Exam 2: Thinking Like an Economist

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

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

The slope of a horizontal line is infinite, and the slope of a vertical line is zero.

Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

Among economic models, the circular-flow diagram is unusual in that it

Economists view normative statements as

Figure 2-22 -Refer to Figure 2-22. What is the x-coordinate of point R?

The argument that purchases of minivans cause large families is an example of

Economists speaking like policy advisers make

Economists make assumptions to

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

Figure 2-23 -Refer to Figure 2-23. It is possible for this economy to produce 75 doghouses.

Economists use one standard set of assumptions to answer all economic questions.

The y-coordinate of an ordered pair specifies the

In the ordered pair 20, 30), 20 is the

Who would be more likely to study the effects of rent control on housing in New York City, a macroeconomist or a microeconomist?

The second number in any ordered pair is

Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. Which of the following could result in a movement from point B to point Z?

Figure 2-5 -Refer to Figure 2-5. It is possible for this economy to produce

When two variables move in the same direction, the curve relating them is