Question 1

Normative statements are

Accepted Answer

A)  prescriptive, whereas positive statements are descriptive. 
B)  descriptive, whereas positive statements are prescriptive. 
C)  backward-looking, whereas positive statements are forward-looking. 
D)  forward-looking, whereas positive statements are backward-looking. 
A)  prescriptive, whereas positive statements are descriptive. 
B)  descriptive, whereas positive statements are prescriptive. 
C)  backward-looking, whereas positive statements are forward-looking. 
D)  forward-looking, whereas positive statements are backward-looking.

Question 2

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

Accepted Answer

A)  When the minimum wage is increased, unemployment is a predictable consequence. 
B)  The income tax rate should be increased to offset the budget deficit. 
C)  Increasing government spending is the best way to help the economy move out of a recession. 
D)  More than one of the above are positive statements. 
A)  When the minimum wage is increased, unemployment is a predictable consequence. 
B)  The income tax rate should be increased to offset the budget deficit. 
C)  Increasing government spending is the best way to help the economy move out of a recession. 
D)  More than one of the above are positive statements.

Question 3

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

Accepted Answer

A)  the effects of rent control on the availability of housing in New York City 
B)  the economic impact of tornadoes on cities and towns in Oklahoma 
C)  how tariffs on shoes affects the shoe industry 
D)  the effect on the economy of changes in the nation's unemployment rate 
A)  the effects of rent control on the availability of housing in New York City 
B)  the economic impact of tornadoes on cities and towns in Oklahoma 
C)  how tariffs on shoes affects the shoe industry 
D)  the effect on the economy of changes in the nation's unemployment rate

Question 4

In constructing models, economists

Accepted Answer

A)  leave out equations, since equations and models tend to contradict one another. 
B)  ignore the long run, since models are useful only for short-run analysis. 
C)  sometimes make assumptions that are contrary to features of the real world. 
D)  try to include every feature of the economy. 
A)  leave out equations, since equations and models tend to contradict one another. 
B)  ignore the long run, since models are useful only for short-run analysis. 
C)  sometimes make assumptions that are contrary to features of the real world. 
D)  try to include every feature of the economy.

Question 5

Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not an assumption of the productions possibilities frontier?

Accepted Answer

A)  A country produces only two goods or types of goods. 
B)  Technology does not change. 
C)  The amount of available resources does not change. 
D)  There is a fixed quantity of money. 
A)  A country produces only two goods or types of goods. 
B)  Technology does not change. 
C)  The amount of available resources does not change. 
D)  There is a fixed quantity of money.

Question 7

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Accepted Answer

A)  any misunderstandings in communicating the policy to the public. 
B)  whether the policy will affect his standing among different groups in the electorate. 
C)  what amendments will be suggested by members of Congress. 
D)  All of the above are correct. 
A)  any misunderstandings in communicating the policy to the public. 
B)  whether the policy will affect his standing among different groups in the electorate. 
C)  what amendments will be suggested by members of Congress. 
D)  All of the above are correct.

Question 8

When economists make normative statements, they are

Accepted Answer

A)  speaking as scientists. 
B)  speaking as policy advisers. 
C)  making claims about how the world is. 
D)  revealing that they are very liberal in their views of how the world works. 
A)  speaking as scientists. 
B)  speaking as policy advisers. 
C)  making claims about how the world is. 
D)  revealing that they are very liberal in their views of how the world works.

Question 9

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

Accepted Answer

A)  goods 
B)  services 
C)  capital 
D)  profit 
A)  goods 
B)  services 
C)  capital 
D)  profit

Question 10

Figure 2-11  
-Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

Accepted Answer

A)  simultaneous technological advances in the book and DVD industries. 
B)  a reallocation of resources away from the production of DVDs and toward the production of books. 
C)  economic growth. 
D)  All of the above are correct. 
A)  simultaneous technological advances in the book and DVD industries. 
B)  a reallocation of resources away from the production of DVDs and toward the production of books. 
C)  economic growth. 
D)  All of the above are correct.

Question 11

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A)  households provide firms with savings for investment. 
B)  households provide firms with labor, land, and capital. 
C)  firms provide households with output. 
D)  firms provide households with profit. 
A)  households provide firms with savings for investment. 
B)  households provide firms with labor, land, and capital. 
C)  firms provide households with output. 
D)  firms provide households with profit.

Question 12

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

Accepted Answer

A) True 
 B)False

Question 13

In the circular-flow diagram, firms produce goods and services using the factors of production.

Accepted Answer

A) True 
 B)False

Question 14

Figure 2-9
Panel a) Panel b)
    
-Refer to Figure 2-9, Panel a). The opportunity cost of moving from point K to point L is

Accepted Answer

A)  0 cups of coffee. 
B)  1 donut. 
C)  2 donuts. 
D)  4 cups of coffee. 
A)  0 cups of coffee. 
B)  1 donut. 
C)  2 donuts. 
D)  4 cups of coffee.

Question 15

In the circular-flow diagram, firms consume all the goods and services that they produce.

Accepted Answer

A) True 
 B)False

Question 16

The Council of Economic Advisers

Accepted Answer

A)  was created in 1946. 
B)  advises the president of the United States on economic policy matters. 
C)  writes the annual Economic Report of the President. 
D)  All of the above are correct. 
A)  was created in 1946. 
B)  advises the president of the United States on economic policy matters. 
C)  writes the annual Economic Report of the President. 
D)  All of the above are correct.

Question 17

As a substitute for laboratory experiments, economists use evidence available through history's

Accepted Answer

natural ex

Question 18

Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about economic models is correct?

Accepted Answer

A)  Economic models are built to mirror reality exactly. 
B)  Economic models are useful, but they should not be used for the purpose of improving public policies. 
C)  Because economic models omit many details, they allow us to see what is truly important. 
D)  Economic models seldom incorporate equations or diagrams. 
A)  Economic models are built to mirror reality exactly. 
B)  Economic models are useful, but they should not be used for the purpose of improving public policies. 
C)  Because economic models omit many details, they allow us to see what is truly important. 
D)  Economic models seldom incorporate equations or diagrams.

Question 20

Duties of the Council of Economic Advisers include

Accepted Answer

A)  advising the president and writing the annual Economic Report of the President. 
B)  implementing the president's tax policies. 
C)  tracking the behavior of the nation's money supply. 
D)  All of the above are correct. 
A)  advising the president and writing the annual Economic Report of the President. 
B)  implementing the president's tax policies. 
C)  tracking the behavior of the nation's money supply. 
D)  All of the above are correct.

Exam 2: Thinking Like an Economist

Normative statements are

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

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

In constructing models, economists

Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

Which of the following is not an assumption of the productions possibilities frontier?

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

When economists make normative statements, they are

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

Figure 2-11 -Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

In the markets for goods and services in the circular-flow diagram,

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

In the circular-flow diagram, firms produce goods and services using the factors of production.

Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a). The opportunity cost of moving from point K to point L is

In the circular-flow diagram, firms consume all the goods and services that they produce.

The Council of Economic Advisers

As a substitute for laboratory experiments, economists use evidence available through history's

Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

Which of the following statements about economic models is correct?

Duties of the Council of Economic Advisers include

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

Filters