Question 1

Figure 2-3  
-Refer to Figure 2-3. Which shape refers to the markets for goods and services?

Accepted Answer

A)  oval A 
B)  oval B 
C)  rectangle 1 
D)  rectangle 2 
A)  oval A 
B)  oval B 
C)  rectangle 1 
D)  rectangle 2

Question 2

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

Accepted Answer

A)  households 
B)  firms 
C)  government 
D)  markets for factors of production 
A)  households 
B)  firms 
C)  government 
D)  markets for factors of production

Question 3

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

Accepted Answer

A) True 
 B)False

Question 4

The x-coordinate of an ordered pair specifies the

Accepted Answer

A)  diagonal location of the point. 
B)  vertical location of the point. 
C)  horizontal location of the point. 
D)  quadrant location in which the point is located. 
A)  diagonal location of the point. 
B)  vertical location of the point. 
C)  horizontal location of the point. 
D)  quadrant location in which the point is located.

Question 5

Figure 2-20
Relationship Between Years of Education and Annual Income  
-Refer to Figure 2-20. According to the graph, the correlation between years of education and annual income is

Accepted Answer

A)  positive 
B)  negative 
C)  inverse 
D)  normative 
A)  positive 
B)  negative 
C)  inverse 
D)  normative

Question 6

Economic models are most often composed of diagrams and equations.

Accepted Answer

A) True 
 B)False

Question 7

The circular-flow diagram

Accepted Answer

A)  is an economic model. 
B)  incorporates two types of decision makers: households and firms. 
C)  represents the flows of inputs, outputs, and dollars. 
D)  All of the above are correct. 
A)  is an economic model. 
B)  incorporates two types of decision makers: households and firms. 
C)  represents the flows of inputs, outputs, and dollars. 
D)  All of the above are correct.

Question 8

Two variables that have a positive correlation move in the same direction.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is correct?

Accepted Answer

A)  A horizontal line has an infinite slope, and a vertical line has a zero slope. 
B)  A horizontal line has a slope of 1, and a vertical line has a slope of -1. 
C)  A horizontal line has a zero slope, and a vertical line has an infinite slope. 
D)  A horizontal line has a slope of -1, and a vertical line has a slope of 1. 
A)  A horizontal line has an infinite slope, and a vertical line has a zero slope. 
B)  A horizontal line has a slope of 1, and a vertical line has a slope of -1. 
C)  A horizontal line has a zero slope, and a vertical line has an infinite slope. 
D)  A horizontal line has a slope of -1, and a vertical line has a slope of 1.

Question 10

Figure 2-4  
-Refer to Figure 2-4. Inefficient production is represented by which points)?

Accepted Answer

A)  Q, S 
B)  Q, S, T 
C)  R, U 
D)  T 
A)  Q, S 
B)  Q, S, T 
C)  R, U 
D)  T

Question 11

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

Accepted Answer

A)  amount of the other good that must be given up. 
B)  market price of the additional amount produced. 
C)  amount of resources that must be devoted to its production. 
D)  number of dollars that must be spent to produce it. 
A)  amount of the other good that must be given up. 
B)  market price of the additional amount produced. 
C)  amount of resources that must be devoted to its production. 
D)  number of dollars that must be spent to produce it.

Question 12

The production possibilities frontier is a graph that shows the various combinations of output that an economy

Accepted Answer

A)  should produce. 
B)  wants to produce. 
C)  can produce. 
D)  demands. 
A)  should produce. 
B)  wants to produce. 
C)  can produce. 
D)  demands.

Question 13

Economic models

Accepted Answer

A)  are not useful because they omit many real-world details. 
B)  are usually composed of diagrams and equations. 
C)  are useful because they do not omit any real-world details. 
D)  are usually plastic representations of the economy. 
A)  are not useful because they omit many real-world details. 
B)  are usually composed of diagrams and equations. 
C)  are useful because they do not omit any real-world details. 
D)  are usually plastic representations of the economy.

Question 14

Figure 2-6  
-Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point F is

Accepted Answer

A)  zero. 
B)  40 blankets. 
C)  120 pillows. 
D)  360 blankets. 
A)  zero. 
B)  40 blankets. 
C)  120 pillows. 
D)  360 blankets.

Question 15

Which of the following statements are positive and which are normative?
a. The minimum wage creates unemployment among young and unskilled workers.
b. The minimum wage ought to be abolished.
c. If the price of a product in a market decreases, then, other things equal, quantity demanded will increase.
d. A little bit of inflation is worse for society than a little bit of unemployment.
e. There is a tradeoff between inflation and unemployment in the short run.
f. If consumer income increases, then, other things equal, the demand for automobiles will increase.
g. The U.S. income distribution is not fair.
h. U.S. workers deserve more liberal unemployment benefits.
i. If interest rates increase, then investment will decrease.
j. If welfare benefits were reduced, then the country would be better off.

Accepted Answer

a, c, e, f, and i ar

Question 16

According to the circular flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn,

Accepted Answer

A)  the $50 represents a cost of production for Denny's firm. 
B)  the $50 represents wages, rent, and profit to Denny's firm. 
C)  Denny acts as a firm who interacted in the markets for factors of production with Mrs. Pendleton. 
D)  Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton. 
A)  the $50 represents a cost of production for Denny's firm. 
B)  the $50 represents wages, rent, and profit to Denny's firm. 
C)  Denny acts as a firm who interacted in the markets for factors of production with Mrs. Pendleton. 
D)  Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton.

Question 17

The circular-flow diagram is a

Accepted Answer

A)  visual model of the economy. 
B)  visual model of the relationships among money, prices, and businesses. 
C)  model that shows the effects of government on the economy. 
D)  mathematical model of how the economy works. 
A)  visual model of the economy. 
B)  visual model of the relationships among money, prices, and businesses. 
C)  model that shows the effects of government on the economy. 
D)  mathematical model of how the economy works.

Question 18

An assumption an economist might make while studying international trade is

Accepted Answer

A)  there are only two countries. 
B)  countries only produce two goods. 
C)  technology does not change. 
D)  All of the above are possible assumptions. 
A)  there are only two countries. 
B)  countries only produce two goods. 
C)  technology does not change. 
D)  All of the above are possible assumptions.

Question 19

Who would be more likely to study the effects of foreign competition on the accounting industry, a macroeconomist or a microeconomist?

Accepted Answer

The answer of Who would be more likely to study...

Question 20

Which of the following is not correct?

Accepted Answer

A)  The slope of a line will be a small positive number for a fairly flat upward-sloping line. 
B)  The slope of a line will be a large positive number for a steep upward-sloping line. 
C)  The slope of a line will be a negative number for a downward-sloping line. 
D)  The slope of a line will be infinite for a horizontal line. 
A)  The slope of a line will be a small positive number for a fairly flat upward-sloping line. 
B)  The slope of a line will be a large positive number for a steep upward-sloping line. 
C)  The slope of a line will be a negative number for a downward-sloping line. 
D)  The slope of a line will be infinite for a horizontal line.

Exam 2: Thinking Like an Economist

Figure 2-3 -Refer to Figure 2-3. Which shape refers to the markets for goods and services?

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

The x-coordinate of an ordered pair specifies the

Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. According to the graph, the correlation between years of education and annual income is

Economic models are most often composed of diagrams and equations.

The circular-flow diagram

Two variables that have a positive correlation move in the same direction.

Which of the following is correct?

Figure 2-4 -Refer to Figure 2-4. Inefficient production is represented by which points)?

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

The production possibilities frontier is a graph that shows the various combinations of output that an economy

Economic models

Figure 2-6 -Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point F is

According to the circular flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn,

The circular-flow diagram is a

An assumption an economist might make while studying international trade is

Who would be more likely to study the effects of foreign competition on the accounting industry, a macroeconomist or a microeconomist?

Which of the following is not correct?

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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