Question 1

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 2

A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is

Accepted Answer

A)  less than 0. 
B)  between zero and 1. 
C)  between one and infinity. 
D)  undefined. 
A)  less than 0. 
B)  between zero and 1. 
C)  between one and infinity. 
D)  undefined.

Question 3

Figure 2-17  
-Refer to Figure 2-17. The curves shown are

Accepted Answer

A)  supply curves. 
B)  demand curves. 
C)  preference curves. 
D)  income-consumption curves. 
A)  supply curves. 
B)  demand curves. 
C)  preference curves. 
D)  income-consumption curves.

Question 4

Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

Accepted Answer

A)  Transit ridership increased in Atlanta following an increase in gas prices. 
B)  Federal tax revenue increased following a decrease in the tax rate. 
C)  Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances. 
D)  Following the imposition of austerity measures, the growth rate of the economy in Greece slowed. 
A)  Transit ridership increased in Atlanta following an increase in gas prices. 
B)  Federal tax revenue increased following a decrease in the tax rate. 
C)  Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances. 
D)  Following the imposition of austerity measures, the growth rate of the economy in Greece slowed.

Question 5

Macroeconomics is the study of

Accepted Answer

A)  individual decision makers. 
B)  international trade. 
C)  economy-wide phenomena. 
D)  markets for large products. 
A)  individual decision makers. 
B)  international trade. 
C)  economy-wide phenomena. 
D)  markets for large products.

Question 6

In the simple circular-flow diagram, the participants in the economy are

Accepted Answer

A)  firms and government. 
B)  households and firms. 
C)  households and government. 
D)  households, firms, and government. 
A)  firms and government. 
B)  households and firms. 
C)  households and government. 
D)  households, firms, and government.

Question 7

In the circular-flow diagram,

Accepted Answer

A)  firms are buyers in the markets for goods and services. 
B)  households are sellers in the markets for the factors of production. 
C)  firms are sellers in the markets for factors of production and in the markets for goods and services. 
D)  dollars that are spent on goods and services flow directly from firms to households. 
A)  firms are buyers in the markets for goods and services. 
B)  households are sellers in the markets for the factors of production. 
C)  firms are sellers in the markets for factors of production and in the markets for goods and services. 
D)  dollars that are spent on goods and services flow directly from firms to households.

Question 8

Policies such as rent control and trade barriers persist

Accepted Answer

A)  because economists are about evenly divided as to the merits of those policies. 
B)  because almost all economists agree that those policies have no discernible economic effects. 
C)  because almost all economists agree that those policies are desirable. 
D)  despite the fact that almost all economists agree that those policies are undesirable. 
A)  because economists are about evenly divided as to the merits of those policies. 
B)  because almost all economists agree that those policies have no discernible economic effects. 
C)  because almost all economists agree that those policies are desirable. 
D)  despite the fact that almost all economists agree that those policies are undesirable.

Question 9

The production possibilities frontier illustrates

Accepted Answer

A)  the trade-off between efficiency and equality. 
B)  the combination of output that an economy should produce. 
C)  the combination of output that each member of society should consume. 
D)  None of the above is correct. 
A)  the trade-off between efficiency and equality. 
B)  the combination of output that an economy should produce. 
C)  the combination of output that each member of society should consume. 
D)  None of the above is correct.

Question 10

Figure 2-9
Panel a) Panel b)
    
-Refer to Figure 2-9, Panel a) and Panel b). A shift of the economy's production possibilities frontier from Panel a) to Panel b) could be caused by

Accepted Answer

A)  unemployment. 
B)  an improvement in donut production technology. 
C)  an improvement in coffee production technology. 
D)  an improvement in both donut and coffee production technology. 
A)  unemployment. 
B)  an improvement in donut production technology. 
C)  an improvement in coffee production technology. 
D)  an improvement in both donut and coffee production technology.

Question 11

A survey which sought the opinion of professional economists on fourteen propositions about economic policy found that

Accepted Answer

A)  the respondents were almost equally divided on the propositions. 
B)  the respondents favored the propositions by a slight margin. 
C)  the respondents disagreed with the propositions by a slight margin. 
D)  there was overwhelming endorsement of the propositions among the respondents. 
A)  the respondents were almost equally divided on the propositions. 
B)  the respondents favored the propositions by a slight margin. 
C)  the respondents disagreed with the propositions by a slight margin. 
D)  there was overwhelming endorsement of the propositions among the respondents.

Question 12

The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

Accepted Answer

A) True 
 B)False

Question 13

Table 2-6
  
-Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of mobile phones from 200 to 500?

Accepted Answer

The answer of Table 2-6
  
-Refer to Table 2-6....

Question 14

Which types of models are built with assumptions?

Accepted Answer

A)  economic models, but not models in other disciplines such as physics and biology 
B)  economic models as well as models in other disciplines such as physics and biology 
C)  models that are built for teaching purposes but not for research purposes 
D)  bad models 
A)  economic models, but not models in other disciplines such as physics and biology 
B)  economic models as well as models in other disciplines such as physics and biology 
C)  models that are built for teaching purposes but not for research purposes 
D)  bad models

Question 15

Figure 2-8  
-Refer to Figure 2-8. To reach point L, the economy would have to

Accepted Answer

A)  acquire more resources or experience a technological advance. 
B)  begin using its available resources more efficiently than it is currently using them. 
C)  shift resources away from the production of nails and toward the production of hammers. 
D)  None of the above are correct; the economy will never be able to reach point L. 
A)  acquire more resources or experience a technological advance. 
B)  begin using its available resources more efficiently than it is currently using them. 
C)  shift resources away from the production of nails and toward the production of hammers. 
D)  None of the above are correct; the economy will never be able to reach point L.

Question 16

Figure 2-23  
-Refer to Figure 2-23. Point B represents an inefficient outcome for this economy.

Accepted Answer

A) True 
 B)False

Question 17

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Accepted Answer

A) True 
 B)False

Question 18

When studying the effects of changes in public policy, economists believe that

Accepted Answer

A)  it is important to distinguish between the short run and the long run. 
B)  the assumptions used in studying those effects should be the same for the short run as for the long run. 
C)  the short-run effects of those changes are always more beneficial to society than are the long-run effects. 
D)  the long-run effects of those changes are always more beneficial to society than are the short-run effects. 
A)  it is important to distinguish between the short run and the long run. 
B)  the assumptions used in studying those effects should be the same for the short run as for the long run. 
C)  the short-run effects of those changes are always more beneficial to society than are the long-run effects. 
D)  the long-run effects of those changes are always more beneficial to society than are the short-run effects.

Question 19

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Accepted Answer

A)  rotation of the curve. 
B)  shift of the curve. 
C)  movement along the curve. 
D)  change in the slope of the curve. 
A)  rotation of the curve. 
B)  shift of the curve. 
C)  movement along the curve. 
D)  change in the slope of the curve.

Question 20

Figure 2-13  
-Refer to Figure 2-13. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Accepted Answer

A)  I, L 
B)  G, H 
C)  J, K 
D)  F, G 
A)  I, L 
B)  G, H 
C)  J, K 
D)  F, G

Exam 2: Thinking Like an Economist

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

A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is

Figure 2-17 -Refer to Figure 2-17. The curves shown are

Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

Macroeconomics is the study of

In the simple circular-flow diagram, the participants in the economy are

In the circular-flow diagram,

Policies such as rent control and trade barriers persist

The production possibilities frontier illustrates

Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a) and Panel b). A shift of the economy's production possibilities frontier from Panel a) to Panel b) could be caused by

A survey which sought the opinion of professional economists on fourteen propositions about economic policy found that

The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

Table 2-6 -Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of mobile phones from 200 to 500?

Which types of models are built with assumptions?

Figure 2-8 -Refer to Figure 2-8. To reach point L, the economy would have to

Figure 2-23 -Refer to Figure 2-23. Point B represents an inefficient outcome for this economy.

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

When studying the effects of changes in public policy, economists believe that

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Figure 2-13 -Refer to Figure 2-13. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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