Question 1

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

Accepted Answer

A) True 
 B)False

Question 2

When constructing a production possibilities frontier, which of the following assumptions is not made?

Accepted Answer

A)  The economy produces only two goods or two types of goods. 
B)  Firms produce goods using factors of production. 
C)  The technology available to firms is given. 
D)  The quantities of the factors of production that are available are increasing over the relevant time period. 
A)  The economy produces only two goods or two types of goods. 
B)  Firms produce goods using factors of production. 
C)  The technology available to firms is given. 
D)  The quantities of the factors of production that are available are increasing over the relevant time period.

Question 3

Home is a country that produces two goods, pears and cellular phones. Last year, Home produced 450 bushels of pears and 1050 cellular phones. This year it produced 450 bushels of pears and 2000 cellular phones. Given no other information, which of the following events could explain this change?

Accepted Answer

A)  Home experienced increased unemployment. 
B)  Home experienced a decline in pear-producing technology. 
C)  Home experienced an improvement in cellular phone-making technology. 
D)  Home experienced a reduction in resources. 
A)  Home experienced increased unemployment. 
B)  Home experienced a decline in pear-producing technology. 
C)  Home experienced an improvement in cellular phone-making technology. 
D)  Home experienced a reduction in resources.

Question 4

The slope of a line is equal to

Accepted Answer

A)  rise divided by run. 
B)  run divided by rise. 
C)  rise minus run. 
D)  rise plus run. 
A)  rise divided by run. 
B)  run divided by rise. 
C)  rise minus run. 
D)  rise plus run.

Question 5

Figure 2-9
Panel a) Panel b)
    
-Refer to Figure 2-9, Panel a) and Panel b). Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel a) to Panel b)?

Accepted Answer

A)  the tradeoff between the production of donuts and coffee changes 
B)  the opportunity cost of a cup of coffee is higher at all levels of coffee production 
C)  production of 4 donuts and 2 cups of coffee becomes possible 
D)  production of 1 donut and 4 cups of coffee becomes efficient 
A)  the tradeoff between the production of donuts and coffee changes 
B)  the opportunity cost of a cup of coffee is higher at all levels of coffee production 
C)  production of 4 donuts and 2 cups of coffee becomes possible 
D)  production of 1 donut and 4 cups of coffee becomes efficient

Question 6

John Maynard Keynes believed the ideas of economists to be

Accepted Answer

A)  generally incorrect. 
B)  powerful. 
C)  academic and without practical application. 
D)  rantings of madmen. 
A)  generally incorrect. 
B)  powerful. 
C)  academic and without practical application. 
D)  rantings of madmen.

Question 7

In the markets for factors of production in the circular-flow diagram,

Accepted Answer

A)  households provide firms with labor, land, and capital. 
B)  households provide firms with savings for investment. 
C)  firms provide households with goods and services. 
D)  firms provide households with revenue. 
A)  households provide firms with labor, land, and capital. 
B)  households provide firms with savings for investment. 
C)  firms provide households with goods and services. 
D)  firms provide households with revenue.

Question 8

Economists make assumptions to

Accepted Answer

A)  provide issues for political discussion. 
B)  make a complex world easier to understand. 
C)  make it easier to teach economic concepts and analysis. 
D)  create policy alternatives that are incomplete or subject to criticism. 
A)  provide issues for political discussion. 
B)  make a complex world easier to understand. 
C)  make it easier to teach economic concepts and analysis. 
D)  create policy alternatives that are incomplete or subject to criticism.

Question 9

In the circular-flow diagram,

Accepted Answer

A)  firms own the factors of production. 
B)  the factors of production are labor, land, and capital. 
C)  the factors of production are also called "output." 
D)  All of the above are correct. 
A)  firms own the factors of production. 
B)  the factors of production are labor, land, and capital. 
C)  the factors of production are also called "output." 
D)  All of the above are correct.

Question 10

Figure 2-1  
-Refer to Figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

Accepted Answer

A)  A only 
B)  A and B 
C)  C only 
D)  C and D 
A)  A only 
B)  A and B 
C)  C only 
D)  C and D

Question 11

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

Accepted Answer

A) True 
 B)False

Question 12

The duties of the Council of Economic Advisers are to advise the president of the United States and to determine U.S. monetary policy.

Accepted Answer

A) True 
 B)False

Question 13

Economic models can help us understand reality only when they include all details of the economy.

Accepted Answer

A) True 
 B)False

Question 14

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.

Question 15

The x-coordinate is the

Accepted Answer

A)  first number of an ordered pair and represents the point's horizontal location. 
B)  second number of an ordered pair and represents the point's horizontal location. 
C)  first number of an ordered pair and represents the point's vertical location. 
D)  second number of an ordered pair and represents the point's vertical location. 
A)  first number of an ordered pair and represents the point's horizontal location. 
B)  second number of an ordered pair and represents the point's horizontal location. 
C)  first number of an ordered pair and represents the point's vertical location. 
D)  second number of an ordered pair and represents the point's vertical location.

Question 16

When a variable that is named on an axis of a graph changes, the curve shifts.

Accepted Answer

A) True 
 B)False

Question 17

Economists speaking like scientists make

Accepted Answer

A)  positive statements. 
B)  prescriptive statements. 
C)  claims about how the world should be. 
D)  More than one of the above is correct. 
A)  positive statements. 
B)  prescriptive statements. 
C)  claims about how the world should be. 
D)  More than one of the above is correct.

Question 18

In the simple circular-flow diagram,

Accepted Answer

A)  households own the factors of production. 
B)  households buy all the goods and services that firms produce. 
C)  land, labor, and capital flow from households to firms. 
D)  All of the above are correct. 
A)  households own the factors of production. 
B)  households buy all the goods and services that firms produce. 
C)  land, labor, and capital flow from households to firms. 
D)  All of the above are correct.

Question 19

Table 2-6
  
-Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of mobile phones from 200 to 500?

Accepted Answer

The answer of Table 2-6
  
-Refer to Table 2-6....

Question 20

Figure 2-20
Relationship Between Years of Education and Annual Income  
-Refer to Figure 2-20. The graph above is a

Accepted Answer

A)  bar graph 
B)  scatterplot 
C)  pie chart 
D)  time series analysis 
A)  bar graph 
B)  scatterplot 
C)  pie chart 
D)  time series analysis

Exam 2: Thinking Like an Economist

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

When constructing a production possibilities frontier, which of the following assumptions is not made?

Home is a country that produces two goods, pears and cellular phones. Last year, Home produced 450 bushels of pears and 1050 cellular phones. This year it produced 450 bushels of pears and 2000 cellular phones. Given no other information, which of the following events could explain this change?

The slope of a line is equal to

Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a) and Panel b). Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel a) to Panel b)?

John Maynard Keynes believed the ideas of economists to be

In the markets for factors of production in the circular-flow diagram,

Economists make assumptions to

In the circular-flow diagram,

Figure 2-1 -Refer to Figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

The duties of the Council of Economic Advisers are to advise the president of the United States and to determine U.S. monetary policy.

Economic models can help us understand reality only when they include all details of the economy.

In the circular-flow diagram, in the markets for

The x-coordinate is the

When a variable that is named on an axis of a graph changes, the curve shifts.

Economists speaking like scientists make

In the simple circular-flow diagram,

Table 2-6 -Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of mobile phones from 200 to 500?

Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. The graph above is a

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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