Question 1

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)  the effect of an increase in the alcohol tax on the market for beer 
B)  the effect of foreign competition on the domestic auto industry 
C)  the effect of a price war in the airline industry 
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemployment 
A)  the effect of an increase in the alcohol tax on the market for beer 
B)  the effect of foreign competition on the domestic auto industry 
C)  the effect of a price war in the airline industry 
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemployment

Question 2

The slope of a line that passes through the points (20, 30) and (40, 14) is

Accepted Answer

A)  -4/5. 
B)  4/5. 
C)  5/4. 
D)  -5/4. 
A)  -4/5. 
B)  4/5. 
C)  5/4. 
D)  -5/4.

Question 3

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Which of the following statements is correct?

Accepted Answer

A)  Economists almost always find it easy to conduct experiments in order to test their theories. 
B)  Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C)  Economics is a social science rather than a true science because it cannot employ the scientific method. 
D)  Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history. 
A)  Economists almost always find it easy to conduct experiments in order to test their theories. 
B)  Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C)  Economics is a social science rather than a true science because it cannot employ the scientific method. 
D)  Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history.

Question 6

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 7

Two variables that have a positive correlation move in the same direction.

Accepted Answer

A) True 
 B)False

Question 8

When economists are trying to explain the world, they are scientists. When they are trying to improve it, they are

Accepted Answer

The answer of When economists are trying to explain the...

Question 9

An economy's production of two goods is efficient if

Accepted Answer

A)  all members of society consume equal portions of the goods. 
B)  the goods are produced using only some of society's available resources. 
C)  it is impossible to produce more of one good without producing less of the other. 
D)  the opportunity cost of producing more of one good is zero. 
A)  all members of society consume equal portions of the goods. 
B)  the goods are produced using only some of society's available resources. 
C)  it is impossible to produce more of one good without producing less of the other. 
D)  the opportunity cost of producing more of one good is zero.

Question 10

"Minimum wage laws result in unemployment" is a normative statement, while "the minimum wage should be higher" is a positive statement.

Accepted Answer

A) True 
 B)False

Question 11

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 12

A circular-flow diagram is a visual model of the economy.

Accepted Answer

A) True 
 B)False

Question 13

Figure 2-3  
-Refer to Figure 2-3. What do the inner arrows represent in the figure?

Accepted Answer

flow of in

Question 14

The y-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 15

The scientific method is applicable to studying

Accepted Answer

A)  natural sciences, but not social sciences. 
B)  social sciences, but not natural sciences. 
C)  both natural sciences and social sciences. 
D)  None of the above is correct. 
A)  natural sciences, but not social sciences. 
B)  social sciences, but not natural sciences. 
C)  both natural sciences and social sciences. 
D)  None of the above is correct.

Question 16

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

Accepted Answer

A)  is rooted in the principle that people face tradeoffs. 
B)  indicates that economists recognize that there are opportunity costs associated with policy decisions. 
C)  confirms that economists are not suited to be presidential advisers. 
D)  More than one of the above is correct. 
A)  is rooted in the principle that people face tradeoffs. 
B)  indicates that economists recognize that there are opportunity costs associated with policy decisions. 
C)  confirms that economists are not suited to be presidential advisers. 
D)  More than one of the above is correct.

Question 17

A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?

Accepted Answer

A)  the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing 
B)  the tradeoff between production of jewelry and production of clothing 
C)  the opportunity cost of clothing in terms of jewelry 
D)  the effect of economic growth on production possibilities involving jewelry and clothing 
A)  the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing 
B)  the tradeoff between production of jewelry and production of clothing 
C)  the opportunity cost of clothing in terms of jewelry 
D)  the effect of economic growth on production possibilities involving jewelry and clothing

Question 18

In principle, we can

Accepted Answer

A)  ignore positive statements when choosing among various public policy alternatives. 
B)  ignore normative statements when choosing among various public policy alternatives. 
C)  confirm or refute positive statements by examining evidence. 
D)  confirm or refute normative statements by examining evidence. 
A)  ignore positive statements when choosing among various public policy alternatives. 
B)  ignore normative statements when choosing among various public policy alternatives. 
C)  confirm or refute positive statements by examining evidence. 
D)  confirm or refute normative statements by examining evidence.

Question 19

The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 2: Thinking Like an Economist

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

The slope of a line that passes through the points (20, 30) and (40, 14) is

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

Positive statements are not

Which of the following statements is correct?

Normative statements are

Two variables that have a positive correlation move in the same direction.

When economists are trying to explain the world, they are scientists. When they are trying to improve it, they are

An economy's production of two goods is efficient if

"Minimum wage laws result in unemployment" is a normative statement, while "the minimum wage should be higher" is a positive statement.

Economists sometimes give conflicting advice because

A circular-flow diagram is a visual model of the economy.

Figure 2-3 -Refer to Figure 2-3. What do the inner arrows represent in the figure?

The y-coordinate is the

The scientific method is applicable to studying

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?

In principle, we can

The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.

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

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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