Question 1

Figure 2-2  
-Refer to Figure 2-2.If the flow of goods and services is part of what is represented by the inner loop of this circular-flow diagram,then

Accepted Answer

A)  the flow of factors of production is also part of what is represented by the inner loop. 
B)  the flow of income paid to households is also part of what is represented by the inner loop. 
C)  the flow of revenue to firms is also part of what is represented by the inner loop. 
D)  households must be sellers of output. 
A)  the flow of factors of production is also part of what is represented by the inner loop. 
B)  the flow of income paid to households is also part of what is represented by the inner loop. 
C)  the flow of revenue to firms is also part of what is represented by the inner loop. 
D)  households must be sellers of output.

Question 2

When an economy is operating at a point on its production possibilities frontier,then

Accepted Answer

A)  consumers are content with the mix of goods and services that is being produced. 
B)  there is no way to produce more of one good without producing less of the other. 
C)  equal amounts of the two goods are being produced. 
D)  All of the above are correct. 
A)  consumers are content with the mix of goods and services that is being produced. 
B)  there is no way to produce more of one good without producing less of the other. 
C)  equal amounts of the two goods are being produced. 
D)  All of the above are correct.

Question 3

Figure 2-4  
-Refer to Figure 2-4.It is possible for this economy to produce

Accepted Answer

A)  40 toothbrushes and 20 toasters. 
B)  50 toothbrushes and 30 toasters. 
C)  70 toothbrushes and 40 toasters. 
D)  All of the above. 
A)  40 toothbrushes and 20 toasters. 
B)  50 toothbrushes and 30 toasters. 
C)  70 toothbrushes and 40 toasters. 
D)  All of the above.

Question 4

Good assumptions simplify a problem without substantially affecting the answer.

Accepted Answer

A) True 
 B)False

Question 5

In principle,we can

Accepted Answer

A)  ignore positive statements when choosing among various public policy alternatives. 
B)  ignore normative statements when choosing among various public policy alternatives. 
C)  confirm or refute positive statements by examining evidence. 
D)  confirm or refute normative statements by examining evidence. 
A)  ignore positive statements when choosing among various public policy alternatives. 
B)  ignore normative statements when choosing among various public policy alternatives. 
C)  confirm or refute positive statements by examining evidence. 
D)  confirm or refute normative statements by examining evidence.

Question 6

Albert Einstein once made the following observation about science:

Accepted Answer

A)  "The whole of science is nothing more than the refinement of everyday thinking." 
B)  "The whole of science is nothing more than an interesting intellectual exercise." 
C)  "In order to understand science,one must rely solely on abstraction." 
D)  "In order to understand science,one must transcend everyday thinking." 
A)  "The whole of science is nothing more than the refinement of everyday thinking." 
B)  "The whole of science is nothing more than an interesting intellectual exercise." 
C)  "In order to understand science,one must rely solely on abstraction." 
D)  "In order to understand science,one must transcend everyday thinking."

Question 7

Which of the following statements is (are)correct?

Accepted Answer

A)  Relative to other scientists,economists find it more difficult to generate useful data. 
B)  Theory and observation are important in economics as well as in other sciences. 
C)  To obtain data,economists often rely upon the natural experiments offered by history. 
D)  All of the above are correct. 
A)  Relative to other scientists,economists find it more difficult to generate useful data. 
B)  Theory and observation are important in economics as well as in other sciences. 
C)  To obtain data,economists often rely upon the natural experiments offered by history. 
D)  All of the above are correct.

Question 8

Economists try to address their subject with a scientist's objectivity.

Accepted Answer

A) True 
 B)False

Question 9

Figure 2-4  
-Refer to Figure 2-4.The opportunity cost of this economy moving from point A to point B is

Accepted Answer

A)  0 toasters. 
B)  10 toasters. 
C)  10 toothbrushes. 
D)  20 toasters. 
A)  0 toasters. 
B)  10 toasters. 
C)  10 toothbrushes. 
D)  20 toasters.

Question 10

In the simple circular-flow diagram,who consumes the goods and services that firms produce?

Accepted Answer

A)  households only 
B)  firms only 
C)  both households and firms 
D)  neither households nor firms 
A)  households only 
B)  firms only 
C)  both households and firms 
D)  neither households nor firms

Question 11

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

Accepted Answer

A) True 
 B)False

Question 12

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Accepted Answer

A)  will never be able to produce. 
B)  can produce using all available resources and technology. 
C)  can produce using some portion,but not all,of its resources and technology. 
D)  may be able to produce in the future with more resources and/or superior technology. 
A)  will never be able to produce. 
B)  can produce using all available resources and technology. 
C)  can produce using some portion,but not all,of its resources and technology. 
D)  may be able to produce in the future with more resources and/or superior technology.

Question 13

Figure 2-4  
-Refer to Figure 2-4.Inefficient production is represented by which point(s)?

Accepted Answer

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

Question 14

Figure 2-5  
-Refer to Figure 2-5.A movement from point C to point D could be caused by

Accepted Answer

A)  unemployment. 
B)  a decrease in society's preference for bananas. 
C)  fewer resources available for production of bananas. 
D)  All of the above are correct. 
A)  unemployment. 
B)  a decrease in society's preference for bananas. 
C)  fewer resources available for production of bananas. 
D)  All of the above are correct.

Question 15

For economists,conducting experiments is often difficult and sometimes impossible.

Accepted Answer

A) True 
 B)False

Question 16

Duties of the Council of Economic Advisers include

Accepted Answer

A)  advising the president and writing the annual Economic Report of the President. 
B)  implementing the president's tax policies. 
C)  tracking the behavior of the nation's money supply. 
D)  All of the above are correct. 
A)  advising the president and writing the annual Economic Report of the President. 
B)  implementing the president's tax policies. 
C)  tracking the behavior of the nation's money supply. 
D)  All of the above are correct.

Question 17

John Maynard Keynes referred to economics as an easy subject,

Accepted Answer

A)  at which very few excel. 
B)  but not as easy as philosophy or the pure sciences. 
C)  which very few can enjoy. 
D)  which deals primarily with common sense. 
A)  at which very few excel. 
B)  but not as easy as philosophy or the pure sciences. 
C)  which very few can enjoy. 
D)  which deals primarily with common sense.

Question 18

Figure 2-6  
-Refer to Figure 2-6.If this economy devotes all of its resources to the production of bathtubs,then it will produce

Accepted Answer

A)  0 bathtubs and 35 barrels. 
B)  10 bathtubs and 25 barrels. 
C)  16 bathtubs and 0 barrels. 
D)  16 bathtubs and 35 barrels. 
A)  0 bathtubs and 35 barrels. 
B)  10 bathtubs and 25 barrels. 
C)  16 bathtubs and 0 barrels. 
D)  16 bathtubs and 35 barrels.

Question 19

Economists at the U.S.Department of the Treasury help design U.S.coins and paper money.

Accepted Answer

A) True 
 B)False

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,then,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,then,other things equal,the demand for automobiles will increase.
g. The U.S.income distribution is not fair.
h. U.S.workers deserve more liberal unemployment benefits.
i. If interest rates increase,then investment will decrease.
j. If welfare benefits were reduced,then the country would be better off.

Accepted Answer

a,c,e,f,and i are po

Exam 2: Thinking Like an Economist

Figure 2-2 -Refer to Figure 2-2.If the flow of goods and services is part of what is represented by the inner loop of this circular-flow diagram,then

When an economy is operating at a point on its production possibilities frontier,then

Figure 2-4 -Refer to Figure 2-4.It is possible for this economy to produce

Good assumptions simplify a problem without substantially affecting the answer.

In principle,we can

Albert Einstein once made the following observation about science:

Which of the following statements is (are)correct?

Economists try to address their subject with a scientist's objectivity.

Figure 2-4 -Refer to Figure 2-4.The opportunity cost of this economy moving from point A to point B is

In the simple circular-flow diagram,who consumes the goods and services that firms produce?

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Figure 2-4 -Refer to Figure 2-4.Inefficient production is represented by which point(s)?

Figure 2-5 -Refer to Figure 2-5.A movement from point C to point D could be caused by

For economists,conducting experiments is often difficult and sometimes impossible.

Duties of the Council of Economic Advisers include

John Maynard Keynes referred to economics as an easy subject,

Figure 2-6 -Refer to Figure 2-6.If this economy devotes all of its resources to the production of bathtubs,then it will produce

Economists at the U.S.Department of the Treasury help design U.S.coins and paper money.

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

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