Question 1

Economists believe that production possibilities frontiers are often bowed because

Accepted Answer

A)  trade-offs inevitably create unemployment. 
B)  resources are not completely adaptable. 
C)  opportunity costs are constant. 
D)  of improvements in technology. 
A)  trade-offs inevitably create unemployment. 
B)  resources are not completely adaptable. 
C)  opportunity costs are constant. 
D)  of improvements in technology. B

Question 2

Figure 2-14   Consider the production possibilities curve for a country that can produce sweaters, apples in bushels), or a combination of the two.
-Refer to Figure 2-14. What is the opportunity cost of moving from point R to point Q?

Accepted Answer

80 bushels of apples

Question 3

Figure 2-7  
-Refer to Figure 2-7. What is the opportunity cost of moving from point L to point M?

Accepted Answer

A)  zero 
B)  15 tvs 
C)  20 engines and 15 tvs 
D)  20 engines 
A)  zero 
B)  15 tvs 
C)  20 engines and 15 tvs 
D)  20 engines D

Question 4

Which markets are represented in the simple circular-flow diagram?

Accepted Answer

A)  markets for goods and services and markets for financial assets 
B)  markets for factors of production and markets for financial assets 
C)  markets for goods and services and markets for factors of production 
D)  markets for goods and services and markets for imports and exports 
A)  markets for goods and services and markets for financial assets 
B)  markets for factors of production and markets for financial assets 
C)  markets for goods and services and markets for factors of production 
D)  markets for goods and services and markets for imports and exports

Question 5

The circular-flow diagram is an example of

Accepted Answer

A)  a laboratory experiment. 
B)  an economic model. 
C)  a mathematical model. 
D)  All of the above are correct. 
A)  a laboratory experiment. 
B)  an economic model. 
C)  a mathematical model. 
D)  All of the above are correct.

Question 6

Economists speaking like policy advisers make

Accepted Answer

A)  positive statements. 
B)  descriptive statements. 
C)  claims about how the world is. 
D)  claims about how the world should be. 
A)  positive statements. 
B)  descriptive statements. 
C)  claims about how the world is. 
D)  claims about how the world should be.

Question 7

Economists may disagree about the validity of alternative positive theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 8

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Accepted Answer

A) True 
 B)False

Question 9

Figure 2-2  
-Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

Accepted Answer

A)  Box D must represent the markets for factors of production. 
B)  Box C must represent the markets for goods and services. 
C)  firms are buyers in the markets represented by Box D. 
D)  All of the above are correct. 
A)  Box D must represent the markets for factors of production. 
B)  Box C must represent the markets for goods and services. 
C)  firms are buyers in the markets represented by Box D. 
D)  All of the above are correct.

Question 10

"Prices rise when the quantity of money rises rapidly" is an example of a

Accepted Answer

A)  negative economic statement. 
B)  positive economic statement. 
C)  normative economic statement. 
D)  statement that contradicts one of the basic principles of economics. 
A)  negative economic statement. 
B)  positive economic statement. 
C)  normative economic statement. 
D)  statement that contradicts one of the basic principles of economics.

Question 11

Table 2-4
Production Possibilities for Picnicland
  
-Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of burgers from 450 to 750?

Accepted Answer

A)  150 hotdogs 
B)  225 hotdogs 
C)  300 hotdogs 
D)  450 hotdogs 
A)  150 hotdogs 
B)  225 hotdogs 
C)  300 hotdogs 
D)  450 hotdogs

Question 12

Economists build economic models by

Accepted Answer

A)  generating data. 
B)  conducting controlled experiments in a lab. 
C)  making assumptions. 
D)  reviewing statistical forecasts. 
A)  generating data. 
B)  conducting controlled experiments in a lab. 
C)  making assumptions. 
D)  reviewing statistical forecasts.

Question 13

Economists who are primarily responsible for advising Congress on economic matters work in which agency?

Accepted Answer

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

Question 14

Economists believe that production possibilities frontiers rarely have a bowed shape.

Accepted Answer

A) True 
 B)False

Question 15

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 16

The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

Accepted Answer

A) True 
 B)False

Question 17

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. Which of the following conclusions should not be drawn from observing this graph?

Accepted Answer

A)  There is a positive correlation between the frequency of service and the number of passengers. 
B)  When there are 5 stops per hour, there are approximately 200 passengers. 
C)  More stops per hour is associated with more passengers per hour. 
D)  No other factors besides the frequency of service affect the number of passengers. 
A)  There is a positive correlation between the frequency of service and the number of passengers. 
B)  When there are 5 stops per hour, there are approximately 200 passengers. 
C)  More stops per hour is associated with more passengers per hour. 
D)  No other factors besides the frequency of service affect the number of passengers.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Figure 2-17  
-Refer to Figure 2-17. The movement from point B to point C could have been caused by

Accepted Answer

A)  inflation. 
B)  a change in income. 
C)  a change in the price of grapes. 
D)  a change in the cost of producing grapes. 
A)  inflation. 
B)  a change in income. 
C)  a change in the price of grapes. 
D)  a change in the cost of producing grapes.

Question 20

A normative economic statement such as "The minimum wage should be abolished"

Accepted Answer

A)  would likely be made by an economist acting as a scientist. 
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 policy advisers. 
A)  would likely be made by an economist acting as a scientist. 
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 policy advisers.

Exam 2: Thinking Like an Economist

Economists believe that production possibilities frontiers are often bowed because

Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters, apples in bushels), or a combination of the two. -Refer to Figure 2-14. What is the opportunity cost of moving from point R to point Q?

Figure 2-7 -Refer to Figure 2-7. What is the opportunity cost of moving from point L to point M?

Which markets are represented in the simple circular-flow diagram?

The circular-flow diagram is an example of

Economists speaking like policy advisers make

Economists may disagree about the validity of alternative positive theories about how the world works.

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Figure 2-2 -Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

"Prices rise when the quantity of money rises rapidly" is an example of a

Table 2-4 Production Possibilities for Picnicland -Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of burgers from 450 to 750?

Economists build economic models by

Economists who are primarily responsible for advising Congress on economic matters work in which agency?

Economists believe that production possibilities frontiers rarely have a bowed shape.

The production possibilities frontier illustrates

The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

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

Figure 2-17 -Refer to Figure 2-17. The movement from point B to point C could have been caused by

A normative economic statement such as "The minimum wage should be abolished"

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

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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