Question 1

Figure 2-9
Panel (a) Panel (b)    
-Refer to Figure 2-9, Panel (a). The opportunity cost of one cup of coffee is highest when the economy produces

Accepted Answer

A)  0 cups of coffee. 
B)  2 cups of coffee. 
C)  4 cups of coffee. 
D)  6 cups of coffee. 
A)  0 cups of coffee. 
B)  2 cups of coffee. 
C)  4 cups of coffee. 
D)  6 cups of coffee.

Question 2

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 3

Figure 2-9
Panel (a) Panel (b)    
-Refer to Figure 2-9, Panel (a). Production is

Accepted Answer

A)  possible at points J, K, L, and M, but efficient only at points J, L, and M. 
B)  possible at points J, K, L, and M, but efficient only at point K. 
C)  possible at points J, L, M, and N, but efficient only at points J, L, and M. 
D)  possible at points J, L, M, and N, but efficient only at point N. 
A)  possible at points J, K, L, and M, but efficient only at points J, L, and M. 
B)  possible at points J, K, L, and M, but efficient only at point K. 
C)  possible at points J, L, M, and N, but efficient only at points J, L, and M. 
D)  possible at points J, L, M, and N, but efficient only at point N.

Question 4

In the circular-flow diagram, factors of production are the goods and services produced by firms.

Accepted Answer

A) True 
 B)False

Question 5

In the simple circular-flow diagram, households

Accepted Answer

A)  are the only decision makers. 
B)  own the factors of production. 
C)  are buyers of inputs. 
D)  consume only some of the goods and services that firms produce. 
A)  are the only decision makers. 
B)  own the factors of production. 
C)  are buyers of inputs. 
D)  consume only some of the goods and services that firms produce.

Question 6

Different values are not a reason for disagreement among economists.

Accepted Answer

A) True 
 B)False

Question 7

A survey which sought the opinion of professional economists on fourteen propositions about economic policy found that

Accepted Answer

A)  the respondents were almost equally divided on the propositions. 
B)  the respondents favored the propositions by a slight margin. 
C)  the respondents disagreed with the propositions by a slight margin. 
D)  there was overwhelming endorsement of the propositions among the respondents. 
A)  the respondents were almost equally divided on the propositions. 
B)  the respondents favored the propositions by a slight margin. 
C)  the respondents disagreed with the propositions by a slight margin. 
D)  there was overwhelming endorsement of the propositions among the respondents.

Question 8

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Accepted Answer

A) True 
 B)False

Question 9

In the circular-flow diagram, firms own the factors of production and use them to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 10

When economists make

Accepted Answer

A)  positive statements, they are speaking not as scientists but as policy advisers. 
B)  positive statements, they are speaking not as scientists but as forecasters. 
C)  normative statements, they are speaking not as scientists but as policy advisers. 
D)  normative statements, they are speaking not as policy advisers but as model-builders. 
A)  positive statements, they are speaking not as scientists but as policy advisers. 
B)  positive statements, they are speaking not as scientists but as forecasters. 
C)  normative statements, they are speaking not as scientists but as policy advisers. 
D)  normative statements, they are speaking not as policy advisers but as model-builders.

Question 11

Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik

Accepted Answer

A)  hold different normative views about the tax system. 
B)  disagree about the validity of a positive theory. 
C)  have a fundamental misunderstanding of the tax system. 
D)  More than one of the above is correct. 
A)  hold different normative views about the tax system. 
B)  disagree about the validity of a positive theory. 
C)  have a fundamental misunderstanding of the tax system. 
D)  More than one of the above is correct.

Question 12

According to economist John Maynard Keynes, a great economist must also be a(n)

Accepted Answer

A)  mathematician. 
B)  historian. 
C)  philosopher. 
D)  All of the above are correct. 
A)  mathematician. 
B)  historian. 
C)  philosopher. 
D)  All of the above are correct.

Question 13

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

Accepted Answer

A) True 
 B)False

Question 14

A relatively flat demand curve indicates that

Accepted Answer

A)  quantity demanded will adjust only slightly to a price change. 
B)  quantity demanded will adjust significantly to a price change. 
C)  quantity demanded will not adjust to a price change. 
D)  the change in quantity demanded will exactly equal a change in price. 
A)  quantity demanded will adjust only slightly to a price change. 
B)  quantity demanded will adjust significantly to a price change. 
C)  quantity demanded will not adjust to a price change. 
D)  the change in quantity demanded will exactly equal a change in price.

Question 15

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

Accepted Answer

A)  The US Department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers. 
B)  Antitrust laws should be used to prevent further concentration in the wireless telephone service market. 
C)  The US Department of Justice sued AT&T to block its merger with T-Mobile. 
D)  The wireless telephone service market is too highly concentrated. 
A)  The US Department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers. 
B)  Antitrust laws should be used to prevent further concentration in the wireless telephone service market. 
C)  The US Department of Justice sued AT&T to block its merger with T-Mobile. 
D)  The wireless telephone service market is too highly concentrated.

Question 16

Normative conclusions

Accepted Answer

A)  come from positive analysis alone. 
B)  are based on ignorance of positive analysis. 
C)  involve value judgments. 
D)  reflect the economist's role as scientist. 
A)  come from positive analysis alone. 
B)  are based on ignorance of positive analysis. 
C)  involve value judgments. 
D)  reflect the economist's role as scientist.

Question 17

Figure 2-9
Panel (a) Panel (b)    
-Refer to Figure 2-9, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Accepted Answer

A)  unemployment. 
B)  an improvement in donut production technology. 
C)  an improvement in coffee production technology. 
D)  an improvement in both donut and coffee production technology. 
A)  unemployment. 
B)  an improvement in donut production technology. 
C)  an improvement in coffee production technology. 
D)  an improvement in both donut and coffee production technology.

Question 18

The point where both x and y are zero is known as the

Accepted Answer

A)  origin. 
B)  null. 
C)  zero coordinate. 
D)  center. 
A)  origin. 
B)  null. 
C)  zero coordinate. 
D)  center.

Question 19

Just like other scientific models, economic models simplify reality using

Accepted Answer

The answer of Just like other scientific models, economic models...

Question 20

Alfonso has noticed that increases in unemployment insurance claims are associated with recessions, and therefore he advocates limits on unemployment insurance so as to prevent recessions. Mary has noticed that most drug addicts once attended schools, and therefore she advocates getting rid of schools so as to prevent drug addiction.

Accepted Answer

A)  The reasoning of both Alfonso and Mary suffers from the omitted variable problem. 
B)  The reasoning of both Alfonso and Mary suffers from the reverse causality problem. 
C)  Alfonso's reasoning suffers from the reverse causality problem, and Mary's reasoning suffers from the omitted variable problem. 
D)  Mary's reasoning suffers from the reverse causality problem, and Alfonso's reasoning suffers from the omitted variable problem. 
A)  The reasoning of both Alfonso and Mary suffers from the omitted variable problem. 
B)  The reasoning of both Alfonso and Mary suffers from the reverse causality problem. 
C)  Alfonso's reasoning suffers from the reverse causality problem, and Mary's reasoning suffers from the omitted variable problem. 
D)  Mary's reasoning suffers from the reverse causality problem, and Alfonso's reasoning suffers from the omitted variable problem.

Exam 2: Thinking Like an Economist

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a). The opportunity cost of one cup of coffee is highest when the economy produces

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

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a). Production is

In the circular-flow diagram, factors of production are the goods and services produced by firms.

In the simple circular-flow diagram, households

Different values are not a reason for disagreement among economists.

A survey which sought the opinion of professional economists on fourteen propositions about economic policy found that

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

In the circular-flow diagram, firms own the factors of production and use them to produce goods and services.

When economists make

Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik

According to economist John Maynard Keynes, a great economist must also be a(n)

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

A relatively flat demand curve indicates that

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

Normative conclusions

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a) and Panel (b). A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

The point where both x and y are zero is known as the

Just like other scientific models, economic models simplify reality using

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

Filters