Question 1

Economists speaking like policy advisers make

Accepted Answer

A)  claims about how the world is. 
B)  descriptive statements. 
C)  normative statements. 
D)  More than one of the above is correct. 
A)  claims about how the world is. 
B)  descriptive statements. 
C)  normative statements. 
D)  More than one of the above is correct.

Question 2

Figure 2-2  
-Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

Accepted Answer

A)  households are represented by Box A. 
B)  firms are represented by Box C. 
C)  firms are represented by Box A. 
D)  firms are sellers in Box B. 
A)  households are represented by Box A. 
B)  firms are represented by Box C. 
C)  firms are represented by Box A. 
D)  firms are sellers in Box B.

Question 3

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 4

The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.

Accepted Answer

A) True 
 B)False

Question 5

A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"

Accepted Answer

A)  would likely be made by an economist acting as a policy advisor. 
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 scientists. 
A)  would likely be made by an economist acting as a policy advisor. 
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 scientists.

Question 6

Figure 2-7  
-Refer to Figure 2-7. Efficient production is represented by which points)?

Accepted Answer

A)  L, M 
B)  L, M, N, P, Q 
C)  N, O, P 
D)  Q 
A)  L, M 
B)  L, M, N, P, Q 
C)  N, O, P 
D)  Q

Question 7

For economists, substitutes for laboratory experiments often come in the form of

Accepted Answer

A)  natural experiments offered by history. 
B)  untested theories. 
C)  "rules of thumb" and other such conveniences. 
D)  reliance upon the wisdom of elders in the economics profession. 
A)  natural experiments offered by history. 
B)  untested theories. 
C)  "rules of thumb" and other such conveniences. 
D)  reliance upon the wisdom of elders in the economics profession.

Question 8

A circular-flow diagram is a model that

Accepted Answer

A)  helps to explain how participants in the economy interact with one another. 
B)  helps to explain how the economy is organized. 
C)  incorporates all aspects of the real economy. 
D)  Both a) and b) are correct. 
A)  helps to explain how participants in the economy interact with one another. 
B)  helps to explain how the economy is organized. 
C)  incorporates all aspects of the real economy. 
D)  Both a) and b) are correct.

Question 9

Figure 2-5  
-Refer to Figure 2-5. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

Accepted Answer

A)  The economy has insufficient resources to produce at a more desirable point. 
B)  The economy's available technology prevents it from producing at a more desirable point. 
C)  There is widespread unemployment in the economy. 
D)  Any of the above statements would be a legitimate explanation for this situation. 
A)  The economy has insufficient resources to produce at a more desirable point. 
B)  The economy's available technology prevents it from producing at a more desirable point. 
C)  There is widespread unemployment in the economy. 
D)  Any of the above statements would be a legitimate explanation for this situation.

Question 10

The president of the United States receives tax policy advice from economists in the

Accepted Answer

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

Question 11

A production possibilities frontier shifts outward when

Accepted Answer

A)  the economy experiences economic growth. 
B)  the desires of the economy's citizens change. 
C)  at least one of the basic principles of economics is violated. 
D)  opportunity costs are lessened. 
A)  the economy experiences economic growth. 
B)  the desires of the economy's citizens change. 
C)  at least one of the basic principles of economics is violated. 
D)  opportunity costs are lessened.

Question 12

Economists at which administrative department analyze data on workers and those looking for work to help formulate labor-market policies?

Accepted Answer

The answer of Economists at which administrative department analyze data...

Question 13

Figure 2-21  
-Refer to Figure 2-21. Your friend John created the graph above to illustrate that snowstorms are caused by more snowblowers being sold. You inform him that his interpretation is incorrect due to

Accepted Answer

A)  omitted variable bias. 
B)  reverse causality. 
C)  slope mismatch. 
D)  shifting versus moving along a curve. 
A)  omitted variable bias. 
B)  reverse causality. 
C)  slope mismatch. 
D)  shifting versus moving along a curve.

Question 14

Figure 2-5  
-Refer to Figure 2-5. If this economy devotes all of its resources to the production of dryers, then it will produce

Accepted Answer

A)  0 dryers and 100 washers. 
B)  60 dryers and 50 washers. 
C)  80 dryers and 0 washers. 
D)  80 dryers and 50 washers. 
A)  0 dryers and 100 washers. 
B)  60 dryers and 50 washers. 
C)  80 dryers and 0 washers. 
D)  80 dryers and 50 washers.

Question 15

Economists at the Department of the Treasury

Accepted Answer

A)  design U.S. currency and coins. 
B)  provide Congress with the annual budget. 
C)  enforce the U.S. antitrust laws. 
D)  provide advice on tax policy to the President. 
A)  design U.S. currency and coins. 
B)  provide Congress with the annual budget. 
C)  enforce the U.S. antitrust laws. 
D)  provide advice on tax policy to the President.

Question 16

The most common data for testing economic theories come from

Accepted Answer

A)  carefully controlled and conducted laboratory experiments. 
B)  computer models of economies. 
C)  historical episodes of economic change. 
D)  centrally planned economies. 
A)  carefully controlled and conducted laboratory experiments. 
B)  computer models of economies. 
C)  historical episodes of economic change. 
D)  centrally planned economies.

Question 17

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Accepted Answer

A) True 
 B)False

Question 18

The y-coordinate is the

Accepted Answer

A)  first number of an ordered pair and represents the point's horizontal location. 
B)  second number of an ordered pair and represents the point's horizontal location. 
C)  first number of an ordered pair and represents the point's vertical location. 
D)  second number of an ordered pair and represents the point's vertical location. 
A)  first number of an ordered pair and represents the point's horizontal location. 
B)  second number of an ordered pair and represents the point's horizontal location. 
C)  first number of an ordered pair and represents the point's vertical location. 
D)  second number of an ordered pair and represents the point's vertical location.

Question 19

Figure 2-19
In the following graph the x-axis shows the number of times a commuter rail train stops at a station per hour and the y-axis shows the number of commuter rail passengers per hour.
Commuter Rail Passengers by Frequency of Service  
-Refer to Figure 2-19. A policymaker observes this graph and concludes that increasing the frequency of commuter rail service is a certain way to get more commuters to choose the commuter rail instead of driving their own cars. You warn the policymaker about making a reverse causality mistake with which of the following statements?

Accepted Answer

A)  Higher gas prices are causing more people to choose the commuter rail over driving. 
B)  The service frequency was increased in response to an increase in the number of passengers per hour. 
C)  There is a positive relationship between frequency of stops and number of passengers. 
D)  None of the above is correct. 
A)  Higher gas prices are causing more people to choose the commuter rail over driving. 
B)  The service frequency was increased in response to an increase in the number of passengers per hour. 
C)  There is a positive relationship between frequency of stops and number of passengers. 
D)  None of the above is correct.

Question 20

Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Economists speaking like policy advisers make

Figure 2-2 -Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

John Maynard Keynes believed the ideas of economists to be

The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.

A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"

Figure 2-7 -Refer to Figure 2-7. Efficient production is represented by which points)?

For economists, substitutes for laboratory experiments often come in the form of

A circular-flow diagram is a model that

Figure 2-5 -Refer to Figure 2-5. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

The president of the United States receives tax policy advice from economists in the

A production possibilities frontier shifts outward when

Economists at which administrative department analyze data on workers and those looking for work to help formulate labor-market policies?

Figure 2-21 -Refer to Figure 2-21. Your friend John created the graph above to illustrate that snowstorms are caused by more snowblowers being sold. You inform him that his interpretation is incorrect due to

Figure 2-5 -Refer to Figure 2-5. If this economy devotes all of its resources to the production of dryers, then it will produce

Economists at the Department of the Treasury

The most common data for testing economic theories come from

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

The y-coordinate is the

Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

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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