Question 1

Figure 2-8
Panel (a)Panel (b)    
-Refer to Figure 2-8,Panel (a).Production at point K is

Accepted Answer

A)  possible and efficient. 
B)  possible but inefficient. 
C)  impossible but efficient. 
D)  impossible and inefficient. 
A)  possible and efficient. 
B)  possible but inefficient. 
C)  impossible but efficient. 
D)  impossible and inefficient.

Question 2

Congress relies on economists at the Congressional Budget Office to

Accepted Answer

A)  enforce the nation's antitrust laws. 
B)  set the nation's monetary policy. 
C)  provide evidence that incumbent members of Congress are performing well in their jobs. 
D)  provide independent evaluations of policy proposals. 
A)  enforce the nation's antitrust laws. 
B)  set the nation's monetary policy. 
C)  provide evidence that incumbent members of Congress are performing well in their jobs. 
D)  provide independent evaluations of policy proposals.

Question 3

When two variables move in the same direction,the curve relating them is downward sloping,and we say the variables are negatively related.

Accepted Answer

A) True 
 B)False

Question 4

Economists believe that production possibilities frontiers

Accepted Answer

A)  never have a bowed shape. 
B)  rarely have a bowed shape. 
C)  often have a bowed shape. 
D)  always have a bowed shape. 
A)  never have a bowed shape. 
B)  rarely have a bowed shape. 
C)  often have a bowed shape. 
D)  always have a bowed shape.

Question 5

Figure 2-2  
-Refer to Figure 2-2.Malika works as an attorney for a corporation and is paid a salary in exchange for the legal services she performs.Jarel owns office buildings and rents his buildings to companies in exchange for rent payments.If Malika's income is represented by a flow of dollars from Box D to Box B of this circular-flow diagram,then Jarel's income is represented by a flow of dollars

Accepted Answer

A)  from Box A to Box C. 
B)  from Box C to Box A. 
C)  from Box B to Box D. 
D)  from Box D to Box B. 
A)  from Box A to Box C. 
B)  from Box C to Box A. 
C)  from Box B to Box D. 
D)  from Box D to Box B.

Question 6

Which of the following transactions does not take place in the markets for the factors of production in the circular-flow diagram?

Accepted Answer

A)  Kosuke provides plumbing services for a plumbing company and receives an hourly wage from the company for his services. 
B)  Alfonso works as a marriage counselor and his clients pay him on a per-hour basis for his services. 
C)  Geovany owns several shopping malls and receives rent payments from the companies that operate those malls. 
D)  Carlos sells advertising for a newspaper and receives a commission from the newspaper company for each advertisement that he sells. 
A)  Kosuke provides plumbing services for a plumbing company and receives an hourly wage from the company for his services. 
B)  Alfonso works as a marriage counselor and his clients pay him on a per-hour basis for his services. 
C)  Geovany owns several shopping malls and receives rent payments from the companies that operate those malls. 
D)  Carlos sells advertising for a newspaper and receives a commission from the newspaper company for each advertisement that he sells.

Question 7

In the early 19th century,the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic.The villagers noticed that wherever doctors appeared,people died.Therefore,many doctors were chased away from villages,and some were even killed.This reaction to the correlation between doctors and deaths is most likely a problem of

Accepted Answer

A)  omitted variables. 
B)  reverse causality. 
C)  government propaganda. 
D)  medical incompetence. 
A)  omitted variables. 
B)  reverse causality. 
C)  government propaganda. 
D)  medical incompetence.

Question 8

Figure 2-9
Panel (a)Panel (b)    
-Refer to Figure 2-9,Panel (a)and Panel (b).Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a)to Panel (b)?

Accepted Answer

A)  the tradeoff between the production of radios and televisions changes 
B)  production of 2 radios and 5 televisions becomes efficient 
C)  production of 6 radios and 7 televisions becomes possible 
D)  the opportunity cost of a television is higher at all levels of television production 
A)  the tradeoff between the production of radios and televisions changes 
B)  production of 2 radios and 5 televisions becomes efficient 
C)  production of 6 radios and 7 televisions becomes possible 
D)  the opportunity cost of a television is higher at all levels of television production

Question 9

Figure 2-5  
-Refer to Figure 2-5.If this economy devotes one-half of its available resources to the production of baseballs and the other half to the production of bananas,it could produce

Accepted Answer

A)  150 bananas and 100 baseballs. 
B)  150 bananas and 150 baseballs. 
C)  300 bananas and 200 baseballs. 
D)  We would have to know the details of this economy's technology in order to determine this. 
A)  150 bananas and 100 baseballs. 
B)  150 bananas and 150 baseballs. 
C)  300 bananas and 200 baseballs. 
D)  We would have to know the details of this economy's technology in order to determine this.

Question 10

A circular-flow diagram is a model that

Accepted Answer

A)  helps to explain how participants in the economy interact with one another. 
B)  helps to explain how the economy is organized. 
C)  incorporates all aspects of the real economy. 
D)  Both (a)and (b)are correct. 
A)  helps to explain how participants in the economy interact with one another. 
B)  helps to explain how the economy is organized. 
C)  incorporates all aspects of the real economy. 
D)  Both (a)and (b)are correct.

Question 11

Economic models

Accepted Answer

A)  cannot be useful if they are based on false assumptions. 
B)  were once thought to be useful,but that is no longer true. 
C)  must incorporate all aspects of the economy if they are to be useful. 
D)  can be useful,even if they are not particularly realistic. 
A)  cannot be useful if they are based on false assumptions. 
B)  were once thought to be useful,but that is no longer true. 
C)  must incorporate all aspects of the economy if they are to be useful. 
D)  can be useful,even if they are not particularly realistic.

Question 12

A demand curve shows the relationship

Accepted Answer

A)  between income and quantity demanded. 
B)  between price and income. 
C)  between price and quantity demanded. 
D)  among income,price,and quantity demanded. 
A)  between income and quantity demanded. 
B)  between price and income. 
C)  between price and quantity demanded. 
D)  among income,price,and quantity demanded.

Question 13

Figure 2-7  
-Refer to Figure 2-7.Point B represents an outcome in which

Accepted Answer

A)  production is inefficient. 
B)  some of the economy's resources are unemployed. 
C)  the economy is using all of its resources to produce books. 
D)  the economy is using all of its ribeye steaks to produce books. 
A)  production is inefficient. 
B)  some of the economy's resources are unemployed. 
C)  the economy is using all of its resources to produce books. 
D)  the economy is using all of its ribeye steaks to produce books.

Question 14

Figure 2-9
Panel (a)Panel (b)    
-Refer to Figure 2-9,Panel (a)and Panel (b).A shift of the economy's production possibilities frontier from Panel (a)to Panel (b)could be caused by

Accepted Answer

A)  unemployment. 
B)  an improvement in television production technology. 
C)  an improvement in radio production technology. 
D)  an improvement in both television and radio production technology. 
A)  unemployment. 
B)  an improvement in television production technology. 
C)  an improvement in radio production technology. 
D)  an improvement in both television and radio production technology.

Question 15

Factors of production are

Accepted Answer

A)  the mathematical calculations firms make in determining their optimal production levels. 
B)  social and political conditions that affect production. 
C)  the physical relationships between economic inputs and outputs. 
D)  inputs into the production process. 
A)  the mathematical calculations firms make in determining their optimal production levels. 
B)  social and political conditions that affect production. 
C)  the physical relationships between economic inputs and outputs. 
D)  inputs into the production process.

Question 16

Which two groups of decision makers are included in the simple circular-flow diagram?

Accepted Answer

A)  markets and government 
B)  households and government 
C)  firms and government 
D)  households and firms 
A)  markets and government 
B)  households and government 
C)  firms and government 
D)  households and firms

Question 17

Economic growth causes a production possibilities frontier to shift outward.

Accepted Answer

A) True 
 B)False

Question 18

In the circular-flow diagram,firms produce goods and services using the factors of production.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  If the price of a product decreases,people's willingness to buy that product will increase. 
B)  Reducing tax rates on the wealthy would benefit the nation. 
C)  If the national saving rate were to increase,so would the rate of economic growth. 
D)  The elimination of trade restrictions would increase an economy's standard of living. 
A)  If the price of a product decreases,people's willingness to buy that product will increase. 
B)  Reducing tax rates on the wealthy would benefit the nation. 
C)  If the national saving rate were to increase,so would the rate of economic growth. 
D)  The elimination of trade restrictions would increase an economy's standard of living.

Question 20

Factors of production are

Accepted Answer

A)  used to produce goods and services. 
B)  also called output. 
C)  abundant in most economies. 
D)  assumed to be owned by firms in the circular-flow diagram. 
A)  used to produce goods and services. 
B)  also called output. 
C)  abundant in most economies. 
D)  assumed to be owned by firms in the circular-flow diagram.

Exam 2: Thinking Like an Economist

Figure 2-8 Panel (a)Panel (b) -Refer to Figure 2-8,Panel (a).Production at point K is

Congress relies on economists at the Congressional Budget Office to

When two variables move in the same direction,the curve relating them is downward sloping,and we say the variables are negatively related.

Economists believe that production possibilities frontiers

Which of the following transactions does not take place in the markets for the factors of production in the circular-flow diagram?

Figure 2-9 Panel (a)Panel (b) -Refer to Figure 2-9,Panel (a)and Panel (b).Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a)to Panel (b)?

Figure 2-5 -Refer to Figure 2-5.If this economy devotes one-half of its available resources to the production of baseballs and the other half to the production of bananas,it could produce

A circular-flow diagram is a model that

Economic models

A demand curve shows the relationship

Figure 2-7 -Refer to Figure 2-7.Point B represents an outcome in which

Figure 2-9 Panel (a)Panel (b) -Refer to Figure 2-9,Panel (a)and Panel (b).A shift of the economy's production possibilities frontier from Panel (a)to Panel (b)could be caused by

Factors of production are

Which two groups of decision makers are included in the simple circular-flow diagram?

Economic growth causes a production possibilities frontier to shift outward.

In the circular-flow diagram,firms produce goods and services using the factors of production.

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

Factors of production are

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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