Question 1

What are the foundation stones from which economic models are built?

Accepted Answer

A)  economic policies 
B)  legal systems 
C)  assumptions 
D)  statistical forecasts 
A)  economic policies 
B)  legal systems 
C)  assumptions 
D)  statistical forecasts

Question 2

Figure 2-6  
-Refer to Figure 2-6.What is the opportunity cost to society of moving from point B to point D?

Accepted Answer

A)  100 bananas and 100 baseballs 
B)  50 bananas and 50 baseballs 
C)  100 bananas and 50 baseballs 
D)  50 bananas and 100 baseballs 
A)  100 bananas and 100 baseballs 
B)  50 bananas and 50 baseballs 
C)  100 bananas and 50 baseballs 
D)  50 bananas and 100 baseballs

Question 3

Which of the following is NOT a problem associated with graphing in economics?

Accepted Answer

A)  omitted variables 
B)  holding everything else constant 
C)  reverse causality 
D)  the ability to show a relationship between two variables 
A)  omitted variables 
B)  holding everything else constant 
C)  reverse causality 
D)  the ability to show a relationship between two variables

Question 4

In the markets for goods and services,as in the markets for the factors of production,households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 5

Table 2-1
​Production Possibilities for Toyland  
-Refer to Table 2-1.What is the opportunity cost to Toyland of increasing the production of dolls from 300 to 400?

Accepted Answer

A)  50 fire trucks 
B)  100 fire trucks 
C)  150 fire trucks 
D)  200 fire trucks 
A)  50 fire trucks 
B)  100 fire trucks 
C)  150 fire trucks 
D)  200 fire trucks

Question 6

In a simple circular-flow diagram,firms own the factors of production and use them to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 7

What does a point on a country's production possibilities frontier represent?

Accepted Answer

A)  a combination of two goods that an economy will never be able to produce 
B)  a combination of two goods that an economy can produce using all available resources and technology 
C)  a combination of two goods that an economy can produce using some of its resources and technology 
D)  a combination of two goods that an economy may be able to produce sometime in the future with additional resources and technology 
A)  a combination of two goods that an economy will never be able to produce 
B)  a combination of two goods that an economy can produce using all available resources and technology 
C)  a combination of two goods that an economy can produce using some of its resources and technology 
D)  a combination of two goods that an economy may be able to produce sometime in the future with additional resources and technology

Question 8

How does a scientist make assumptions?

Accepted Answer

A)  A scientist chooses the assumptions that best prove a desired result. 
B)  A scientist chooses the assumptions randomly so as not to appear biased. 
C)  A scientist chooses the assumptions that would be most widely accepted. 
D)  A scientist chooses the assumptions that best capture the essential features of the problem. 
A)  A scientist chooses the assumptions that best prove a desired result. 
B)  A scientist chooses the assumptions randomly so as not to appear biased. 
C)  A scientist chooses the assumptions that would be most widely accepted. 
D)  A scientist chooses the assumptions that best capture the essential features of the problem.

Question 9

Which of the following is an example of a positive statement?

Accepted Answer

A)  Higher interest rates should lead to increased savings 
B)  If welfare payments increase,the world will be a better place. 
C)  Inflation is more harmful to the economy than unemployment. 
D)  The benefits to the economy of improved equity are greater than the costs of reduced efficiency. 
A)  Higher interest rates should lead to increased savings 
B)  If welfare payments increase,the world will be a better place. 
C)  Inflation is more harmful to the economy than unemployment. 
D)  The benefits to the economy of improved equity are greater than the costs of reduced efficiency.

Question 10

When economists are trying to explain the world they are acting as scientists,and when they are trying to improve it,they are policymakers.

Accepted Answer

A) True 
 B)False

Question 11

Suppose a nation is currently producing at a point inside its production possibilities frontier.What do we know?

Accepted Answer

A)  The nation is producing beyond its capacity,and inflation will occur. 
B)  The nation is not using all available resources and is inefficient. 
C)  The nation needs improved technology in order to produce an efficient combination of goods. 
D)  There will be a large opportunity cost if the nation tries to increase production. 
A)  The nation is producing beyond its capacity,and inflation will occur. 
B)  The nation is not using all available resources and is inefficient. 
C)  The nation needs improved technology in order to produce an efficient combination of goods. 
D)  There will be a large opportunity cost if the nation tries to increase production.

Question 12

Which of the following is a difficulty economists face that some other scientists do not?

Accepted Answer

A)  Unlike other sciences,economic studies must include the largest economic player,the government. 
B)  Economists,unfortunately,receive less government funding than other scientists. 
C)  Corporations are reluctant to disclose necessary information for economic research. 
D)  Experiments are often difficult to conduct in economics. 
A)  Unlike other sciences,economic studies must include the largest economic player,the government. 
B)  Economists,unfortunately,receive less government funding than other scientists. 
C)  Corporations are reluctant to disclose necessary information for economic research. 
D)  Experiments are often difficult to conduct in economics.

Question 13

What would be considered a topic of study in macroeconomics?

Accepted Answer

A)  the impact of agricultural price support programs in the dairy industry 
B)  the effect on Canadian steel producers due to an import quota imposed on foreign steel 
C)  the effect of an increase in the price of imported oil on the Canadian inflation rate 
D)  the effect of an increase in the price of imported coffee beans on the Canadian coffee industry 
A)  the impact of agricultural price support programs in the dairy industry 
B)  the effect on Canadian steel producers due to an import quota imposed on foreign steel 
C)  the effect of an increase in the price of imported oil on the Canadian inflation rate 
D)  the effect of an increase in the price of imported coffee beans on the Canadian coffee industry

Question 14

What makes a model compelling?

Accepted Answer

A)  its application 
B)  its simplicity 
C)  its predictions 
D)  its assumptions 
A)  its application 
B)  its simplicity 
C)  its predictions 
D)  its assumptions

Question 15

Why do economists make assumptions?

Accepted Answer

A)  to diminish the chance of wrong answers 
B)  to make the world easier to understand 
C)  because all scientists make assumptions 
D)  to make certain that all necessary variables are included 
A)  to diminish the chance of wrong answers 
B)  to make the world easier to understand 
C)  because all scientists make assumptions 
D)  to make certain that all necessary variables are included

Question 16

How did the great economist John Maynard Keynes explain his comment that although economics is an easy subject compared with the higher branches of philosophy or pure science,it is a subject at which few excel?

Accepted Answer

A)  Most people who study economics are not very bright. 
B)  Good economists must possess a rare combination of gifts. 
C)  Economics is actually quite boring; hence,people tend to lose interest in it. 
D)  Good thinkers become frustrated with economics because it is not logical or relevant. 
A)  Most people who study economics are not very bright. 
B)  Good economists must possess a rare combination of gifts. 
C)  Economics is actually quite boring; hence,people tend to lose interest in it. 
D)  Good thinkers become frustrated with economics because it is not logical or relevant.

Question 17

What are the three propositions about which most economists agree most often (in order from first to third)?

Accepted Answer

A)  rent control,tariffs and quotas,and floating exchange rates 
B)  tariffs and quotas,floating exchange rates,and fiscal policy 
C)  rent control,fiscal policy,and tariffs and quotas 
D)  fiscal policy,rent control,and floating exchange rates 
A)  rent control,tariffs and quotas,and floating exchange rates 
B)  tariffs and quotas,floating exchange rates,and fiscal policy 
C)  rent control,fiscal policy,and tariffs and quotas 
D)  fiscal policy,rent control,and floating exchange rates

Question 18

In the circular-flow diagram,which flows are involved?

Accepted Answer

A)  Income from factors of production flows from firms to households. 
B)  Goods and services flow from households to firms. 
C)  Factors of production flow from firms to households. 
D)  Spending on goods and services flow from firms to households. 
A)  Income from factors of production flows from firms to households. 
B)  Goods and services flow from households to firms. 
C)  Factors of production flow from firms to households. 
D)  Spending on goods and services flow from firms to households.

Question 19

What observation did Albert Einstein once make about science?

Accepted Answer

A)  "The whole of science is nothing more than a refinement of everyday thinking." 
B)  "The whole of science is nothing more than an interesting intellectual exercise." 
C)  "In order to understand what science is,one must simply look around themselves." 
D)  "In order to understand what science is,one must transcend everyday thinking." 
A)  "The whole of science is nothing more than a refinement of everyday thinking." 
B)  "The whole of science is nothing more than an interesting intellectual exercise." 
C)  "In order to understand what science is,one must simply look around themselves." 
D)  "In order to understand what science is,one must transcend everyday thinking."

Question 20

Where do the most common data for testing economic theories come from?

Accepted Answer

A)  carefully controlled and conducted laboratory experiments 
B)  governments and large corporations 
C)  historical episodes of economic change 
D)  centrally planned economies 
A)  carefully controlled and conducted laboratory experiments 
B)  governments and large corporations 
C)  historical episodes of economic change 
D)  centrally planned economies

What are the foundation stones from which economic models are built?

Figure 2-6 -Refer to Figure 2-6.What is the opportunity cost to society of moving from point B to point D?

Which of the following is NOT a problem associated with graphing in economics?

In the markets for goods and services,as in the markets for the factors of production,households are buyers and firms are sellers.

Table 2-1 Production Possibilities for Toyland -Refer to Table 2-1.What is the opportunity cost to Toyland of increasing the production of dolls from 300 to 400?

In a simple circular-flow diagram,firms own the factors of production and use them to produce goods and services.

What does a point on a country's production possibilities frontier represent?

How does a scientist make assumptions?

Which of the following is an example of a positive statement?

When economists are trying to explain the world they are acting as scientists,and when they are trying to improve it,they are policymakers.

Suppose a nation is currently producing at a point inside its production possibilities frontier.What do we know?

Which of the following is a difficulty economists face that some other scientists do not?

What would be considered a topic of study in macroeconomics?

What makes a model compelling?

Why do economists make assumptions?

How did the great economist John Maynard Keynes explain his comment that although economics is an easy subject compared with the higher branches of philosophy or pure science,it is a subject at which few excel?

What are the three propositions about which most economists agree most often (in order from first to third)?

In the circular-flow diagram,which flows are involved?

What observation did Albert Einstein once make about science?

Where do the most common data for testing economic theories come from?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Exam 2: Thinking Like an Economist

What are the foundation stones from which economic models are built?

Figure 2-6 -Refer to Figure 2-6.What is the opportunity cost to society of moving from point B to point D?

Which of the following is NOT a problem associated with graphing in economics?

In the markets for goods and services,as in the markets for the factors of production,households are buyers and firms are sellers.

Table 2-1 ​Production Possibilities for Toyland -Refer to Table 2-1.What is the opportunity cost to Toyland of increasing the production of dolls from 300 to 400?

In a simple circular-flow diagram,firms own the factors of production and use them to produce goods and services.

What does a point on a country's production possibilities frontier represent?

How does a scientist make assumptions?

Which of the following is an example of a positive statement?

When economists are trying to explain the world they are acting as scientists,and when they are trying to improve it,they are policymakers.

Suppose a nation is currently producing at a point inside its production possibilities frontier.What do we know?

Which of the following is a difficulty economists face that some other scientists do not?

What would be considered a topic of study in macroeconomics?

What makes a model compelling?

Why do economists make assumptions?

How did the great economist John Maynard Keynes explain his comment that although economics is an easy subject compared with the higher branches of philosophy or pure science,it is a subject at which few excel?

What are the three propositions about which most economists agree most often (in order from first to third)?

In the circular-flow diagram,which flows are involved?

What observation did Albert Einstein once make about science?

Where do the most common data for testing economic theories come from?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Table 2-1 Production Possibilities for Toyland -Refer to Table 2-1.What is the opportunity cost to Toyland of increasing the production of dolls from 300 to 400?