Question 1

In the ordered pair (20, 30), 20 is the

Accepted Answer

A)  the x-coordinate. 
B)  the horizontal location of the point. 
C)  the y-coordinate. 
D)  Both a and b are correct. 
A)  the x-coordinate. 
B)  the horizontal location of the point. 
C)  the y-coordinate. 
D)  Both a and b are correct.

Question 2

When two variables move in opposite directions, the curve relating them is

Accepted Answer

A)  upward sloping, and we say the variables are positively related. 
B)  upward sloping, and we say the variables are negatively related. 
C)  downward sloping, and we say the variables are positively related. 
D)  downward sloping, and we say the variables are negatively related. 
A)  upward sloping, and we say the variables are positively related. 
B)  upward sloping, and we say the variables are negatively related. 
C)  downward sloping, and we say the variables are positively related. 
D)  downward sloping, and we say the variables are negatively related.

Question 3

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

Accepted Answer

A)  the nation is producing beyond its capacity, so inflation will occur. 
B)  the nation is not using all available resources or is using inferior technology or both. 
C)  the nation is producing an efficient combination of goods. 
D)  there will be a large opportunity cost if the nation tries to increase production of any good. 
A)  the nation is producing beyond its capacity, so inflation will occur. 
B)  the nation is not using all available resources or is using inferior technology or both. 
C)  the nation is producing an efficient combination of goods. 
D)  there will be a large opportunity cost if the nation tries to increase production of any good.

Question 4

The most common data for testing economic theories come from

Accepted Answer

A)  carefully controlled and conducted laboratory experiments. 
B)  computer models of economies. 
C)  historical episodes of economic change. 
D)  centrally planned economies. 
A)  carefully controlled and conducted laboratory experiments. 
B)  computer models of economies. 
C)  historical episodes of economic change. 
D)  centrally planned economies.

Question 5

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

Accepted Answer

A)  the Department of Labor 
B)  the Department of the Treasury 
C)  the Congressional Budget Office 
D)  the Council of Economic Advisers 
A)  the Department of Labor 
B)  the Department of the Treasury 
C)  the Congressional Budget Office 
D)  the Council of Economic Advisers

Question 6

Figure 2-4  
-Refer to Figure 2-4. Unemployment could cause this economy to produce at which point(s)?

Accepted Answer

A)  Q, S 
B)  Q, S, T 
C)  R, U 
D)  T 
A)  Q, S 
B)  Q, S, T 
C)  R, U 
D)  T

Question 7

Economic models are built with

Accepted Answer

A)  recommendations concerning public policies. 
B)  facts about the legal system. 
C)  assumptions. 
D)  statistical forecasts. 
A)  recommendations concerning public policies. 
B)  facts about the legal system. 
C)  assumptions. 
D)  statistical forecasts.

Question 8

Figure 2-2  
-Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

Accepted Answer

A)  Box D must represent the markets for factors of production. 
B)  Box C must represent the markets for goods and services. 
C)  firms are buyers in the markets represented by Box D. 
D)  All of the above are correct. 
A)  Box D must represent the markets for factors of production. 
B)  Box C must represent the markets for goods and services. 
C)  firms are buyers in the markets represented by Box D. 
D)  All of the above are correct.

Question 9

Which of the following is correct?

Accepted Answer

A)  A horizontal line has an infinite slope, and a vertical line has a zero slope. 
B)  A horizontal line has a slope of 1, and a vertical line has a slope of -1. 
C)  A horizontal line has a zero slope, and a vertical line has an infinite slope. 
D)  A horizontal line has a slope of -1, and a vertical line has a slope of 1. 
A)  A horizontal line has an infinite slope, and a vertical line has a zero slope. 
B)  A horizontal line has a slope of 1, and a vertical line has a slope of -1. 
C)  A horizontal line has a zero slope, and a vertical line has an infinite slope. 
D)  A horizontal line has a slope of -1, and a vertical line has a slope of 1.

Question 10

Figure 2-20
Relationship Between Years of Education and Annual Income  
-Refer to Figure 2-20. Senator Smith observes the graph and concludes that people who earn higher incomes attend school for more years. Senator Jones observes the graph and concludes that people who attend school for more years earn higher incomes. Who is correct?

Accepted Answer

A)  Senator Smith is correct. 
B)  Senator Jones is correct. 
C)  It is difficult to say which senator might be correct due to the reverse causality problem. 
D)  It is difficult to say which senator might be correct due to omitted variable bias. 
A)  Senator Smith is correct. 
B)  Senator Jones is correct. 
C)  It is difficult to say which senator might be correct due to the reverse causality problem. 
D)  It is difficult to say which senator might be correct due to omitted variable bias.

Question 11

What type of statement is a descriptive statement about how the world is?

Accepted Answer

The answer of What type of statement is a descriptive...

Question 12

Points outside the production possibilities frontier represent infeasible levels of production.

Accepted Answer

A) True 
 B)False

Question 13

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Accepted Answer

A) True 
 B)False

Question 14

Economists use some familiar terms in specialized ways

Accepted Answer

A)  to make the subject sound more complex than it is. 
B)  because every respectable field of study has its own language. 
C)  to provide a new and useful way of thinking about the world. 
D)  because it was too difficult to come up with new terms. 
A)  to make the subject sound more complex than it is. 
B)  because every respectable field of study has its own language. 
C)  to provide a new and useful way of thinking about the world. 
D)  because it was too difficult to come up with new terms.

Question 15

Figure 2-4  
-Refer to Figure 2-4. This economy cannot produce at which point(s)?

Accepted Answer

A)  Q 
B)  Q, S 
C)  Q, S, T 
D)  S 
A)  Q 
B)  Q, S 
C)  Q, S, T 
D)  S

Question 16

Figure 2-9
Panel (a) Panel (b)    
-Refer to Figure 2-9, Panel (a). To gain 2 donuts by moving from point L to point M, society must sacrifice

Accepted Answer

A)  efficiency. 
B)  employment. 
C)  4 cups of coffee. 
D)  More than one of the above is correct. 
A)  efficiency. 
B)  employment. 
C)  4 cups of coffee. 
D)  More than one of the above is correct.

Question 17

Production possibilities frontiers are usually bowed outward. This is because

Accepted Answer

A)  the more resources a society uses to produce one good, the fewer resources it has available to produce another good. 
B)  the opportunity cost of producing a good decreases as more and more of that good is produced. 
C)  of the effects of technological change. 
D)  resources are specialized; that is, some are better at producing particular goods rather than other goods. 
A)  the more resources a society uses to produce one good, the fewer resources it has available to produce another good. 
B)  the opportunity cost of producing a good decreases as more and more of that good is produced. 
C)  of the effects of technological change. 
D)  resources are specialized; that is, some are better at producing particular goods rather than other goods.

Question 18

Unemployment would cause an economy to

Accepted Answer

A)  produce inside its production possibilities frontier. 
B)  produce on its production possibilities frontier. 
C)  produce outside its production possibilities frontier. 
D)  experience an inward shift of its production possibilities frontier. 
A)  produce inside its production possibilities frontier. 
B)  produce on its production possibilities frontier. 
C)  produce outside its production possibilities frontier. 
D)  experience an inward shift of its production possibilities frontier.

Question 19

In the circular-flow diagram,

Accepted Answer

A)  firms are buyers in the markets for goods and services. 
B)  households are sellers in the markets for the factors of production. 
C)  firms are sellers in the markets for factors of production and in the markets for goods and services. 
D)  dollars that are spent on goods and services flow directly from firms to households. 
A)  firms are buyers in the markets for goods and services. 
B)  households are sellers in the markets for the factors of production. 
C)  firms are sellers in the markets for factors of production and in the markets for goods and services. 
D)  dollars that are spent on goods and services flow directly from firms to households.

Question 20

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

In the ordered pair (20, 30), 20 is the

When two variables move in opposite directions, the curve relating them is

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

The most common data for testing economic theories come from

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

Figure 2-4 -Refer to Figure 2-4. Unemployment could cause this economy to produce at which point(s)?

Economic models are built with

Figure 2-2 -Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

Which of the following is correct?

What type of statement is a descriptive statement about how the world is?

Points outside the production possibilities frontier represent infeasible levels of production.

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Economists use some familiar terms in specialized ways

Figure 2-4 -Refer to Figure 2-4. This economy cannot produce at which point(s)?

Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a). To gain 2 donuts by moving from point L to point M, society must sacrifice

Production possibilities frontiers are usually bowed outward. This is because

Unemployment would cause an economy to

In the circular-flow diagram,

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

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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