Question 1

The scientific method is the dispassionate development and testing of theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 2

The slope of a steep upward-sloping line will be a

Accepted Answer

A)  small positive number. 
B)  large positive number. 
C)  small negative number. 
D)  large negative number. 
A)  small positive number. 
B)  large positive number. 
C)  small negative number. 
D)  large negative number.

Question 3

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other is constant.

Accepted Answer

A) True 
 B)False

Question 4

In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 5

A circular-flow diagram is a visual model of the economy.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not an example of a positive,as opposed to normative,statement?

Accepted Answer

A)  Higher gasoline prices will reduce gasoline consumption. 
B)  Equality is more important than efficiency. 
C)  Trade restrictions lower our standard of living. 
D)  If a nation wants to avoid inflation,it will restrict the growth rate of the quantity of money. 
A)  Higher gasoline prices will reduce gasoline consumption. 
B)  Equality is more important than efficiency. 
C)  Trade restrictions lower our standard of living. 
D)  If a nation wants to avoid inflation,it will restrict the growth rate of the quantity of money.

Question 7

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies,probably because

Accepted Answer

A)  economists have not yet convinced the general public that the policies are undesirable. 
B)  economists engage in positive analysis,not normative analysis. 
C)  economists have values that are different from the values of most non-economists. 
D)  economists' theories are not easily confirmed or refuted in laboratory analysis. 
A)  economists have not yet convinced the general public that the policies are undesirable. 
B)  economists engage in positive analysis,not normative analysis. 
C)  economists have values that are different from the values of most non-economists. 
D)  economists' theories are not easily confirmed or refuted in laboratory analysis.

Question 8

Economic models are most often composed of diagrams and equations.

Accepted Answer

A) True 
 B)False

Question 9

The Council of Economic Advisers

Accepted Answer

A)  was created in 1946. 
B)  advises the president of the United States on economic policy matters. 
C)  writes the annual Economic Report of the President. 
D)  All of the above are correct. 
A)  was created in 1946. 
B)  advises the president of the United States on economic policy matters. 
C)  writes the annual Economic Report of the President. 
D)  All of the above are correct.

Question 10

One thing economists do to help them understand how the real world works is

Accepted Answer

A)  make assumptions. 
B)  ignore the past. 
C)  they try to capture every aspect of the real world in the models they construct. 
D)  All of the above are correct. 
A)  make assumptions. 
B)  ignore the past. 
C)  they try to capture every aspect of the real world in the models they construct. 
D)  All of the above are correct.

Question 11

The decision of which assumptions to make is

Accepted Answer

A)  an easy decision for an economist,but a difficult decision for a physicist or a chemist. 
B)  not a particularly important decision for an economist. 
C)  usually regarded as an art in scientific thinking. 
D)  usually regarded as the easiest part of the scientific method. 
A)  an easy decision for an economist,but a difficult decision for a physicist or a chemist. 
B)  not a particularly important decision for an economist. 
C)  usually regarded as an art in scientific thinking. 
D)  usually regarded as the easiest part of the scientific method.

Question 12

When a production possibilities frontier is bowed outward,the opportunity cost of the second good in terms of the first good is higher when the economy is producing much of the second good and little of the first good than it is when the economy is producing little of the second good and much of the first good.

Accepted Answer

A) True 
 B)False

Question 13

Table 2-1
Production Possibilities for Toyland
  
-Refer to Table 2-1.Which of the following statements is correct?

Accepted Answer

A)  The opportunity cost of an additional 100 dolls is constant at 50 fire trucks. 
B)  The opportunity cost of an additional 100 dolls is constant at 100 fire trucks. 
C)  Toyland's production possibilities frontier is a straight,downward-sloping line. 
D)  The opportunity cost of an additional 100 dolls increases as more dolls are produced. 
A)  The opportunity cost of an additional 100 dolls is constant at 50 fire trucks. 
B)  The opportunity cost of an additional 100 dolls is constant at 100 fire trucks. 
C)  Toyland's production possibilities frontier is a straight,downward-sloping line. 
D)  The opportunity cost of an additional 100 dolls increases as more dolls are produced.

Question 14

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Accepted Answer

A)  a controlled experiment that lead to the formulation of a scientific theory. 
B)  being in the right place at the right time. 
C)  an idea whose time had come. 
D)  the interplay between observation and theory in science. 
A)  a controlled experiment that lead to the formulation of a scientific theory. 
B)  being in the right place at the right time. 
C)  an idea whose time had come. 
D)  the interplay between observation and theory in science.

Question 15

Figure 2-7  
-Refer to Figure 2-7.In order to reach point C,the economy would have to

Accepted Answer

A)  acquire more resources or experience a technological advance. 
B)  begin using its available resources more efficiently than it is currently using them. 
C)  shift resources away from the production of ribeye steaks and toward production of books. 
D)  None of the above are correct;the economy will never be able to reach point C. 
A)  acquire more resources or experience a technological advance. 
B)  begin using its available resources more efficiently than it is currently using them. 
C)  shift resources away from the production of ribeye steaks and toward production of books. 
D)  None of the above are correct;the economy will never be able to reach point C.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

In conducting their research,economists often substitute historical events and historical episodes for

Accepted Answer

A)  theories and observations. 
B)  laboratory experiments. 
C)  models. 
D)  assumptions. 
A)  theories and observations. 
B)  laboratory experiments. 
C)  models. 
D)  assumptions.

Question 18

Which of the following is not correct?

Accepted Answer

A)  The slope of a line will be a small positive number for a fairly flat upward-sloping line. 
B)  The slope of a line will be a large positive number for a steep upward-sloping line. 
C)  The slope of a line will be a negative number for a downward-sloping line. 
D)  The slope of a line will be infinite for a horizontal line. 
A)  The slope of a line will be a small positive number for a fairly flat upward-sloping line. 
B)  The slope of a line will be a large positive number for a steep upward-sloping line. 
C)  The slope of a line will be a negative number for a downward-sloping line. 
D)  The slope of a line will be infinite for a horizontal line.

Question 19

When economists make normative statements,they are

Accepted Answer

A)  speaking as scientists. 
B)  speaking as policy advisers. 
C)  making claims about how the world is. 
D)  revealing that they are very liberal in their views of how the world works. 
A)  speaking as scientists. 
B)  speaking as policy advisers. 
C)  making claims about how the world is. 
D)  revealing that they are very liberal in their views of how the world works.

Question 20

Figure 2-2  
-Refer to Figure 2-2.If the outer loop of this circular-flow diagram represents flows of dollars,then the inner loop includes

Accepted Answer

A)  flows of goods and services from households to firms. 
B)  flows of inputs from households to firms. 
C)  flows of rent payments paid to owners of land. 
D)  flows of wages and salaries paid to workers. 
A)  flows of goods and services from households to firms. 
B)  flows of inputs from households to firms. 
C)  flows of rent payments paid to owners of land. 
D)  flows of wages and salaries paid to workers.

Exam 2: Thinking Like an Economist

The scientific method is the dispassionate development and testing of theories about how the world works.

The slope of a steep upward-sloping line will be a

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other is constant.

In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

A circular-flow diagram is a visual model of the economy.

Which of the following is not an example of a positive,as opposed to normative,statement?

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies,probably because

Economic models are most often composed of diagrams and equations.

The Council of Economic Advisers

One thing economists do to help them understand how the real world works is

The decision of which assumptions to make is

Table 2-1 Production Possibilities for Toyland -Refer to Table 2-1.Which of the following statements is correct?

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Figure 2-7 -Refer to Figure 2-7.In order to reach point C,the economy would have to

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

In conducting their research,economists often substitute historical events and historical episodes for

Which of the following is not correct?

When economists make normative statements,they are

Figure 2-2 -Refer to Figure 2-2.If the outer loop of this circular-flow diagram represents flows of dollars,then the inner loop includes

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