Question 1

Economists view positive statements as

Accepted Answer

A)  affirmative, justifying existing economic policy. 
B)  optimistic, putting the best possible interpretation on things. 
C)  descriptive, making a claim about how the world is. 
D)  prescriptive, making a claim about how the world ought to be. 
A)  affirmative, justifying existing economic policy. 
B)  optimistic, putting the best possible interpretation on things. 
C)  descriptive, making a claim about how the world is. 
D)  prescriptive, making a claim about how the world ought to be.

Question 2

In the circular-flow diagram,

Accepted Answer

A)  factors of production flow from government to firms. 
B)  goods and services flow from households to firms. 
C)  income paid to the factors of production flows from firms to households. 
D)  spending on goods and services flows from firms to households. 
A)  factors of production flow from government to firms. 
B)  goods and services flow from households to firms. 
C)  income paid to the factors of production flows from firms to households. 
D)  spending on goods and services flows from firms to households.

Question 3

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Accepted Answer

A) True 
 B)False

Question 4

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Accepted Answer

A)  opinions and education. 
B)  opinions and values. 
C)  scientific judgments and education. 
D)  scientific judgments and values. 
A)  opinions and education. 
B)  opinions and values. 
C)  scientific judgments and education. 
D)  scientific judgments and values.

Question 5

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Accepted Answer

A)  For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics. 
B)  Microeconomists study markets for small products, whereas macroeconomists study markets for large products. 
C)  Microeconomics and macroeconomics are distinct from one another, yet they are closely related. 
D)  Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies. 
A)  For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics. 
B)  Microeconomists study markets for small products, whereas macroeconomists study markets for large products. 
C)  Microeconomics and macroeconomics are distinct from one another, yet they are closely related. 
D)  Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies.

Question 6

When an economy is operating inside its production possibilities frontier, we know that

Accepted Answer

A)  there are unused resources or inefficiencies in the economy. 
B)  all of the economy's resources are fully employed. 
C)  economic growth would have to occur in order for the economy to move to a point on the frontier. 
D)  in order to produce more of one good, the economy would have to give up some of the other good. 
A)  there are unused resources or inefficiencies in the economy. 
B)  all of the economy's resources are fully employed. 
C)  economic growth would have to occur in order for the economy to move to a point on the frontier. 
D)  in order to produce more of one good, the economy would have to give up some of the other good.

Question 7

Economists work both inside and outside the administrative branch of the U.S. government.

Accepted Answer

A) True 
 B)False

Question 8

Figure 2-3  
-Refer to Figure 2-3. What does the arrow going from oval A to rectangle 2 represent in the figure?

Accepted Answer

goods and

Question 9

Economists use some familiar terms in specialized ways

Accepted Answer

A)  to make the subject sound more complex than it is. 
B)  because every respectable field of study has its own language. 
C)  to provide a new and useful way of thinking about the world. 
D)  because it was too difficult to come up with new terms. 
A)  to make the subject sound more complex than it is. 
B)  because every respectable field of study has its own language. 
C)  to provide a new and useful way of thinking about the world. 
D)  because it was too difficult to come up with new terms.

Question 10

Figure 2-22  
-Refer to Figure 2-22. How are price and quantity related in this graph?

Accepted Answer

negatively

Question 11

The institution that sets the nation's monetary policy is called the

Accepted Answer

The answer of The institution that sets the nation's monetary...

Question 12

Which of the following is an example of a capital input?

Accepted Answer

A)  a computer 
B)  a share of stock 
C)  an hour of a worker's time 
D)  $50,000 
A)  a computer 
B)  a share of stock 
C)  an hour of a worker's time 
D)  $50,000

Question 13

Analysis of data on workers and those looking for work is conducted by economists at the

Accepted Answer

A)  Office of Management and Budget. 
B)  Department of Labor. 
C)  Congressional Budget Office. 
D)  Department of the Treasury. 
A)  Office of Management and Budget. 
B)  Department of Labor. 
C)  Congressional Budget Office. 
D)  Department of the Treasury.

Question 14

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Accepted Answer

A)  The United States should not restrict employers from outsourcing work to foreign countries. 
B)  The United States should withdraw from the North American Free Trade Agreement NAFT
A) . 
C)  The United States should eliminate agricultural subsidies. 
D)  Local and state governments should eliminate subsidies to professional sports franchises. 
A)  The United States should not restrict employers from outsourcing work to foreign countries. 
B)  The United States should withdraw from the North American Free Trade Agreement NAFT
A) . 
C)  The United States should eliminate agricultural subsidies. 
D)  Local and state governments should eliminate subsidies to professional sports franchises.

Question 15

Figure 2-3  
-Refer to Figure 2-3. Which of the following is an activity undertaken by the actors in rectangle 2?

Accepted Answer

A)  produce and sell goods and services 
B)  hire and use factors of production 
C)  own and sell factors of production 
D)  exchange goods and services between firms and households 
A)  produce and sell goods and services 
B)  hire and use factors of production 
C)  own and sell factors of production 
D)  exchange goods and services between firms and households

Question 16

Who would be more likely to study the effects of government spending on the unemployment rate, a macroeconomist or a microeconomist?

Accepted Answer

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

Question 17

Figure 2-7  
-Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Accepted Answer

A)  0 engines and 40 tvs. 
B)  10 engines and 35 tvs. 
C)  40 engines and 0 tvs. 
D)  40 engines and 40 tvs. 
A)  0 engines and 40 tvs. 
B)  10 engines and 35 tvs. 
C)  40 engines and 0 tvs. 
D)  40 engines and 40 tvs.

Question 18

The essence of science is

Accepted Answer

A)  the laboratory experiment. 
B)  the scientific method. 
C)  the study of nature, but not the study of society. 
D)  All of the above are correct. 
A)  the laboratory experiment. 
B)  the scientific method. 
C)  the study of nature, but not the study of society. 
D)  All of the above are correct.

Question 19

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 20

In the circular-flow diagram, in the markets for

Accepted Answer

A)  goods and services, households and firms are both sellers. 
B)  goods and services, households are buyers and firms are sellers. 
C)  the factors of production, households are buyers and firms are sellers. 
D)  the factors of production, households and firms are both buyers. 
A)  goods and services, households and firms are both sellers. 
B)  goods and services, households are buyers and firms are sellers. 
C)  the factors of production, households are buyers and firms are sellers. 
D)  the factors of production, households and firms are both buyers.

Exam 2: Thinking Like an Economist

Economists view positive statements as

In the circular-flow diagram,

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

When an economy is operating inside its production possibilities frontier, we know that

Economists work both inside and outside the administrative branch of the U.S. government.

Figure 2-3 -Refer to Figure 2-3. What does the arrow going from oval A to rectangle 2 represent in the figure?

Economists use some familiar terms in specialized ways

Figure 2-22 -Refer to Figure 2-22. How are price and quantity related in this graph?

The institution that sets the nation's monetary policy is called the

Which of the following is an example of a capital input?

Analysis of data on workers and those looking for work is conducted by economists at the

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Figure 2-3 -Refer to Figure 2-3. Which of the following is an activity undertaken by the actors in rectangle 2?

Who would be more likely to study the effects of government spending on the unemployment rate, a macroeconomist or a microeconomist?

Figure 2-7 -Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

The essence of science is

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

In the circular-flow diagram, in the markets for

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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