Question 1

Figure 2-6 
-Refer to Figure 2-6. This economy has the ability to produce at which point(s) ?

Accepted Answer

A)  A, B
B)  A, B, D
C)  A, B, C, F, G
D)  C, F, GE) A) and B)
F) A) and C)

Question 2

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)  the effect of an increase in the alcohol tax on the market for beer
B)  the effect of foreign competition on the domestic auto industry
C)  the effect of a price war in the airline industry
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemploymentE) A) and C)
F) B) and C)

Question 3

Figure 2-9
 
-Refer to Figure 2-9, Panel (a) . The movement from point C to point B could be caused by

Accepted Answer

A)  economic growth.
B)  unemployment.
C)  an improvement in efficiency.
D)  an advance in production technology.E) A) and C)
F) B) and D)

Question 4

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Accepted Answer

A) True 
 B)False

Question 5

The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

Accepted Answer

A)  Wages
B)  Income
C)  Capital
D)  RentE) B) and D)
F) A) and B)

Question 6

While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth.

Accepted Answer

A) True 
 B)False

Question 7

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.E) B) and C)
F) C) and D)

Question 8

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

Accepted Answer

A) True 
 B)False

Question 9

In the simple circular-flow diagram,

Accepted Answer

A)  households own the factors of production.
B)  households buy all the goods and services that firms produce.
C)  land, labor, and capital flow from households to firms.
D)  All of the above are correct.E) B) and C)
F) None of the above

Question 10

Macroeconomics is the study of economy-wide phenomena.

Accepted Answer

A) True 
 B)False

Question 11

In the markets for factors of production in the circular-flow diagram,

Accepted Answer

A)  households provide firms with labor, land, and capital.
B)  households provide firms with savings for investment.
C)  firms provide households with goods and services.
D)  firms provide households with profit.E) All of the above
F) None of the above

Question 12

Economists speaking like policy advisers make

Accepted Answer

A)  claims about how the world is.
B)  descriptive statements.
C)  normative statements.
D)  More than one of the above is correct.E) B) and C)
F) A) and B)

Question 13

Normative statements are

Accepted Answer

A)  prescriptive, whereas positive statements are descriptive.
B)  descriptive, whereas positive statements are prescriptive.
C)  backward-looking, whereas positive statements are forward-looking.
D)  forward-looking, whereas positive statements are backward-looking.E) All of the above
F) B) and C)

Question 14

Which of the following is not an example of a positive, as opposed to normative, statement?

Accepted Answer

A)  Higher gasoline prices will reduce gasoline consumption.
B)  Equality is more important than efficiency.
C)  Trade restrictions lower our standard of living.
D)  If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money.E) A) and C)
F) B) and C)

Question 15

President Truman once said the wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

Accepted Answer

A)  is rooted in the principle that people face tradeoffs.
B)  indicates that economists recognize that there are opportunity costs associated with policy decisions.
C)  confirms that economists are not suited to be presidential advisers.
D)  More than one of the above is correct.E) A) and D)
F) A) and C)

Question 16

Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

Accepted Answer

A)  Isaac Newton
B)  Albert Einstein
C)  Adam Smith
D)  Benjamin FranklinE) All of the above
F) A) and B)

Question 17

Duties of the Council of Economic Advisers include

Accepted Answer

A)  advising the president and writing the annual Economic Report of the President.
B)  implementing the president's tax policies.
C)  tracking the behavior of the nation's money supply.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 18

Economists believe that production possibilities frontiers rarely have a bowed shape.

Accepted Answer

A) True 
 B)False

Question 19

Which two groups of decision makers are included in the simple circular-flow diagram?

Accepted Answer

A)  markets and government
B)  households and government
C)  firms and government
D)  households and firmsE) A) and B)
F) B) and D)

Question 20

Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Macroeconomics is the study of economy-wide phenomena.

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Since economists cannot use natural experiments offered by history, they must use carefully constructed laboratory experiments instead.

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Normative statements are

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Economists speaking like policy advisers make

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While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth.

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

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Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Correct AnswerverifiedShow Answer

In the simple circular-flow diagram,

Correct AnswerverifiedShow Answer

Economists believe that production possibilities frontiers rarely have a bowed shape.

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In the markets for factors of production in the circular-flow diagram,

Correct AnswerverifiedShow Answer

President Truman once said the wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

Correct AnswerverifiedShow Answer

Which two groups of decision makers are included in the simple circular-flow diagram?

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Figure 2-9 -Refer to Figure 2-9, Panel (a) . The movement from point C to point B could be caused by

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The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

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Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

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According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

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The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

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Duties of the Council of Economic Advisers include

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Figure 2-6 -Refer to Figure 2-6. This economy has the ability to produce at which point(s) ?

Correct AnswerverifiedShow Answer

Which of the following is not an example of a positive, as opposed to normative, statement?

Correct AnswerverifiedShow Answer

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