Question 1

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

Accepted Answer

A)  in the markets for factors of production exchanging labor for income. 
B)  in the markets for factors of production exchanging flowers for revenue. 
C)  in the markets for goods and services exchanging flowers for wages, rent, and profit. 
D)  in the markets for goods and services exchanging labor for income. 
A)  in the markets for factors of production exchanging labor for income. 
B)  in the markets for factors of production exchanging flowers for revenue. 
C)  in the markets for goods and services exchanging flowers for wages, rent, and profit. 
D)  in the markets for goods and services exchanging labor for income.

Question 2

Congress relies on economists at the Congressional Budget Office to

Accepted Answer

A)  enforce the nation's antitrust laws. 
B)  set the nation's monetary policy. 
C)  provide evidence that incumbent members of Congress are performing well in their jobs. 
D)  provide independent evaluations of policy proposals. 
A)  enforce the nation's antitrust laws. 
B)  set the nation's monetary policy. 
C)  provide evidence that incumbent members of Congress are performing well in their jobs. 
D)  provide independent evaluations of policy proposals.

Question 3

Economists believe that production possibilities frontiers

Accepted Answer

A)  never have a bowed shape. 
B)  rarely have a bowed shape. 
C)  often have a bowed shape. 
D)  always have a bowed shape. 
A)  never have a bowed shape. 
B)  rarely have a bowed shape. 
C)  often have a bowed shape. 
D)  always have a bowed shape.

Question 4

Which of the following statements applies to economics, as well as to other sciences such as physics?

Accepted Answer

A)  Experiments are considered valid only when they are conducted in a laboratory. 
B)  Good theories do not need to be tested. 
C)  Real-world observations often lead to theories. 
D)  Economics, as well as other sciences, is concerned primarily with abstract concepts. 
A)  Experiments are considered valid only when they are conducted in a laboratory. 
B)  Good theories do not need to be tested. 
C)  Real-world observations often lead to theories. 
D)  Economics, as well as other sciences, is concerned primarily with abstract concepts.

Question 5

Figure 2-13  
-Refer to Figure 2-13. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Accepted Answer

A)  I, L 
B)  G, H 
C)  J, K 
D)  F, G 
A)  I, L 
B)  G, H 
C)  J, K 
D)  F, G

Question 6

Almost all economists agree that tariffs and import quotas

Accepted Answer

A)  reduces general economic welfare. 
B)  increases general economic welfare. 
C)  have no effect on general economic welfare. 
D)  stimulate a less than fully employed economy. 
A)  reduces general economic welfare. 
B)  increases general economic welfare. 
C)  have no effect on general economic welfare. 
D)  stimulate a less than fully employed economy.

Question 7

The President counts among his economic advisors the Congressional Budget Office.

Accepted Answer

A) True 
 B)False

Question 8

The slope of a line is equal to

Accepted Answer

A)  the change in the value of x divided by the change in the value of y. 
B)  the change in the value of y divided by the change in the value of x. 
C)  the horizontal distance divided by the vertical distance. 
D)  the value of y divided by the value of x. 
A)  the change in the value of x divided by the change in the value of y. 
B)  the change in the value of y divided by the change in the value of x. 
C)  the horizontal distance divided by the vertical distance. 
D)  the value of y divided by the value of x.

Question 9

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

Accepted Answer

A)  -0.5. 
B)  -2. 
C)  -4. 
D)  -1. 
A)  -0.5. 
B)  -2. 
C)  -4. 
D)  -1.

Question 10

An example of a price that changes only infrequently is the price of

Accepted Answer

A)  stocks on the New York Stock Exchange. 
B)  crude oil. 
C)  residential real estate. 
D)  magazines sold at newsstands. 
A)  stocks on the New York Stock Exchange. 
B)  crude oil. 
C)  residential real estate. 
D)  magazines sold at newsstands.

Question 11

Efficiency is illustrated by

Accepted Answer

A)  both the production possibilities frontier and the circular-flow diagram. 
B)  neither the production possibilities frontier nor the circular-flow diagram. 
C)  the production possibilities frontier only. 
D)  the circular-flow diagram only. 
A)  both the production possibilities frontier and the circular-flow diagram. 
B)  neither the production possibilities frontier nor the circular-flow diagram. 
C)  the production possibilities frontier only. 
D)  the circular-flow diagram only.

Question 12

Factors of production are

Accepted Answer

A)  the mathematical calculations firms make in determining their optimal production levels. 
B)  social and political conditions that affect production. 
C)  the physical relationships between economic inputs and outputs. 
D)  inputs into the production process. 
A)  the mathematical calculations firms make in determining their optimal production levels. 
B)  social and political conditions that affect production. 
C)  the physical relationships between economic inputs and outputs. 
D)  inputs into the production process.

Question 13

When economists make

Accepted Answer

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

Question 14

Which of these statements about economic models is correct?

Accepted Answer

A)  For economists, economic models provide insights about the world. 
B)  Economic models are built with assumptions. 
C)  Economic models are often composed of equations and diagrams. 
D)  All of the above are correct. 
A)  For economists, economic models provide insights about the world. 
B)  Economic models are built with assumptions. 
C)  Economic models are often composed of equations and diagrams. 
D)  All of the above are correct.

Question 15

Figure 2-1  
-Refer to Figure 2-1. Which arrow represents the flow of spending by households?

Accepted Answer

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

Question 16

Economic models omit many details to allow us to see what is truly important.

Accepted Answer

A) True 
 B)False

Question 17

Figure 2-2  
-Refer to Figure 2-2. If the flow of goods and services is part of what is represented by the inner loop of this circular-flow diagram, then

Accepted Answer

A)  the flow of factors of production is also part of what is represented by the inner loop. 
B)  the flow of income paid to households is also part of what is represented by the inner loop. 
C)  the flow of revenue to firms is also part of what is represented by the inner loop. 
D)  households must be sellers of output. 
A)  the flow of factors of production is also part of what is represented by the inner loop. 
B)  the flow of income paid to households is also part of what is represented by the inner loop. 
C)  the flow of revenue to firms is also part of what is represented by the inner loop. 
D)  households must be sellers of output.

Question 18

Figure 2-17  
-Refer to Figure 2-17. The movement from point B to point C could have been caused by

Accepted Answer

A)  inflation. 
B)  a change in income. 
C)  a change in the price of grapes. 
D)  a change in the cost of producing grapes. 
A)  inflation. 
B)  a change in income. 
C)  a change in the price of grapes. 
D)  a change in the cost of producing grapes.

Question 19

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)  One economist believes everyone should pay the same percentage of their income in taxes; another economist believes that wealthier citizens should pay a higher percentage of their income in taxes. 
B)  One economist believes that manufacturing firms should face greater regulation to preserve the environment; another economist believes the government should not intervene in free markets. 
C)  One economist believes that equality should be valued over efficiency in policy decisions; another economist believes that efficiency should be valued over equality in policy decisions. 
D)  One economist believes the government should tax a household's income; another economist believes the government should tax a household's consumption. 
A)  One economist believes everyone should pay the same percentage of their income in taxes; another economist believes that wealthier citizens should pay a higher percentage of their income in taxes. 
B)  One economist believes that manufacturing firms should face greater regulation to preserve the environment; another economist believes the government should not intervene in free markets. 
C)  One economist believes that equality should be valued over efficiency in policy decisions; another economist believes that efficiency should be valued over equality in policy decisions. 
D)  One economist believes the government should tax a household's income; another economist believes the government should tax a household's consumption.

Question 20

A demand curve shows the relationship between price and

Accepted Answer

A)  income. 
B)  quantity demanded. 
C)  production. 
D)  income and quantity demanded. 
A)  income. 
B)  quantity demanded. 
C)  production. 
D)  income and quantity demanded.

Exam 2: Thinking Like an Economist

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates

Congress relies on economists at the Congressional Budget Office to

Economists believe that production possibilities frontiers

Which of the following statements applies to economics, as well as to other sciences such as physics?

Figure 2-13 -Refer to Figure 2-13. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Almost all economists agree that tariffs and import quotas

The President counts among his economic advisors the Congressional Budget Office.

The slope of a line is equal to

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

An example of a price that changes only infrequently is the price of

Efficiency is illustrated by

Factors of production are

When economists make

Which of these statements about economic models is correct?

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of spending by households?

Economic models omit many details to allow us to see what is truly important.

Figure 2-2 -Refer to Figure 2-2. If the flow of goods and services is part of what is represented by the inner loop of this circular-flow diagram, then

Figure 2-17 -Refer to Figure 2-17. The movement from point B to point C could have been caused by

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

A demand curve shows the relationship between price and

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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