Question 1

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

Accepted Answer

A)  goods and services 
B)  land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit 
A)  goods and services 
B)  land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit

Question 2

Figure 2-18
Relationship between Price and Restaurant Meals  
-Refer to Figure 2-18. The slope of the line containing points Y and Z is

Accepted Answer

A)  -0.5. 
B)  -1. 
C)  -2. 
D)  -4. 
A)  -0.5. 
B)  -1. 
C)  -2. 
D)  -4.

Question 3

Figure 2-7  
-Refer to Figure 2-7. Unemployment could cause this economy to produce at which point(s)?

Accepted Answer

A)  L, M 
B)  N, O, P, Q 
C)  N, O, P 
D)  Q 
A)  L, M 
B)  N, O, P, Q 
C)  N, O, P 
D)  Q

Question 4

Figure 2-2  
-Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box represents households?

Accepted Answer

A)  Box B 
B)  Box C 
C)  Box D 
D)  Any one of the other boxes (B, C, or 
D)  could represent households. 
A)  Box B 
B)  Box C 
C)  Box D 
D)  Any one of the other boxes (B, C, or 
D)  could represent households.

Question 5

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

Accepted Answer

A)  households 
B)  firms 
C)  government 
D)  markets for factors of production 
A)  households 
B)  firms 
C)  government 
D)  markets for factors of production

Question 6

Which types of models are built with assumptions?

Accepted Answer

A)  economic models, but not models in other disciplines such as physics and biology 
B)  economic models as well as models in other disciplines such as physics and biology 
C)  models that are built for teaching purposes but not for research purposes 
D)  bad models 
A)  economic models, but not models in other disciplines such as physics and biology 
B)  economic models as well as models in other disciplines such as physics and biology 
C)  models that are built for teaching purposes but not for research purposes 
D)  bad models

Question 7

Figure 2-23  
-Refer to Figure 2-23. Points A, B, and D represent feasible outcomes for this economy.

Accepted Answer

A) True 
 B)False

Question 8

Normative statements are

Accepted Answer

A)  not usually made by economists. 
B)  claims about how the world should be. 
C)  claims about how variables in the economy normally behave. 
D)  pessimistic interpretations of the economy. 
A)  not usually made by economists. 
B)  claims about how the world should be. 
C)  claims about how variables in the economy normally behave. 
D)  pessimistic interpretations of the economy.

Question 9

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)  One economist believes everyone should pay the same percentage of their income in taxes; another economist believes that wealthier citizens should pay a higher percentage of their income in taxes. 
B)  One economist believes that manufacturing firms should face greater regulation to preserve the environment; another economist believes the government should not intervene in free markets. 
C)  One economist believes that equality should be valued over efficiency in policy decisions; another economist believes that efficiency should be valued over equality in policy decisions. 
D)  One economist believes the government should tax a household's income; another economist believes the government should tax a household's consumption. 
A)  One economist believes everyone should pay the same percentage of their income in taxes; another economist believes that wealthier citizens should pay a higher percentage of their income in taxes. 
B)  One economist believes that manufacturing firms should face greater regulation to preserve the environment; another economist believes the government should not intervene in free markets. 
C)  One economist believes that equality should be valued over efficiency in policy decisions; another economist believes that efficiency should be valued over equality in policy decisions. 
D)  One economist believes the government should tax a household's income; another economist believes the government should tax a household's consumption.

Question 10

Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

Accepted Answer

The answer of Is the following a positive or normative...

Question 11

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Figure 2-7  
-Refer to Figure 2-7. Efficient production is represented by which point(s)?

Accepted Answer

A)  L, M 
B)  L, M, N, P, Q 
C)  N, O, P 
D)  Q 
A)  L, M 
B)  L, M, N, P, Q 
C)  N, O, P 
D)  Q

Question 14

Which markets are represented in the simple circular-flow diagram?

Accepted Answer

A)  markets for goods and services and markets for financial assets 
B)  markets for factors of production and markets for financial assets 
C)  markets for goods and services and markets for factors of production 
D)  markets for goods and services and markets for imports and exports 
A)  markets for goods and services and markets for financial assets 
B)  markets for factors of production and markets for financial assets 
C)  markets for goods and services and markets for factors of production 
D)  markets for goods and services and markets for imports and exports

Question 15

Figure 2-9
Panel (a) Panel (b)
    
-Refer to Figure 2-9, Panel (a). The opportunity cost of moving from point J to point L is

Accepted Answer

A)  2 donuts. 
B)  2 donuts and 2 cups of coffee. 
C)  2 cups of coffee. 
D)  6 cups of coffee. 
A)  2 donuts. 
B)  2 donuts and 2 cups of coffee. 
C)  2 cups of coffee. 
D)  6 cups of coffee.

Question 16

Economists at the Department of the Treasury

Accepted Answer

A)  design U.S. currency and coins. 
B)  provide Congress with the annual budget. 
C)  enforce the U.S. antitrust laws. 
D)  provide advice on tax policy to the President. 
A)  design U.S. currency and coins. 
B)  provide Congress with the annual budget. 
C)  enforce the U.S. antitrust laws. 
D)  provide advice on tax policy to the President.

Question 17

Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

Accepted Answer

A) True 
 B)False

Question 18

Economic models can help us understand reality only when they include all details of the economy.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  0 blankets and 360 pillows. 
B)  200 blankets and 240 pillows. 
C)  320 blankets and 120 pillows. 
D)  360 blankets and 0 pillows. 
A)  0 blankets and 360 pillows. 
B)  200 blankets and 240 pillows. 
C)  320 blankets and 120 pillows. 
D)  360 blankets and 0 pillows.

Question 20

Figure 2-20
Relationship Between Years of Education and Annual Income  
-Refer to Figure 2-20. The graph above is a

Accepted Answer

A)  bar graph 
B)  scatterplot 
C)  pie chart 
D)  time series analysis 
A)  bar graph 
B)  scatterplot 
C)  pie chart 
D)  time series analysis

Exam 2: Thinking Like an Economist

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. The slope of the line containing points Y and Z is

Figure 2-7 -Refer to Figure 2-7. Unemployment could cause this economy to produce at which point(s)?

Figure 2-2 -Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box represents households?

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

Which types of models are built with assumptions?

Figure 2-23 -Refer to Figure 2-23. Points A, B, and D represent feasible outcomes for this economy.

Normative statements are

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

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

Figure 2-7 -Refer to Figure 2-7. Efficient production is represented by which point(s)?

Which markets are represented in the simple circular-flow diagram?

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a). The opportunity cost of moving from point J to point L is

Economists at the Department of the Treasury

Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

Economic models can help us understand reality only when they include all details of the economy.

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

Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. The graph above is a

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

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