Question 1

The President receives economic policy advice from economists at each of the following except

Accepted Answer

A)  the Council of Economic Advisors. 
B)  the Department of the Treasury. 
C)  the Congressional Budget office. 
D)  the Department of Labor. 
A)  the Council of Economic Advisors. 
B)  the Department of the Treasury. 
C)  the Congressional Budget office. 
D)  the Department of Labor.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop?

Accepted Answer

A)  wages 
B)  land 
C)  capital 
D)  goods and services sold 
A)  wages 
B)  land 
C)  capital 
D)  goods and services sold

Question 4

In the circular-flow diagram, which of the following items does not flow from households to firms?

Accepted Answer

A)  revenue 
B)  land, labor, and capital 
C)  factors of production 
D)  profit 
A)  revenue 
B)  land, labor, and capital 
C)  factors of production 
D)  profit

Question 5

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Accepted Answer

A)  the impact of minimum-wage laws on employment in the fast food industry 
B)  the effect of changes in household saving rates on the growth rate of national income 
C)  the impact of faster money growth on the rate of inflation 
D)  a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth 
A)  the impact of minimum-wage laws on employment in the fast food industry 
B)  the effect of changes in household saving rates on the growth rate of national income 
C)  the impact of faster money growth on the rate of inflation 
D)  a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growth

Question 6

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

Accepted Answer

A) True 
 B)False

Question 7

A production possibilities frontier can shift outward if

Accepted Answer

A)  government increases the amount of money in the economy. 
B)  there is a technological improvement. 
C)  resources are shifted from the production of one good to the production of the other good. 
D)  the economy abandons inefficient production methods in favor of efficient production methods. 
A)  government increases the amount of money in the economy. 
B)  there is a technological improvement. 
C)  resources are shifted from the production of one good to the production of the other good. 
D)  the economy abandons inefficient production methods in favor of efficient production methods.

Question 8

A demand curve shows the relationship

Accepted Answer

A)  between income and quantity demanded. 
B)  between price and income. 
C)  between price and quantity demanded. 
D)  among income, price, and quantity demanded. 
A)  between income and quantity demanded. 
B)  between price and income. 
C)  between price and quantity demanded. 
D)  among income, price, and quantity demanded.

Question 9

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

Accepted Answer

A)  Most people who study economics are not very bright. 
B)  Good economists must possess a rare combination of gifts. 
C)  Economics is quite boring; hence, people tend to lose interest in it before mastering it. 
D)  Good thinkers become frustrated with economics because it does not make use of the scientific method. 
A)  Most people who study economics are not very bright. 
B)  Good economists must possess a rare combination of gifts. 
C)  Economics is quite boring; hence, people tend to lose interest in it before mastering it. 
D)  Good thinkers become frustrated with economics because it does not make use of the scientific method.

Question 10

Which of the following is an example of a normative, as opposed to positive, statement?

Accepted Answer

A)  Universal health care would be good for U.S. citizens. 
B)  An increase in the cigarette tax would cause a decrease in the number of smokers. 
C)  A decrease in the minimum wage would decrease unemployment. 
D)  A law requiring the federal government to balance its budget would increase economic growth. 
A)  Universal health care would be good for U.S. citizens. 
B)  An increase in the cigarette tax would cause a decrease in the number of smokers. 
C)  A decrease in the minimum wage would decrease unemployment. 
D)  A law requiring the federal government to balance its budget would increase economic growth.

Question 11

Which of the following is not an example of a positive, as opposed to normative, statement?

Accepted Answer

A)  Higher gasoline prices will reduce gasoline consumption. 
B)  Equality is more important than efficiency. 
C)  Trade restrictions lower our standard of living. 
D)  If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money. 
A)  Higher gasoline prices will reduce gasoline consumption. 
B)  Equality is more important than efficiency. 
C)  Trade restrictions lower our standard of living. 
D)  If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money.

Question 12

A microeconomist - as opposed to a macroeconomist - might study

Accepted Answer

A)  the effect of a national healthcare program on the nation's unemployment rate. 
B)  the effect of new regulations on production in the pulp and paper industry. 
C)  the effect of changes in interest rates on gross domestic product. 
D)  the growth rate of production in the economy. 
A)  the effect of a national healthcare program on the nation's unemployment rate. 
B)  the effect of new regulations on production in the pulp and paper industry. 
C)  the effect of changes in interest rates on gross domestic product. 
D)  the growth rate of production in the economy.

Question 13

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

Accepted Answer

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

Question 14

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

Accepted Answer

A) True 
 B)False

Question 15

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 16

"Minimum wage laws result in unemployment" is a normative statement, while "the minimum wage should be higher" is a positive statement.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is correct?

Accepted Answer

A)  Economists almost always find it easy to conduct experiments in order to test their theories. 
B)  Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C)  Economics is a social science rather than a true science because it cannot employ the scientific method. 
D)  Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history. 
A)  Economists almost always find it easy to conduct experiments in order to test their theories. 
B)  Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C)  Economics is a social science rather than a true science because it cannot employ the scientific method. 
D)  Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history.

Question 18

Economists use one standard set of assumptions to answer all economic questions.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)  the effect of an increase in the alcohol tax on the market for beer 
B)  the effect of foreign competition on the domestic auto industry 
C)  the effect of a price war in the airline industry 
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemployment 
A)  the effect of an increase in the alcohol tax on the market for beer 
B)  the effect of foreign competition on the domestic auto industry 
C)  the effect of a price war in the airline industry 
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemployment

Question 20

If Martina's income increases and, as a result, she chooses to buy more lattés per month at each price, then her demand curve will

Accepted Answer

A)  shift to the right. 
B)  shift to the left. 
C)  not shift; instead, Martina will move along her demand curve downward and to the right. 
D)  not shift; instead, Martina will move along her demand curve upward and to the left. 
A)  shift to the right. 
B)  shift to the left. 
C)  not shift; instead, Martina will move along her demand curve downward and to the right. 
D)  not shift; instead, Martina will move along her demand curve upward and to the left.

Exam 2: Thinking Like an Economist

The President receives economic policy advice from economists at each of the following except

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

The inner loop of the circular-flow diagram represents the flows of inputs and outputs. Which of the following does not appear on the inner loop?

In the circular-flow diagram, which of the following items does not flow from households to firms?

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

A production possibilities frontier can shift outward if

A demand curve shows the relationship

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

Which of the following is an example of a normative, as opposed to positive, statement?

Which of the following is not an example of a positive, as opposed to normative, statement?

A microeconomist - as opposed to a macroeconomist - might study

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

In the circular-flow diagram, payments for labor, land, and capital flow from firms to households through the markets for the factors of production.

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

"Minimum wage laws result in unemployment" is a normative statement, while "the minimum wage should be higher" is a positive statement.

Which of the following statements is correct?

Economists use one standard set of assumptions to answer all economic questions.

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

If Martina's income increases and, as a result, she chooses to buy more lattés per month at each price, then her demand curve will

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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