Question 1

Economists who are primarily responsible for advising Congress on economic matters work in which agency?

Accepted Answer

A) the Federal Reserve 
B) the Congressional Budget Office 
C) the Department of the Treasury 
D) the Department of Commerce 
A) the Federal Reserve 
B) the Congressional Budget Office 
C) the Department of the Treasury 
D) the Department of Commerce

Question 2

Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

Accepted Answer

A) President Truman received input from so many economists that he only wanted one view from each. 
B) President Truman thought economists should analyze policies but not make or enforce them. 
C) Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies. 
D) A one-armed economist would conduct only positive analysis and no normative analysis. 
A) President Truman received input from so many economists that he only wanted one view from each. 
B) President Truman thought economists should analyze policies but not make or enforce them. 
C) Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies. 
D) A one-armed economist would conduct only positive analysis and no normative analysis.

Question 3

You know an economist has crossed the line from policy adviser to scientist when he or she

Accepted Answer

A) claims that the problem at hand is widely misunderstood by non-economists. 
B) makes positive statements. 
C) talks about values. 
D) makes a claim about how the world should be. 
A) claims that the problem at hand is widely misunderstood by non-economists. 
B) makes positive statements. 
C) talks about values. 
D) makes a claim about how the world should be.

Question 4

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

Accepted Answer

A) Gasoline prices ought to be lower than they are now. 
B) The federal government should raise taxes on wealthy people. 
C) The social security system is a good system and it deserves to be preserved as it is. 
D) All of the above are normative statements. 
A) Gasoline prices ought to be lower than they are now. 
B) The federal government should raise taxes on wealthy people. 
C) The social security system is a good system and it deserves to be preserved as it is. 
D) All of the above are normative statements.

Question 5

John Maynard Keynes believed the ideas of economists to be

Accepted Answer

A) generally incorrect. 
B) powerful. 
C) academic and without practical application. 
D) rantings of madmen. 
A) generally incorrect. 
B) powerful. 
C) academic and without practical application. 
D) rantings of madmen.

Question 6

A statement describing how the world should be

Accepted Answer

A) is a normative statement. 
B) is a positive statement. 
C) would only be made by an economist speaking as a scientist. 
D) would only be made by an economist employed by the government. 
A) is a normative statement. 
B) is a positive statement. 
C) would only be made by an economist speaking as a scientist. 
D) would only be made by an economist employed by the government.

Question 7

Normative conclusions

Accepted Answer

A) come from positive analysis alone. 
B) are based on ignorance of positive analysis. 
C) involve value judgments. 
D) reflect the economist's role as scientist. 
A) come from positive analysis alone. 
B) are based on ignorance of positive analysis. 
C) involve value judgments. 
D) reflect the economist's role as scientist.

Question 8

The nation's antitrust laws are enforced by economists at the Department of

Accepted Answer

A) Labor. 
B) Health and Human Services. 
C) Justice. 
D) Treasury. 
A) Labor. 
B) Health and Human Services. 
C) Justice. 
D) Treasury.

Question 9

In addition to advising the president,one duty of the Council of Economic Advisers is to

Accepted Answer

A) prepare the federal budget. 
B) write government regulations. 
C) advise Congress on economic matters. 
D) write the annual Economic Report of the President. 
A) prepare the federal budget. 
B) write government regulations. 
C) advise Congress on economic matters. 
D) write the annual Economic Report of the President.

Question 10

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice,they always answered,"On the one hand,...On the other hand,..." Truman's observation that economists' advice is not always straightforward

Accepted Answer

A) is rooted in the principle that people face tradeoffs. 
B) indicates that economists recognize that there are opportunity costs associated with policy decisions. 
C) confirms that economists are not suited to be presidential advisers. 
D) More than one of the above is correct. 
A) is rooted in the principle that people face tradeoffs. 
B) indicates that economists recognize that there are opportunity costs associated with policy decisions. 
C) confirms that economists are not suited to be presidential advisers. 
D) More than one of the above is correct.

Question 11

The Economic Report of the President

Accepted Answer

A) discusses recent developments in the economy and presents analysis of current policy issues. 
B) is written by the Council of Economic Advisers. 
C) is the responsibility of the economists at the Office of Management and Budget. 
D) Both a and b are correct. 
A) discusses recent developments in the economy and presents analysis of current policy issues. 
B) is written by the Council of Economic Advisers. 
C) is the responsibility of the economists at the Office of Management and Budget. 
D) Both a and b are correct.

Question 12

Economists at the Department of Justice

Accepted Answer

A) track the behavior of the nation's money supply. 
B) advise Congress on economic matters. 
C) help enforce the nation's antitrust laws. 
D) prepare the federal budget. 
A) track the behavior of the nation's money supply. 
B) advise Congress on economic matters. 
C) help enforce the nation's antitrust laws. 
D) prepare the federal budget.

Question 13

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 14

A normative economic statement such as "The minimum wage should be abolished"

Accepted Answer

A) would likely be made by an economist acting as a scientist. 
B) would require values and data to be evaluated. 
C) would require data but not values to be evaluated. 
D) could not be evaluated by economists acting as policy advisers. 
A) would likely be made by an economist acting as a scientist. 
B) would require values and data to be evaluated. 
C) would require data but not values to be evaluated. 
D) could not be evaluated by economists acting as policy advisers.

Question 15

When economists make normative statements,they are

Accepted Answer

A) speaking as scientists. 
B) speaking as policy advisers. 
C) making claims about how the world is. 
D) revealing that they are very liberal in their views of how the world works. 
A) speaking as scientists. 
B) speaking as policy advisers. 
C) making claims about how the world is. 
D) revealing that they are very liberal in their views of how the world works.

Question 16

You know an economist has crossed the line from scientist to policy adviser when he or she

Accepted Answer

A) claims that the problem at hand is widely misunderstood by non-economists. 
B) talks about the evidence. 
C) makes normative statements. 
D) makes a claim about how the world is. 
A) claims that the problem at hand is widely misunderstood by non-economists. 
B) talks about the evidence. 
C) makes normative statements. 
D) makes a claim about how the world is.

Question 17

When economists make

Accepted Answer

A) positive statements,they are speaking not as policy advisers but as scientists. 
B) positive statements,they are speaking not as scientists but as forecasters. 
C) normative statements,they are speaking not as policy advisers but as scientists. 
D) normative statements,they are speaking not as policy advisers but as model-builders. 
A) positive statements,they are speaking not as policy advisers but as scientists. 
B) positive statements,they are speaking not as scientists but as forecasters. 
C) normative statements,they are speaking not as policy advisers but as scientists. 
D) normative statements,they are speaking not as policy advisers but as model-builders.

Question 18

The difference between economists speaking as scientists or policy advisers boil down to the difference between

Accepted Answer

A) assumptions and theories. 
B) true statements and false statements. 
C) specific statements and general statements. 
D) positive statements and normative statements. 
A) assumptions and theories. 
B) true statements and false statements. 
C) specific statements and general statements. 
D) positive statements and normative statements.

Question 19

When economists are trying to help improve the world,they are

Accepted Answer

A) in the realm of positive economics rather than normative economics. 
B) in the realm of macroeconomics rather than microeconomics. 
C) scientists. 
D) policy advisers. 
A) in the realm of positive economics rather than normative economics. 
B) in the realm of macroeconomics rather than microeconomics. 
C) scientists. 
D) policy advisers.

Question 20

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

Accepted Answer

A) Inflation is more harmful to the economy than unemployment is. 
B) If welfare payments increase,the world will be a better place. 
C) Prices rise when the government prints too much money. 
D) When public policies are evaluated,the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency. 
A) Inflation is more harmful to the economy than unemployment is. 
B) If welfare payments increase,the world will be a better place. 
C) Prices rise when the government prints too much money. 
D) When public policies are evaluated,the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.

Exam 2: Thinking Like an Economist: The Economist As Policy Adviser

Economists who are primarily responsible for advising Congress on economic matters work in which agency?

Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

You know an economist has crossed the line from policy adviser to scientist when he or she

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

John Maynard Keynes believed the ideas of economists to be

A statement describing how the world should be

Normative conclusions

The nation's antitrust laws are enforced by economists at the Department of

In addition to advising the president,one duty of the Council of Economic Advisers is to

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice,they always answered,"On the one hand,...On the other hand,..." Truman's observation that economists' advice is not always straightforward

The Economic Report of the President

Economists at the Department of Justice

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

A normative economic statement such as "The minimum wage should be abolished"

When economists make normative statements,they are

You know an economist has crossed the line from scientist to policy adviser when he or she

When economists make

The difference between economists speaking as scientists or policy advisers boil down to the difference between

When economists are trying to help improve the world,they are

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

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A