Question 1

The circular-flow diagram represents the market for _____ and the market for _____.

Accepted Answer

A) goods and services; factors 
B) households; firms 
C) money; goods and services 
D) factors; money 
A) goods and services; factors 
B) households; firms 
C) money; goods and services 
D) factors; money

Question 2

Which of the following is a normative statement?

Accepted Answer

A) The minimum wage has not kept pace with inflation. 
B) The minimum wage is an important tool in fighting poverty and should be increased. 
C) The minimum wage can cause higher unemployment for teens and unskilled workers. 
D) A higher minimum wage is expected to increase the price of a fast-food cheeseburger. 
A) The minimum wage has not kept pace with inflation. 
B) The minimum wage is an important tool in fighting poverty and should be increased. 
C) The minimum wage can cause higher unemployment for teens and unskilled workers. 
D) A higher minimum wage is expected to increase the price of a fast-food cheeseburger.

Question 3

Use the following to answer questions :
Figure: Production Possibility Frontier  
-(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. The combination of cars and computers at point H:

Accepted Answer

A) can be attained but would cost too much. 
B) cannot be attained given the level of technology and the resources available. 
C) has no meaning, since it is not what consumers want. 
D) is attainable but would increase unemployment. 
A) can be attained but would cost too much. 
B) cannot be attained given the level of technology and the resources available. 
C) has no meaning, since it is not what consumers want. 
D) is attainable but would increase unemployment.

Question 4

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

Accepted Answer

A) The poverty rate should be 4%. 
B) A high rate of economic growth should be a more important goal for the country than a low rate of unemployment. 
C) The federal government pays for 46% of U.S. health care costs. 
D) Everyone in the country should be covered by national health insurance. 
A) The poverty rate should be 4%. 
B) A high rate of economic growth should be a more important goal for the country than a low rate of unemployment. 
C) The federal government pays for 46% of U.S. health care costs. 
D) Everyone in the country should be covered by national health insurance.

Question 5

If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibility frontier is:

Accepted Answer

A) bowed out. 
B) bowed in. 
C) a straight line. 
D) a vertical line. 
A) bowed out. 
B) bowed in. 
C) a straight line. 
D) a vertical line.

Question 6

Economists disagree more over normative economics than positive economics.

Accepted Answer

A) True 
 B)False

Question 7

Use the following to answer questions:
Figure: Strawberries and Submarines  
-(Figure: Strawberries and Submarines) Look at the figure Strawberries and Submarines. Suppose the economy now operates at point C. Moving to point E would require that the economy:

Accepted Answer

A) achieve full employment and an efficient allocation of resources. 
B) eliminate its production of strawberries. 
C) reduce its production of submarines. 
D) improve its technology or increase its quantities of factors of production. 
A) achieve full employment and an efficient allocation of resources. 
B) eliminate its production of strawberries. 
C) reduce its production of submarines. 
D) improve its technology or increase its quantities of factors of production.

Question 8

Bangladesh produces much of the clothing we wear because it can produce more clothes than the United States.

Accepted Answer

A) True 
 B)False

Question 9

A typical bowed-out production possibility frontier between two goods, guns and butter, shows that the opportunity cost of butter in terms of guns increases as more butter is produced. This implies that the opportunity cost of guns in terms of butter decreases as more guns are produced.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is NOT a factor of production?

Accepted Answer

A) labor 
B) machines and buildings 
C) land 
D) money 
A) labor 
B) machines and buildings 
C) land 
D) money

Question 11

Use the following to answer questions :
Figure: Guns and Butter  
-(Figure: Guns and Butter) Look at the figure Guns and Butter. This production possibility frontier is:

Accepted Answer

A) bowed out because of increasing opportunity costs. 
B) bowed in because of increasing opportunity costs. 
C) bowed in because of constant costs of guns and butter. 
D) linear because of constant costs. 
A) bowed out because of increasing opportunity costs. 
B) bowed in because of increasing opportunity costs. 
C) bowed in because of constant costs of guns and butter. 
D) linear because of constant costs.

Question 12

Households buy goods and services in the _____ markets.

Accepted Answer

A) factor 
B) product 
C) resource 
D) financial 
A) factor 
B) product 
C) resource 
D) financial

Question 13

When building a model, economists:

Accepted Answer

A) simplify reality to highlight what really matters. 
B) attempt to duplicate reality in all of its complexity. 
C) ignore the facts and instead try to determine what the facts should be. 
D) are careful to avoid the scientific method. 
A) simplify reality to highlight what really matters. 
B) attempt to duplicate reality in all of its complexity. 
C) ignore the facts and instead try to determine what the facts should be. 
D) are careful to avoid the scientific method.

Question 14

Use the following to answer questions :
Figure: Bicycles and Radishes I  
-(Figure: Bicycles and Radishes I) Look at The figure Bicycles and Radishes I. It shows the production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. The opportunity cost of producing an additional ton of radishes would be greater in:

Accepted Answer

A) country A. 
B) country B. 
C) neither; the opportunity cost would be the same in both countries. 
D) There is not enough information to answer the question. 
A) country A. 
B) country B. 
C) neither; the opportunity cost would be the same in both countries. 
D) There is not enough information to answer the question.

Question 15

If farmer Sam MacDonald can produce 200 pounds of cabbages and no potatoes or no cabbages and 100 pounds of potatoes and if he faces a linear production possibility frontier, the opportunity cost of producing an additional pound of cabbage is _____ pound(s) of potatoes.

Accepted Answer

A) 0.5 
B) 2 
C) 100 
D) 200 
A) 0.5 
B) 2 
C) 100 
D) 200

Question 16

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Frances CANNOT efficiently produce _____ bushels of tomatoes and _____ bushels of green beans.

Accepted Answer

A) 400; 0 
B) 200; 400 
C) 200; 200 
D) 0; 800 
A) 400; 0 
B) 200; 400 
C) 200; 200 
D) 0; 800

Question 17

The assumption ceteris paribus in a model means "other things equal."

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a normative statement?

Accepted Answer

A) The rate of unemployment is 9%. 
B) A high rate of economic growth creates jobs. 
C) The federal government spends half of its budget on national defense. 
D) Everyone in the United States deserves to be covered by national health insurance. 
A) The rate of unemployment is 9%. 
B) A high rate of economic growth creates jobs. 
C) The federal government spends half of its budget on national defense. 
D) Everyone in the United States deserves to be covered by national health insurance.

Question 19

Use the following to answer questions:
Scenario: Linear Production Possibility Frontier
Largetown has a linear production possibility frontier, and it produces socks and shirts with 80 hours of labor. The table shows the number of hours of labor necessary to produce one pair of socks or one shirt.  
-(Scenario: Linear Production Possibility Frontier) Look at the scenario Linear Production Possibility Frontier. Largetown CANNOT produce _____ shirts and _____ pairs of socks.

Accepted Answer

A) 20; 0 
B) 40; 40 
C) 0; 40 
D) 10; 20 
A) 20; 0 
B) 40; 40 
C) 0; 40 
D) 10; 20

Question 20

A simplified version of reality that is used to clarify economic situations is called a(n):

Accepted Answer

A) economic fact. 
B) current event. 
C) model. 
D) scarce resource. 
A) economic fact. 
B) current event. 
C) model. 
D) scarce resource.

The circular-flow diagram represents the market for _ and the market for _.

Which of the following is a normative statement?

Use the following to answer questions : Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. The combination of cars and computers at point H:

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

If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibility frontier is:

Economists disagree more over normative economics than positive economics.

Use the following to answer questions: Figure: Strawberries and Submarines -(Figure: Strawberries and Submarines) Look at the figure Strawberries and Submarines. Suppose the economy now operates at point C. Moving to point E would require that the economy:

Bangladesh produces much of the clothing we wear because it can produce more clothes than the United States.

A typical bowed-out production possibility frontier between two goods, guns and butter, shows that the opportunity cost of butter in terms of guns increases as more butter is produced. This implies that the opportunity cost of guns in terms of butter decreases as more guns are produced.

Which of the following is NOT a factor of production?

Use the following to answer questions : Figure: Guns and Butter -(Figure: Guns and Butter) Look at the figure Guns and Butter. This production possibility frontier is:

Households buy goods and services in the _____ markets.

When building a model, economists:

If farmer Sam MacDonald can produce 200 pounds of cabbages and no potatoes or no cabbages and 100 pounds of potatoes and if he faces a linear production possibility frontier, the opportunity cost of producing an additional pound of cabbage is _____ pound(s) of potatoes.

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Frances CANNOT efficiently produce _ bushels of tomatoes and _ bushels of green beans.

The assumption ceteris paribus in a model means "other things equal."

Which of the following is a normative statement?

A simplified version of reality that is used to clarify economic situations is called a(n):

First Principles

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

Exam 2: Economic Models

The circular-flow diagram represents the market for _____ and the market for _____.

Which of the following is a normative statement?

Use the following to answer questions : Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. The combination of cars and computers at point H:

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

If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibility frontier is:

Economists disagree more over normative economics than positive economics.

Use the following to answer questions: Figure: Strawberries and Submarines -(Figure: Strawberries and Submarines) Look at the figure Strawberries and Submarines. Suppose the economy now operates at point C. Moving to point E would require that the economy:

Bangladesh produces much of the clothing we wear because it can produce more clothes than the United States.

A typical bowed-out production possibility frontier between two goods, guns and butter, shows that the opportunity cost of butter in terms of guns increases as more butter is produced. This implies that the opportunity cost of guns in terms of butter decreases as more guns are produced.

Which of the following is NOT a factor of production?

Use the following to answer questions : Figure: Guns and Butter -(Figure: Guns and Butter) Look at the figure Guns and Butter. This production possibility frontier is:

Households buy goods and services in the _____ markets.

When building a model, economists:

If farmer Sam MacDonald can produce 200 pounds of cabbages and no potatoes or no cabbages and 100 pounds of potatoes and if he faces a linear production possibility frontier, the opportunity cost of producing an additional pound of cabbage is _____ pound(s) of potatoes.

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Frances CANNOT efficiently produce _____ bushels of tomatoes and _____ bushels of green beans.

The assumption ceteris paribus in a model means "other things equal."

Which of the following is a normative statement?

A simplified version of reality that is used to clarify economic situations is called a(n):

First Principles

Supply and Demand

International Trade 5

Macroeconomics: the Big Picture

Gdp and Cpi: Tracking the Macroeconomy

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending, and the Financial System

Fiscal Policy Appendix Taxes and the Multiplier

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

toward a Fuller Understanding of Present Value

Filters

The circular-flow diagram represents the market for _ and the market for _.

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Frances CANNOT efficiently produce _ bushels of tomatoes and _ bushels of green beans.