Question 1

Just like models constructed in other areas of science, economic models

Accepted Answer

A)  incorporate assumptions that contradict reality. 
B)  incorporate all details of the real world. 
C)  complicate reality. 
D)  avoid the use of diagrams and equations. 
A)  incorporate assumptions that contradict reality. 
B)  incorporate all details of the real world. 
C)  complicate reality. 
D)  avoid the use of diagrams and equations.

Question 2

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 3

Normative statements are

Accepted Answer

A)  not usually made by economists. 
B)  claims about how the world should be. 
C)  claims about how variables in the economy normally behave. 
D)  pessimistic interpretations of the economy. 
A)  not usually made by economists. 
B)  claims about how the world should be. 
C)  claims about how variables in the economy normally behave. 
D)  pessimistic interpretations of the economy.

Question 4

The slope of a line is equal to

Accepted Answer

A)  the change in the value of x divided by the change in the value of y. 
B)  the change in the value of y divided by the change in the value of x. 
C)  the horizontal distance divided by the vertical distance. 
D)  the value of y divided by the value of x. 
A)  the change in the value of x divided by the change in the value of y. 
B)  the change in the value of y divided by the change in the value of x. 
C)  the horizontal distance divided by the vertical distance. 
D)  the value of y divided by the value of x.

Question 5

Economists make assumptions to

Accepted Answer

A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand. 
A)  mimic the methodologies employed by other scientists. 
B)  minimize the number of experiments that yield no useful data. 
C)  minimize the likelihood that some aspect of the problem at hand is being overlooked. 
D)  focus their thinking on the essence of the problem at hand.

Question 6

Economists at which administrative department help formulate spending plans and regulatory policies?

Accepted Answer

Office of

Question 7

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

Accepted Answer

The answer of Figure 2-3  
-Refer to Figure 2-3....

Question 8

In the circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 9

Positive statements are descriptive, while normative statements are prescriptive.

Accepted Answer

A) True 
 B)False

Question 10

A macroeconomist - as opposed to a microeconomist - would study

Accepted Answer

A)  the effects of rent control on housing in New York City. 
B)  the effects of foreign competition on the US auto industry. 
C)  the effects of borrowing by the federal government. 
D)  the effects of raising the gasoline tax on transit ridership. 
A)  the effects of rent control on housing in New York City. 
B)  the effects of foreign competition on the US auto industry. 
C)  the effects of borrowing by the federal government. 
D)  the effects of raising the gasoline tax on transit ridership.

Question 11

Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

Accepted Answer

A)  President Truman received input from so many economists that he only wanted one view from each. 
B)  President Truman thought economists should analyze policies but not make or enforce them. 
C)  Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies. 
D)  A one-armed economist would conduct only positive analysis and no normative analysis. 
A)  President Truman received input from so many economists that he only wanted one view from each. 
B)  President Truman thought economists should analyze policies but not make or enforce them. 
C)  Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies. 
D)  A one-armed economist would conduct only positive analysis and no normative analysis.

Question 12

Figure 2-9
Panel a) Panel b)
    
-Refer to Figure 2-9, Panel a). To gain 2 donuts by moving from point L to point M, society must sacrifice

Accepted Answer

A)  efficiency. 
B)  employment. 
C)  4 cups of coffee. 
D)  More than one of the above is correct. 
A)  efficiency. 
B)  employment. 
C)  4 cups of coffee. 
D)  More than one of the above is correct.

Question 13

Economists sometimes give conflicting advice because

Accepted Answer

A)  graduate students in economics are encouraged to argue with each other. 
B)  economists have different values and scientific judgment. 
C)  economists acting as scientists do not like to agree with economists acting as policy advisers. 
D)  economics is more of a belief system than a science. 
A)  graduate students in economics are encouraged to argue with each other. 
B)  economists have different values and scientific judgment. 
C)  economists acting as scientists do not like to agree with economists acting as policy advisers. 
D)  economics is more of a belief system than a science.

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

In the circular-flow diagram,

Accepted Answer

A)  profit flows from households to firms. 
B)  labor flows from households to firms. 
C)  services flow from households to firms. 
D)  All of the above are correct. 
A)  profit flows from households to firms. 
B)  labor flows from households to firms. 
C)  services flow from households to firms. 
D)  All of the above are correct.

Question 16

Figure 2-23  
-Refer to Figure 2-23. It is possible for this economy to produce 45 doghouses and 30 dishwashers.

Accepted Answer

A) True 
 B)False

Question 17

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. If this society is producing at point T,

Accepted Answer

A)  there is unemployment. 
B)  production is efficient. 
C)  growth can only be achieved through an advancement in technology. 
D)  the opportunity cost of producing one more sweater is approximately 40 bushels of apples. 
A)  there is unemployment. 
B)  production is efficient. 
C)  growth can only be achieved through an advancement in technology. 
D)  the opportunity cost of producing one more sweater is approximately 40 bushels of apples.

Question 18

A statement describing how the world is

Accepted Answer

A)  is a normative statement. 
B)  is a positive statement. 
C)  would only be made by an economist speaking as a policy adviser. 
D)  would only be made by an economist employed by the government. 
A)  is a normative statement. 
B)  is a positive statement. 
C)  would only be made by an economist speaking as a policy adviser. 
D)  would only be made by an economist employed by the government.

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 one of the basic reasons why economists often appear to give conflicting advice to policymakers?

Accepted Answer

A)  similar opinions about the validity of economic theories 
B)  significant differences in education 
C)  differences in personal values 
D)  a reliance on normative statement for research theories 
A)  similar opinions about the validity of economic theories 
B)  significant differences in education 
C)  differences in personal values 
D)  a reliance on normative statement for research theories

Exam 2: Thinking Like an Economist

Just like models constructed in other areas of science, economic models

Normative statements are

The slope of a line is equal to

Economists make assumptions to

Economists at which administrative department help formulate spending plans and regulatory policies?

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

In the circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Positive statements are descriptive, while normative statements are prescriptive.

A macroeconomist - as opposed to a microeconomist - would study

Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a). To gain 2 donuts by moving from point L to point M, society must sacrifice

Economists sometimes give conflicting advice because

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?

In the circular-flow diagram,

Figure 2-23 -Refer to Figure 2-23. It is possible for this economy to produce 45 doghouses and 30 dishwashers.

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. If this society is producing at point T,

A statement describing how the world 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 one of the basic reasons why economists often appear to give conflicting advice to policymakers?

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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