Question 1

An example of a price that changes only infrequently is the price of

Accepted Answer

A)  stocks on the New York Stock Exchange. 
B)  crude oil. 
C)  residential real estate. 
D)  magazines sold at newsstands. 
A)  stocks on the New York Stock Exchange. 
B)  crude oil. 
C)  residential real estate. 
D)  magazines sold at newsstands.

Question 2

What you must give up to get something else is called the

Accepted Answer

The answer of What you must give up to get...

Question 3

Figure 2-8  
-Refer to Figure 2-8. Inefficient production is represented by which points)?

Accepted Answer

A)  K, M 
B)  L 
C)  L, M 
D)  M 
A)  K, M 
B)  L 
C)  L, M 
D)  M

Question 4

Economists speaking like policy advisers make

Accepted Answer

A)  claims about how the world is. 
B)  descriptive statements. 
C)  normative statements. 
D)  More than one of the above is correct. 
A)  claims about how the world is. 
B)  descriptive statements. 
C)  normative statements. 
D)  More than one of the above is correct.

Question 5

The essence of science is

Accepted Answer

A)  the laboratory experiment. 
B)  the scientific method. 
C)  the study of nature, but not the study of society. 
D)  All of the above are correct. 
A)  the laboratory experiment. 
B)  the scientific method. 
C)  the study of nature, but not the study of society. 
D)  All of the above are correct.

Question 6

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)  A ceiling on rents reduces the quantity and quality of housing available. 
B)  Fiscal policy has a significant stimulative impact on a less than fully employed economy. 
C)  The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. 
D)  The United States should implement universal health care for its citizens. 
A)  A ceiling on rents reduces the quantity and quality of housing available. 
B)  Fiscal policy has a significant stimulative impact on a less than fully employed economy. 
C)  The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. 
D)  The United States should implement universal health care for its citizens.

Question 7

Unemployment causes production levels to be inefficient.

Accepted Answer

A) True 
 B)False

Question 8

In the circular-flow diagram, firms produce

Accepted Answer

A)  goods and services using factors of production. 
B)  output using inputs. 
C)  factors of production using goods and services. 
D)  Both a) and b) are correct. 
A)  goods and services using factors of production. 
B)  output using inputs. 
C)  factors of production using goods and services. 
D)  Both a) and b) are correct.

Question 9

When economists are trying to help improve the world, they are

Accepted Answer

A)  in the realm of positive economics rather than normative economics. 
B)  in the realm of macroeconomics rather than microeconomics. 
C)  scientists. 
D)  policy advisers. 
A)  in the realm of positive economics rather than normative economics. 
B)  in the realm of macroeconomics rather than microeconomics. 
C)  scientists. 
D)  policy advisers.

Question 10

You know an economist has crossed the line from scientist to policy adviser when he or she

Accepted Answer

A)  claims that the problem at hand is widely misunderstood by non-economists. 
B)  talks about the evidence. 
C)  makes normative statements. 
D)  makes a claim about how the world is. 
A)  claims that the problem at hand is widely misunderstood by non-economists. 
B)  talks about the evidence. 
C)  makes normative statements. 
D)  makes a claim about how the world is.

Question 11

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)  One economist believes everyone should pay the same percentage of their income in taxes; another economist believes that wealthier citizens should pay a higher percentage of their income in taxes. 
B)  One economist believes that manufacturing firms should face greater regulation to preserve the environment; another economist believes the government should not intervene in free markets. 
C)  One economist believes that equality should be valued over efficiency in policy decisions; another economist believes that efficiency should be valued over equality in policy decisions. 
D)  One economist believes the government should tax a household's income; another economist believes the government should tax a household's consumption. 
A)  One economist believes everyone should pay the same percentage of their income in taxes; another economist believes that wealthier citizens should pay a higher percentage of their income in taxes. 
B)  One economist believes that manufacturing firms should face greater regulation to preserve the environment; another economist believes the government should not intervene in free markets. 
C)  One economist believes that equality should be valued over efficiency in policy decisions; another economist believes that efficiency should be valued over equality in policy decisions. 
D)  One economist believes the government should tax a household's income; another economist believes the government should tax a household's consumption.

Question 12

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to

Accepted Answer

A)  make use of theory and observation. 
B)  rely upon the scientific method. 
C)  conduct laboratory experiments. 
D)  find articles or books that were written before 1900. 
A)  make use of theory and observation. 
B)  rely upon the scientific method. 
C)  conduct laboratory experiments. 
D)  find articles or books that were written before 1900.

Question 13

Positive statements are not

Accepted Answer

A)  descriptive. 
B)  prescriptive. 
C)  claims about how the world is. 
D)  made by economists speaking as scientists. 
A)  descriptive. 
B)  prescriptive. 
C)  claims about how the world is. 
D)  made by economists speaking as scientists.

Question 14

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

Accepted Answer

A) True 
 B)False

Question 15

In the circular flow diagram, when Brian provides labor through the markets for factors of production to ABC Company, the flow of money he receives in exchange is called

Accepted Answer

The answer of In the circular flow diagram, when Brian...

Question 16

The slope of a horizontal line is infinite, and the slope of a vertical line is zero.

Accepted Answer

A) True 
 B)False

Question 17

In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 18

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Accepted Answer

A)  performing an experiment in an economic system. 
B)  applying mathematical methods to economic analysis. 
C)  analyzing available data. 
D)  formulating theories about economic events. 
A)  performing an experiment in an economic system. 
B)  applying mathematical methods to economic analysis. 
C)  analyzing available data. 
D)  formulating theories about economic events.

Question 19

A circular-flow diagram is a model that

Accepted Answer

A)  helps to explain how participants in the economy interact with one another. 
B)  helps to explain how the economy is organized. 
C)  incorporates all aspects of the real economy. 
D)  Both a) and b) are correct. 
A)  helps to explain how participants in the economy interact with one another. 
B)  helps to explain how the economy is organized. 
C)  incorporates all aspects of the real economy. 
D)  Both a) and b) are correct.

Question 20

When economists disagree about whether a policy is fair, they are expressing a difference in

Accepted Answer

The answer of When economists disagree about whether a policy...

Exam 2: Thinking Like an Economist

An example of a price that changes only infrequently is the price of

What you must give up to get something else is called the

Figure 2-8 -Refer to Figure 2-8. Inefficient production is represented by which points)?

Economists speaking like policy advisers make

The essence of science is

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?

Unemployment causes production levels to be inefficient.

In the circular-flow diagram, firms produce

When economists are trying to help improve the world, they are

You know an economist has crossed the line from scientist to policy adviser when he or she

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to

Positive statements are not

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

In the circular flow diagram, when Brian provides labor through the markets for factors of production to ABC Company, the flow of money he receives in exchange is called

The slope of a horizontal line is infinite, and the slope of a vertical line is zero.

In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers.

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

A circular-flow diagram is a model that

When economists disagree about whether a policy is fair, they are expressing a difference in

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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