Question 1

An economic model:

Accepted Answer

A) is useful for explaining past economic conditions but not for predicting. 
B) often leads to faulty conclusions because of the ceteris paribus assumption. 
C) allows nothing to change in the economic situation that is being described. 
D) is a simplified version of reality used to understand real-world economic conditions. 
A) is useful for explaining past economic conditions but not for predicting. 
B) often leads to faulty conclusions because of the ceteris paribus assumption. 
C) allows nothing to change in the economic situation that is being described. 
D) is a simplified version of reality used to understand real-world economic conditions.

Question 2

The effect of a natural disaster can be shown by _____ the production possibility frontier.

Accepted Answer

A) a point inside of 
B) an outward shift of 
C) a movement from one point to another along 
D) an inward shift of 
A) a point inside of 
B) an outward shift of 
C) a movement from one point to another along 
D) an inward shift of

Question 3

In terms of the production possibility frontier, inefficient use of available resources is shown by:

Accepted Answer

A) an increase in the labor force growth rate. 
B) a movement from one point to another along the production possibility frontier. 
C) an inward shift of the production possibility frontier due to the lack of opportunity. 
D) production at a point inside the production possibility frontier. 
A) an increase in the labor force growth rate. 
B) a movement from one point to another along the production possibility frontier. 
C) an inward shift of the production possibility frontier due to the lack of opportunity. 
D) production at a point inside the production possibility frontier.

Question 4

Use the following to answer questions:  
-(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. If the economy is producing at alternative X, the opportunity cost of producing at Y instead of X is _____ units of consumer goods per period.

Accepted Answer

A) 0 
B) 6 
C) 8 
D) 14 
A) 0 
B) 6 
C) 8 
D) 14

Question 5

Use the following to answer questions :  
-(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing at point A, we know the economy is:

Accepted Answer

A) using its resources efficiently. 
B) using its resources inefficiently. 
C) producing at an unattainable point. 
D) trading with another country. 
A) using its resources efficiently. 
B) using its resources inefficiently. 
C) producing at an unattainable point. 
D) trading with another country.

Question 6

In constructing a model, economists:

Accepted Answer

A) might use a computer simulation. 
B) avoid making any assumptions. 
C) assume that all relevant factors are constantly changing. 
D) are prohibited from using mathematics. 
A) might use a computer simulation. 
B) avoid making any assumptions. 
C) assume that all relevant factors are constantly changing. 
D) are prohibited from using mathematics.

Question 7

In the circular-flow diagram the flow of money going into each sector or market is _____ the flow of money coming out of that market or sector.

Accepted Answer

A) equal to 
B) greater than 
C) less than 
D) unrelated to 
A) equal to 
B) greater than 
C) less than 
D) unrelated to

Question 8

The economy's factors of production are not equally suitable for producing different types of goods. This principle generates:

Accepted Answer

A) economic growth. 
B) technical efficiency. 
C) underuse of resources. 
D) the law of increasing opportunity cost. 
A) economic growth. 
B) technical efficiency. 
C) underuse of resources. 
D) the law of increasing opportunity cost.

Question 9

Use the following to answer questions :
Figure: Comparative Advantage
Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods.  
-(Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of peaches for Westland is _____ box(es) of oranges.

Accepted Answer

A) 1 
B) 0.25 
C) 4 
D) 10 
A) 1 
B) 0.25 
C) 4 
D) 10

Question 10

When a nation's economy grows:

Accepted Answer

A) its production possibility frontier shifts outward. 
B) its production possibility frontier shifts inward. 
C) it has been able to reach full employment. 
D) it has moved to a more consumer-oriented position on its production possibility frontier. 
A) its production possibility frontier shifts outward. 
B) its production possibility frontier shifts inward. 
C) it has been able to reach full employment. 
D) it has moved to a more consumer-oriented position on its production possibility frontier.

Question 11

Which of the following is sold in the product market?

Accepted Answer

A) land 
B) labor 
C) cell phones 
D) human capital 
A) land 
B) labor 
C) cell phones 
D) human capital

Question 12

Statements that make value judgments are:

Accepted Answer

A) pecuniary. 
B) positive. 
C) nominal. 
D) normative. 
A) pecuniary. 
B) positive. 
C) nominal. 
D) normative.

Question 13

"The rate of unemployment is 9%." This statement:

Accepted Answer

A) is positive. 
B) is normative. 
C) involves a value judgment. 
D) is a personal reflection and has no value in economics. 
A) is positive. 
B) is normative. 
C) involves a value judgment. 
D) is a personal reflection and has no value in economics.

Question 14

Use the following to answer questions :  
-(Table: Coffee and Salmon Production Possibilities) Look at the table Coffee and Salmon Production Possibilities. The table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good. The opportunity cost of producing 1 unit of salmon for Alaska is:

Accepted Answer

A) 2 coffees. 
B) 0.25 coffee. 
C) 1 coffee. 
D) 0.5 coffee. 
A) 2 coffees. 
B) 0.25 coffee. 
C) 1 coffee. 
D) 0.5 coffee.

Question 15

In the circular-flow diagram, an individual or a group of people (usually a family) who share their income is a(n):

Accepted Answer

A) market. 
B) factor. 
C) household. 
D) business. 
A) market. 
B) factor. 
C) household. 
D) business.

Question 16

Use the following to answer questions :  
-(Table: Crab and Cake Production in Chesapeake) Look at the table Crab and Cake Production in Chesapeake. What is the opportunity cost of increasing the production of crabs from zero to 100? What is the opportunity cost of increasing the production of crabs from 400 to 500? Explain the difference in your answers.

Accepted Answer

When the region increased production fro

Question 17

Free trade between countries:

Accepted Answer

A) should be based on absolute advantage. 
B) will allow wealthy countries to exploit less developed nations. 
C) will shift the domestic production possibility frontier to the right. 
D) will allow for greater levels of consumption than without trade. 
A) should be based on absolute advantage. 
B) will allow wealthy countries to exploit less developed nations. 
C) will shift the domestic production possibility frontier to the right. 
D) will allow for greater levels of consumption than without trade.

Question 18

A production possibility frontier illustrates the _____ facing an economy that _____ only two goods.

Accepted Answer

A) prices; sells 
B) trade-offs; produces 
C) trade-offs; sells 
D) shortages; produces 
A) prices; sells 
B) trade-offs; produces 
C) trade-offs; sells 
D) shortages; produces

Question 19

Economic models that make unrealistic assumptions may be useful in analyzing some economic problems.

Accepted Answer

A) True 
 B)False

Question 20

The production possibility frontier will shift outward because of:

Accepted Answer

A) a decrease in the labor force. 
B) an upgrade of capital to the best available technology. 
C) better technology that improves worker productivity. 
D) a decrease in the unemployment rate. 
A) a decrease in the labor force. 
B) an upgrade of capital to the best available technology. 
C) better technology that improves worker productivity. 
D) a decrease in the unemployment rate.

An economic model:

The effect of a natural disaster can be shown by _____ the production possibility frontier.

In terms of the production possibility frontier, inefficient use of available resources is shown by:

Use the following to answer questions: -(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. If the economy is producing at alternative X, the opportunity cost of producing at Y instead of X is _____ units of consumer goods per period.

Use the following to answer questions : -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing at point A, we know the economy is:

In constructing a model, economists:

In the circular-flow diagram the flow of money going into each sector or market is _____ the flow of money coming out of that market or sector.

The economy's factors of production are not equally suitable for producing different types of goods. This principle generates:

When a nation's economy grows:

Which of the following is sold in the product market?

Statements that make value judgments are:

"The rate of unemployment is 9%." This statement:

In the circular-flow diagram, an individual or a group of people (usually a family) who share their income is a(n):

Free trade between countries:

A production possibility frontier illustrates the _ facing an economy that _ only two goods.

Economic models that make unrealistic assumptions may be useful in analyzing some economic problems.

The production possibility frontier will shift outward because of:

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

An economic model:

The effect of a natural disaster can be shown by _____ the production possibility frontier.

In terms of the production possibility frontier, inefficient use of available resources is shown by:

Use the following to answer questions: -(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. If the economy is producing at alternative X, the opportunity cost of producing at Y instead of X is _____ units of consumer goods per period.

Use the following to answer questions : -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing at point A, we know the economy is:

In constructing a model, economists:

In the circular-flow diagram the flow of money going into each sector or market is _____ the flow of money coming out of that market or sector.

The economy's factors of production are not equally suitable for producing different types of goods. This principle generates:

When a nation's economy grows:

Which of the following is sold in the product market?

Statements that make value judgments are:

"The rate of unemployment is 9%." This statement:

In the circular-flow diagram, an individual or a group of people (usually a family) who share their income is a(n):

Free trade between countries:

A production possibility frontier illustrates the _____ facing an economy that _____ only two goods.

Economic models that make unrealistic assumptions may be useful in analyzing some economic problems.

The production possibility frontier will shift outward because of:

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

A production possibility frontier illustrates the _ facing an economy that _ only two goods.