Question 1

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

Accepted Answer

A)  Inflation is more harmful to the economy than unemployment is. 
B)  If welfare payments increase, the world will be a better place. 
C)  Prices rise when the government prints too much money. 
D)  When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency. 
A)  Inflation is more harmful to the economy than unemployment is. 
B)  If welfare payments increase, the world will be a better place. 
C)  Prices rise when the government prints too much money. 
D)  When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.

Question 2

Draw a production possibilities frontier showing increasing opportunity cost of hammers in terms of horseshoes.
a. On the graph, identify the area of feasible outcomes and the area of infeasible outcomes.
b. On the graph, label a point that is efficient and a point that is inefficient.
c. On the graph, illustrate the effect of the discovery of a new vein of iron ore, a resource needed to make both horseshoes and hammers, on this economy.
d. On a second graph, illustrate the effect of a new computerized assembly line in the production of hammers on this economy.

Accepted Answer

The answer of Draw a production possibilities frontier showing increasing...

Question 3

Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policymakers?

Accepted Answer

A)  similar opinions about the validity of economic theories 
B)  significant differences in education 
C)  differences in personal values 
D)  a reliance on normative statement for research theories 
A)  similar opinions about the validity of economic theories 
B)  significant differences in education 
C)  differences in personal values 
D)  a reliance on normative statement for research theories

Question 4

Table 2-3
Production Possibilities for Footville  
-Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

Accepted Answer

A)  400 socks 
B)  300 socks 
C)  200 socks 
D)  100 socks 
A)  400 socks 
B)  300 socks 
C)  200 socks 
D)  100 socks

Question 5

In the circular-flow diagram, firms produce goods and services using the factors of production.

Accepted Answer

A) True 
 B)False

Question 6

Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

Accepted Answer

The answer of Is the following a positive or normative...

Question 7

Trade-offs are involved in most policy decisions.

Accepted Answer

A) True 
 B)False

Question 8

Figure 2-14   Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two.
-Refer to Figure 2-14. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Accepted Answer

The answer of Figure 2-14   Consider the production...

Question 9

Which of the following steps does an economist take when studying the economy?

Accepted Answer

A)  devise theories 
B)  collect data 
C)  analyze data 
D)  All of the above are correct. 
A)  devise theories 
B)  collect data 
C)  analyze data 
D)  All of the above are correct.

Question 10

For an economist, the idea of making assumptions is regarded generally as a

Accepted Answer

A)  bad idea, since doing so leads to the omission of important ideas and variables from economic models. 
B)  bad idea, since doing so invariably leads to data-collection problems. 
C)  good idea, since doing so helps to simplify the complex world and make it easier to understand. 
D)  good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand. 
A)  bad idea, since doing so leads to the omission of important ideas and variables from economic models. 
B)  bad idea, since doing so invariably leads to data-collection problems. 
C)  good idea, since doing so helps to simplify the complex world and make it easier to understand. 
D)  good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.

Question 11

The slope of a line is equal to

Accepted Answer

A)  rise divided by run. 
B)  run divided by rise. 
C)  rise minus run. 
D)  rise plus run. 
A)  rise divided by run. 
B)  run divided by rise. 
C)  rise minus run. 
D)  rise plus run.

Question 12

Table 2-4
Production Possibilities for Picnicland  
-Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?

Accepted Answer

A)  150 burgers 
B)  225 burgers 
C)  300 burgers 
D)  450 burgers 
A)  150 burgers 
B)  225 burgers 
C)  300 burgers 
D)  450 burgers

Question 13

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

Accepted Answer

A)  economists have not yet convinced the general public that the policies are undesirable. 
B)  economists engage in positive analysis, not normative analysis. 
C)  economists have values that are different from the values of most non-economists. 
D)  economists' theories are not easily confirmed or refuted in laboratory analysis. 
A)  economists have not yet convinced the general public that the policies are undesirable. 
B)  economists engage in positive analysis, not normative analysis. 
C)  economists have values that are different from the values of most non-economists. 
D)  economists' theories are not easily confirmed or refuted in laboratory analysis.

Question 14

Which of the following is not an assumption of the productions possibilities frontier?

Accepted Answer

A)  A country produces only two goods or types of goods. 
B)  Technology does not change. 
C)  The amount of available resources does not change. 
D)  There is a fixed quantity of money. 
A)  A country produces only two goods or types of goods. 
B)  Technology does not change. 
C)  The amount of available resources does not change. 
D)  There is a fixed quantity of money.

Question 15

Economists use one standard set of assumptions to answer all economic questions.

Accepted Answer

A) True 
 B)False

Question 16

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

Accepted Answer

A) True 
 B)False

Question 17

When economists disagree about whether a policy is fair, they are expressing a difference in

Accepted Answer

The answer of When economists disagree about whether a policy...

Question 18

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

Accepted Answer

A) True 
 B)False

Question 19

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

Accepted Answer

A) True 
 B)False

Question 20

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

Accepted Answer

A)  interest 
B)  capital 
C)  spending by households on goods 
D)  spending by households on services 
A)  interest 
B)  capital 
C)  spending by households on goods 
D)  spending by households on services

Exam 2: Thinking Like an Economist

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

Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policymakers?

Table 2-3 Production Possibilities for Footville -Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

In the circular-flow diagram, firms produce goods and services using the factors of production.

Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

Trade-offs are involved in most policy decisions.

Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two. -Refer to Figure 2-14. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Which of the following steps does an economist take when studying the economy?

For an economist, the idea of making assumptions is regarded generally as a

The slope of a line is equal to

Table 2-4 Production Possibilities for Picnicland -Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

Which of the following is not an assumption of the productions possibilities frontier?

Economists use one standard set of assumptions to answer all economic questions.

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

When economists disagree about whether a policy is fair, they are expressing a difference in

Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

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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