

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 4

When two variables have a positive correlation,

Accepted Answer

A)  when the x-variable increases,the y-variable decreases. 
B)  when the x-variable decreases,the y-variable increases. 
C)  when the x-variable increases,the y-variable increases. 
D)  More than one of the above is correct. 
A)  when the x-variable increases,the y-variable decreases. 
B)  when the x-variable decreases,the y-variable increases. 
C)  when the x-variable increases,the y-variable increases. 
D)  More than one of the above is correct.

Question 5

The use of the coordinate system allows

Accepted Answer

A)  for the display of the flows of dollars,goods and services,and factors of production in an economic system. 
B)  for the display of how labor and other resources are organized in the production process. 
C)  for the display of two variables on a single graph. 
D)  for the creation of pie charts and bar graphs. 
A)  for the display of the flows of dollars,goods and services,and factors of production in an economic system. 
B)  for the display of how labor and other resources are organized in the production process. 
C)  for the display of two variables on a single graph. 
D)  for the creation of pie charts and bar graphs.

Question 6

Macroeconomics is the study of economywide phenomena.

Accepted Answer

A) True 
 B)False

Question 7

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 8

The slope of a line that passes through the points (10,15)and (20,7)is

Accepted Answer

A)  -5/4. 
B)  -4/5. 
C)  4/5. 
D)  5/4. 
A)  -5/4. 
B)  -4/5. 
C)  4/5. 
D)  5/4.

Question 9

Bill has noticed that increases in unemployment insurance claims are associated with recessions,and therefore he advocates limits on unemployment insurance so as to prevent recessions.Martha has noticed that most drug addicts once attended schools,and therefore she advocates getting rid of schools so as to prevent drug addiction.

Accepted Answer

A)  The reasoning of both Bill and Martha suffers from the omitted variable problem. 
B)  The reasoning of both Bill and Martha suffers from the reverse causality problem. 
C)  Bill's reasoning suffers from the reverse causality problem,and Martha's reasoning suffers from the omitted variable problem. 
D)  Martha's reasoning suffers from the reverse causality problem,and Bill's reasoning suffers from the omitted variable problem. 
A)  The reasoning of both Bill and Martha suffers from the omitted variable problem. 
B)  The reasoning of both Bill and Martha suffers from the reverse causality problem. 
C)  Bill's reasoning suffers from the reverse causality problem,and Martha's reasoning suffers from the omitted variable problem. 
D)  Martha's reasoning suffers from the reverse causality problem,and Bill's reasoning suffers from the omitted variable problem.

Question 10

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 11

Figure 2-2  
-Refer to Figure 2-2.If households are sellers in the markets represented by Box D of this circular-flow diagram,then

Accepted Answer

A)  Box D must represent the markets for factors of production. 
B)  Box C must represent the markets for goods and services. 
C)  firms are buyers in the markets represented by Box D. 
D)  All of the above are correct. 
A)  Box D must represent the markets for factors of production. 
B)  Box C must represent the markets for goods and services. 
C)  firms are buyers in the markets represented by Box D. 
D)  All of the above are correct.

Question 12

Figure 2-6  
-Refer to Figure 2-6.Unemployment could cause this economy to produce at which point(s)?

Accepted Answer

A)  A,B 
B)  C,D,F,G 
C)  C,F,G 
D)  D 
A)  A,B 
B)  C,D,F,G 
C)  C,F,G 
D)  D

Question 13

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Accepted Answer

A) True 
 B)False

Question 14

The circular-flow diagram is an example of

Accepted Answer

A)  a laboratory experiment. 
B)  an economic model. 
C)  a mathematical model. 
D)  All of the above are correct. 
A)  a laboratory experiment. 
B)  an economic model. 
C)  a mathematical model. 
D)  All of the above are correct.

Question 15

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Accepted Answer

A) True 
 B)False

Question 16

In conducting their research,economists face an obstacle that not all scientists face;specifically,in economics,it is often difficult and sometimes impossible to

Accepted Answer

A)  make use of theory and observation. 
B)  rely upon the scientific method. 
C)  conduct laboratory experiments. 
D)  find articles or books that were written before 1900. 
A)  make use of theory and observation. 
B)  rely upon the scientific method. 
C)  conduct laboratory experiments. 
D)  find articles or books that were written before 1900.

Question 17

Economists regard events from the past as

Accepted Answer

A)  irrelevant,since history is unlikely to repeat itself. 
B)  of limited interest,since those events seldom provide any useful economic data. 
C)  interesting but not particularly valuable,since those events cannot be used to evaluate present-day economic theories. 
D)  interesting and valuable,since those events are capable of helping us to understand the past,the present,and the future. 
A)  irrelevant,since history is unlikely to repeat itself. 
B)  of limited interest,since those events seldom provide any useful economic data. 
C)  interesting but not particularly valuable,since those events cannot be used to evaluate present-day economic theories. 
D)  interesting and valuable,since those events are capable of helping us to understand the past,the present,and the future.

Question 18

In the circular-flow diagram,

Accepted Answer

A)  profit flows from households to firms. 
B)  labor flows from households to firms. 
C)  services flow from households to firms. 
D)  All of the above are correct. 
A)  profit flows from households to firms. 
B)  labor flows from households to firms. 
C)  services flow from households to firms. 
D)  All of the above are correct.

Question 19

The production possibilities frontier illustrates

Accepted Answer

A)  the trade-off between efficiency and equality. 
B)  the combination of output that an economy should produce. 
C)  the combination of output that each member of society should consume. 
D)  None of the above is correct. 
A)  the trade-off between efficiency and equality. 
B)  the combination of output that an economy should produce. 
C)  the combination of output that each member of society should consume. 
D)  None of the above is correct.

Question 20

Figure 2-1  
-Refer to Figure 2-1.Which arrow represents the flow of goods and services?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Exam 2: Thinking Like an Economist

Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

Figure 2-6 -Refer to Figure 2-6.Efficient production is represented by which point(s)?

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

When two variables have a positive correlation,

The use of the coordinate system allows

Macroeconomics is the study of economywide phenomena.

A microeconomist - as opposed to a macroeconomist - might study

The slope of a line that passes through the points (10,15)and (20,7)is

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

Figure 2-2 -Refer to Figure 2-2.If households are sellers in the markets represented by Box D of this circular-flow diagram,then

Figure 2-6 -Refer to Figure 2-6.Unemployment could cause this economy to produce at which point(s)?

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

The circular-flow diagram is an example of

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

In conducting their research,economists face an obstacle that not all scientists face;specifically,in economics,it is often difficult and sometimes impossible to

Economists regard events from the past as

In the circular-flow diagram,

The production possibilities frontier illustrates

Figure 2-1 -Refer to Figure 2-1.Which arrow represents the flow of goods and services?

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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 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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters