Question 1

Figure 2-5  
-Refer to Figure 2-5. Efficient production is represented by which points)?

Accepted Answer

A)  A, B 
B)  A, B, D 
C)  A, B, C 
D)  C 
A)  A, B 
B)  A, B, D 
C)  A, B, C 
D)  C

Question 2

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

Accepted Answer

@#IMG-DLM& This diagram should duplicate the essen

Question 3

Which of the following statements about the circular-flow diagram is correct?

Accepted Answer

A)  One must imagine that the economy operates without money in order to make sense of the diagram. 
B)  The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. 
C)  The government cannot be excluded as a decision maker in a circular-flow diagram. 
D)  All of the above are correct. 
A)  One must imagine that the economy operates without money in order to make sense of the diagram. 
B)  The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. 
C)  The government cannot be excluded as a decision maker in a circular-flow diagram. 
D)  All of the above are correct.

Question 4

Which of the following is not an example of a graph of a single variable?

Accepted Answer

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

Question 5

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.

Accepted Answer

A) True 
 B)False

Question 6

Almost all economists agree that tariffs and import quotas

Accepted Answer

A)  reduces general economic welfare. 
B)  increases general economic welfare. 
C)  have no effect on general economic welfare. 
D)  stimulate a less than fully employed economy. 
A)  reduces general economic welfare. 
B)  increases general economic welfare. 
C)  have no effect on general economic welfare. 
D)  stimulate a less than fully employed economy.

Question 7

Figure 2-21  
-Refer to Figure 2-21. Which of the following could be an omitted variable in the graph?

Accepted Answer

A)  the price of snowblowers 
B)  a change in consumers' incomes 
C)  a change in the seasons 
D)  All of the above are correct. 
A)  the price of snowblowers 
B)  a change in consumers' incomes 
C)  a change in the seasons 
D)  All of the above are correct.

Question 8

Figure 2-23  
-Refer to Figure 2-23. The opportunity cost of moving from point B to point A is zero.

Accepted Answer

A) True 
 B)False

Question 9

Points inside the production possibilities frontier represent inefficient levels of production.

Accepted Answer

A) True 
 B)False

Question 10

Figure 2-2  
-Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

Accepted Answer

A)  flows of goods and services from households to firms. 
B)  flows of inputs from households to firms. 
C)  flows of rent payments paid to owners of land. 
D)  flows of wages and salaries paid to workers. 
A)  flows of goods and services from households to firms. 
B)  flows of inputs from households to firms. 
C)  flows of rent payments paid to owners of land. 
D)  flows of wages and salaries paid to workers.

Question 11

The opportunity cost of something is what you give up to get it.

Accepted Answer

A) True 
 B)False

Question 12

Figure 2-12  
-Refer to Figure 2-12. The shift of the production possibilities frontier from A to B can best be described as

Accepted Answer

A)  a downturn in the economy. 
B)  economic growth. 
C)  an enhancement of equality. 
D)  an improvement in the allocation of resources. 
A)  a downturn in the economy. 
B)  economic growth. 
C)  an enhancement of equality. 
D)  an improvement in the allocation of resources.

Question 13

Which of the following is not correct?

Accepted Answer

A)  Evaluating statements about how the world should be involves values as well as facts. 
B)  Positive statements can, in principle, be confirmed or refuted by examining evidence. 
C)  Normative statements can be judged using data alone. 
D)  Deciding what is good or bad policy is not just a matter of science. 
A)  Evaluating statements about how the world should be involves values as well as facts. 
B)  Positive statements can, in principle, be confirmed or refuted by examining evidence. 
C)  Normative statements can be judged using data alone. 
D)  Deciding what is good or bad policy is not just a matter of science.

Question 14

Table 2-1
The following table contains some production possibilities for an economy for a given month.
  
-Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)  400. 
B)  450. 
C)  600. 
D)  750. 
A)  400. 
B)  450. 
C)  600. 
D)  750.

Question 15

"Society would be better off if the welfare system were abolished" is a normative statement, not a positive statement.

Accepted Answer

A) True 
 B)False

Question 16

The slope of a fairly flat upward-sloping line will be a

Accepted Answer

A)  small positive number. 
B)  large positive number. 
C)  small negative number. 
D)  large negative number. 
A)  small positive number. 
B)  large positive number. 
C)  small negative number. 
D)  large negative number.

Question 17

Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1050 units of food and 47 machines. Which of the following statements is correct?

Accepted Answer

A)  Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47. 
B)  Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. 
C)  In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. 
D)  The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food. 
A)  Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47. 
B)  Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. 
C)  In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. 
D)  The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food.

Question 18

Almost all economists agree that rent control

Accepted Answer

A)  has no effect on the rental income of landlords. 
B)  allows the market for housing to work more efficiently. 
C)  adversely affects the availability and quality of housing. 
D)  is a very inexpensive way to help the most needy members of society. 
A)  has no effect on the rental income of landlords. 
B)  allows the market for housing to work more efficiently. 
C)  adversely affects the availability and quality of housing. 
D)  is a very inexpensive way to help the most needy members of society.

Question 19

Which of these terms are used interchangeably?

Accepted Answer

A)  "goods and services" and "inputs" 
B)  "goods and services" and "factors of production" 
C)  "inputs" and "factors of production" 
D)  "land, labor, and capital" and "goods and services" 
A)  "goods and services" and "inputs" 
B)  "goods and services" and "factors of production" 
C)  "inputs" and "factors of production" 
D)  "land, labor, and capital" and "goods and services"

Question 20

Most economists agree that a large federal budget deficit has what type of effect on the economy?

Accepted Answer

The answer of Most economists agree that a large federal...

Exam 2: Thinking Like an Economist

Figure 2-5 -Refer to Figure 2-5. Efficient production is represented by which points)?

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

Which of the following statements about the circular-flow diagram is correct?

Which of the following is not an example of a graph of a single variable?

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.

Almost all economists agree that tariffs and import quotas

Figure 2-21 -Refer to Figure 2-21. Which of the following could be an omitted variable in the graph?

Figure 2-23 -Refer to Figure 2-23. The opportunity cost of moving from point B to point A is zero.

Points inside the production possibilities frontier represent inefficient levels of production.

Figure 2-2 -Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

The opportunity cost of something is what you give up to get it.

Figure 2-12 -Refer to Figure 2-12. The shift of the production possibilities frontier from A to B can best be described as

Which of the following is not correct?

Table 2-1 The following table contains some production possibilities for an economy for a given month. -Refer to Table 2-1. If the production possibilities frontier is bowed outward, then "?" could be

"Society would be better off if the welfare system were abolished" is a normative statement, not a positive statement.

The slope of a fairly flat upward-sloping line will be a

Almost all economists agree that rent control

Which of these terms are used interchangeably?

Most economists agree that a large federal budget deficit has what type of effect on the economy?

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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