Question 1

The argument that purchases of minivans cause large families is an example of

Accepted Answer

A)  omitted variables. 
B)  normative statements. 
C)  reverse causality. 
D)  bias. 
A)  omitted variables. 
B)  normative statements. 
C)  reverse causality. 
D)  bias.

Question 2

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

Accepted Answer

A) True 
 B)False

Question 3

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 4

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Accepted Answer

A)  Harry Truman 
B)  George Bernard Shaw 
C)  John Maynard Keynes 
D)  Ronald Reagan 
A)  Harry Truman 
B)  George Bernard Shaw 
C)  John Maynard Keynes 
D)  Ronald Reagan

Question 5

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Accepted Answer

A) True 
 B)False

Question 6

Figure 2-23  
-Refer to Figure 2-23. It is possible for this economy to produce 75 doghouses.

Accepted Answer

A) True 
 B)False

Question 7

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

Accepted Answer

A) True 
 B)False

Question 8

When studying the effects of public policy changes, economists

Accepted Answer

A)  always refrain from making assumptions. 
B)  sometimes make different assumptions about the short run and the long run. 
C)  consider only the direct effects of those policy changes and not the indirect effects. 
D)  consider only the short-run effects of those policy changes and not the long-run effects. 
A)  always refrain from making assumptions. 
B)  sometimes make different assumptions about the short run and the long run. 
C)  consider only the direct effects of those policy changes and not the indirect effects. 
D)  consider only the short-run effects of those policy changes and not the long-run effects.

Question 9

The circular-flow diagram is an example of

Accepted Answer

A)  a laboratory experiment. 
B)  an economic model. 
C)  a mathematical model. 
D)  All of the above are correct. 
A)  a laboratory experiment. 
B)  an economic model. 
C)  a mathematical model. 
D)  All of the above are correct.

Question 10

Economists build economic models by

Accepted Answer

A)  generating data. 
B)  conducting controlled experiments in a lab. 
C)  making assumptions. 
D)  reviewing statistical forecasts. 
A)  generating data. 
B)  conducting controlled experiments in a lab. 
C)  making assumptions. 
D)  reviewing statistical forecasts.

Question 11

Figure 2-23  
-Refer to Figure 2-23. Points A, B, and D represent feasible outcomes for this economy.

Accepted Answer

A) True 
 B)False

Question 12

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Accepted Answer

A)  rotation of the curve. 
B)  shift of the curve. 
C)  movement along the curve. 
D)  change in the slope of the curve. 
A)  rotation of the curve. 
B)  shift of the curve. 
C)  movement along the curve. 
D)  change in the slope of the curve.

Question 13

In constructing models, economists

Accepted Answer

A)  leave out equations, since equations and models tend to contradict one another. 
B)  ignore the long run, since models are useful only for short-run analysis. 
C)  sometimes make assumptions that are contrary to features of the real world. 
D)  try to include every feature of the economy. 
A)  leave out equations, since equations and models tend to contradict one another. 
B)  ignore the long run, since models are useful only for short-run analysis. 
C)  sometimes make assumptions that are contrary to features of the real world. 
D)  try to include every feature of the economy.

Question 14

Positive statements are descriptive, while normative statements are prescriptive.

Accepted Answer

A) True 
 B)False

Question 15

Figure 2-1  
-Refer to Figure 2-1. Which arrow represents the flow of goods and services?

Accepted Answer

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

Question 16

An assumption an economist might make while studying international trade is

Accepted Answer

A)  there are only two countries. 
B)  countries only produce two goods. 
C)  technology does not change. 
D)  All of the above are possible assumptions. 
A)  there are only two countries. 
B)  countries only produce two goods. 
C)  technology does not change. 
D)  All of the above are possible assumptions.

Question 17

The slope of a line passing through the points (15, 3) and (10, 6) is

Accepted Answer

A)  -3/5. 
B)  3/5. 
C)  -5/3. 
D)  5/3. 
A)  -3/5. 
B)  3/5. 
C)  -5/3. 
D)  5/3.

Question 18

Figure 2-2  
-Refer to Figure 2-2. Carla regularly buys fruits and vegetables at a grocery store. Roberto regularly pays a lawn- care company to mow his lawn. If the flow of fruits and vegetables from the grocery store to Carla is represented by an arrow from Box C to Box B of this circular-flow diagram, then the money paid by Roberto to the lawn-care company is represented by an arrow

Accepted Answer

A)  from Box A to Box D. 
B)  from Box B to Box C. 
C)  from Box C to Box B. 
D)  from Box D to Box A. 
A)  from Box A to Box D. 
B)  from Box B to Box C. 
C)  from Box C to Box B. 
D)  from Box D to Box A.

Question 19

Which of the following trade-offs does the production possibilities frontier illustrate?

Accepted Answer

A)  If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption. 
B)  Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other. 
C)  For an economy to consume more of one good, it must stop consuming the other good entirely. 
D)  For an economy to produce and consume goods, it must sacrifice environmental quality. 
A)  If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption. 
B)  Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other. 
C)  For an economy to consume more of one good, it must stop consuming the other good entirely. 
D)  For an economy to produce and consume goods, it must sacrifice environmental quality.

Question 20

Which of the following allows you to provide information about the relationship between two variables?

Accepted Answer

A)  coordinate system. 
B)  pie chart 
C)  bar graph 
D)  time-series graph 
A)  coordinate system. 
B)  pie chart 
C)  bar graph 
D)  time-series graph

Exam 2: Thinking Like an Economist

The argument that purchases of minivans cause large families is an example of

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

The essence of science is

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Figure 2-23 -Refer to Figure 2-23. It is possible for this economy to produce 75 doghouses.

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

When studying the effects of public policy changes, economists

The circular-flow diagram is an example of

Economists build economic models by

Figure 2-23 -Refer to Figure 2-23. Points A, B, and D represent feasible outcomes for this economy.

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

In constructing models, economists

Positive statements are descriptive, while normative statements are prescriptive.

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of goods and services?

An assumption an economist might make while studying international trade is

The slope of a line passing through the points (15, 3) and (10, 6) is

Which of the following trade-offs does the production possibilities frontier illustrate?

Which of the following allows you to provide information about the relationship between two variables?

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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