Question 1

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 2

In the circular-flow diagram, factors of production include land, labor, and capital.

Accepted Answer

A) True 
 B)False

Question 3

In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?

Accepted Answer

A)  goods and services 
B)  dollars paid to land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit 
A)  goods and services 
B)  dollars paid to land, labor, and capital 
C)  dollars spent on goods and services 
D)  wages, rent, and profit

Question 4

Figure 2-2  
-Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

Accepted Answer

A)  households are represented by Box A. 
B)  firms are represented by Box C. 
C)  firms are represented by Box A. 
D)  firms are sellers in Box B. 
A)  households are represented by Box A. 
B)  firms are represented by Box C. 
C)  firms are represented by Box A. 
D)  firms are sellers in Box B.

Question 5

The production possibilities frontier is used to illustrate some basic economic ideas, including

Accepted Answer

A)  scarcity. 
B)  opportunity cost. 
C)  economic growth. 
D)  All of the above are correct. 
A)  scarcity. 
B)  opportunity cost. 
C)  economic growth. 
D)  All of the above are correct.

Question 6

The production possibilities frontier illustrates

Accepted Answer

A)  the trade-off between efficiency and equality. 
B)  the combination of output that an economy should produce. 
C)  the combination of output that each member of society should consume. 
D)  None of the above is correct. 
A)  the trade-off between efficiency and equality. 
B)  the combination of output that an economy should produce. 
C)  the combination of output that each member of society should consume. 
D)  None of the above is correct.

Question 7

Table 2-3
Production Possibilities for Footville  
-Refer to Table 2-3. Which of the following statements is correct?

Accepted Answer

A)  The opportunity cost of an additional 200 shoes is constant at 200 socks. 
B)  The opportunity cost of an additional 200 shoes is constant at 300 socks. 
C)  Footville's production possibilities frontier is a straight, downward­sloping line. 
D)  The opportunity cost of an additional 200 shoes increases as more socks are produced. 
A)  The opportunity cost of an additional 200 shoes is constant at 200 socks. 
B)  The opportunity cost of an additional 200 shoes is constant at 300 socks. 
C)  Footville's production possibilities frontier is a straight, downward­sloping line. 
D)  The opportunity cost of an additional 200 shoes increases as more socks are produced.

Question 8

Figure 2-11  
-Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

Accepted Answer

A)  simultaneous technological advances in the book and DVD industries. 
B)  a reallocation of resources away from the production of DVDs and toward the production of books. 
C)  economic growth. 
D)  All of the above are correct. 
A)  simultaneous technological advances in the book and DVD industries. 
B)  a reallocation of resources away from the production of DVDs and toward the production of books. 
C)  economic growth. 
D)  All of the above are correct.

Question 9

A survey of professional economists revealed that more than three-fourths of them agreed with a number of statements, including which of the following?

Accepted Answer

A)  Tariffs and import quotas usually reduce general economic welfare. 
B)  A large federal budget deficit has an adverse effect on the economy. 
C)  Minimum wage increases unemployment among young and unskilled workers. 
D)  All of the above are correct. 
A)  Tariffs and import quotas usually reduce general economic welfare. 
B)  A large federal budget deficit has an adverse effect on the economy. 
C)  Minimum wage increases unemployment among young and unskilled workers. 
D)  All of the above are correct.

Question 10

One thing economists do to help them understand how the real world works is

Accepted Answer

A)  make assumptions. 
B)  ignore the past. 
C)  try to capture every aspect of the real world in the models they construct. 
D)  All of the above are correct. 
A)  make assumptions. 
B)  ignore the past. 
C)  try to capture every aspect of the real world in the models they construct. 
D)  All of the above are correct.

Question 11

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Accepted Answer

A)  opinions and education. 
B)  opinions and values. 
C)  scientific judgments and education. 
D)  scientific judgments and values. 
A)  opinions and education. 
B)  opinions and values. 
C)  scientific judgments and education. 
D)  scientific judgments and values.

Question 12

Figure 2-18
Relationship between Price and Restaurant Meals  
-Refer to Figure 2-18. The slope of the line containing points A and B is

Accepted Answer

A)  -1/2. 
B)  1/2. 
C)  2. 
D)  -2. 
A)  -1/2. 
B)  1/2. 
C)  2. 
D)  -2.

Question 13

Unemployment causes production levels to be inefficient.

Accepted Answer

A) True 
 B)False

Question 14

In economics, capital refers to

Accepted Answer

A)  the finances necessary for firms to produce their products. 
B)  buildings and machines used in the production process. 
C)  the money households use to purchase firms' output. 
D)  stocks and bonds. 
A)  the finances necessary for firms to produce their products. 
B)  buildings and machines used in the production process. 
C)  the money households use to purchase firms' output. 
D)  stocks and bonds.

Question 15

Figure 2-8  
-Refer to Figure 2-8. Point K represents an outcome in which

Accepted Answer

A)  production is inefficient. 
B)  some of the economy's resources are unemployed. 
C)  the economy is using all of its resources to produce hammers. 
D)  the economy is using all of its nails to produce hammers. 
A)  production is inefficient. 
B)  some of the economy's resources are unemployed. 
C)  the economy is using all of its resources to produce hammers. 
D)  the economy is using all of its nails to produce hammers.

Question 16

Which of the following is not correct?

Accepted Answer

A)  Economists use some familiar words in specialized ways. 
B)  Economics has its own language and its own way of thinking, but few other fields of study do. 
C)  Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language. 
D)  The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live. 
A)  Economists use some familiar words in specialized ways. 
B)  Economics has its own language and its own way of thinking, but few other fields of study do. 
C)  Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language. 
D)  The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live.

Question 17

Figure 2-10
Panel (a) Panel (b)    
-Refer to Figure 2-10, Panel (a). The opportunity cost of one sofa is highest when the economy produces

Accepted Answer

A)  0 sofas. 
B)  12 sofas. 
C)  20 sofas. 
D)  24 sofas. 
A)  0 sofas. 
B)  12 sofas. 
C)  20 sofas. 
D)  24 sofas.

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

Economists often find it worthwhile to make assumptions that do not necessarily describe the real world.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 2: Thinking Like an Economist

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

In the circular-flow diagram, factors of production include land, labor, and capital.

In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?

Figure 2-2 -Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

The production possibilities frontier is used to illustrate some basic economic ideas, including

The production possibilities frontier illustrates

Table 2-3 Production Possibilities for Footville -Refer to Table 2-3. Which of the following statements is correct?

Figure 2-11 -Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

A survey of professional economists revealed that more than three-fourths of them agreed with a number of statements, including which of the following?

One thing economists do to help them understand how the real world works is

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. The slope of the line containing points A and B is

Unemployment causes production levels to be inefficient.

In economics, capital refers to

Figure 2-8 -Refer to Figure 2-8. Point K represents an outcome in which

Which of the following is not correct?

Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a). The opportunity cost of one sofa is highest when the economy produces

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

Economists often find it worthwhile to make assumptions that do not necessarily describe the real world.

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

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