Question 1

Historical episodes are not valuable to economists.

Accepted Answer

A) True 
 B)False

Question 2

The two loops in the circular-flow diagram represent

Accepted Answer

A)   the flow of goods and the flow of services.
B)   the flow of dollars and the flow of financial assets.
C)   the flow of inputs into production processes and the flow of outputs from production processes.
D)   the flows of inputs and outputs and the flow of dollars.E) All of the above
F) None of the above

Question 3

Since 1946,the president of the United States has received guidance from the Council of Economic Advisers.

Accepted Answer

A) True 
 B)False

Question 4

Figure 2-3 
-Refer to Figure 2-3.Efficient production is represented by which point(s) ?

Accepted Answer

A)   J,K,N
B)   K,M,N
C)   K,N
D)   L,ME) A) and B)
F) None of the above

Question 5

Points on the production possibilities frontier represent efficient levels of production.

Accepted Answer

A) True 
 B)False

Question 6

The y-coordinate of an ordered pair specifies the

Accepted Answer

A)   diagonal location of the point.
B)   vertical location of the point.
C)   horizontal location of the point.
D)   quadrant location in which the point is located.E) A) and B)
F) A) and C)

Question 7

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions.Which of the following is not one of those propositions?

Accepted Answer

A)   The United States should not restrict employers from outsourcing work to foreign countries.
B)   The United States should withdraw from the North American Free Trade Agreement (NAFT
A)  .
C)   The United States should eliminate agricultural subsidies.
D)   Local and state governments should eliminate subsidies to professional sports franchises.E) C) and D)
F) None of the above

Question 8

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Accepted Answer

A)   the impact of minimum-wage laws on employment in the fast food industry
B)   the effect of changes in household saving rates on the growth rate of national income
C)   the impact of faster money growth on the rate of inflation
D)   a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growthE) A) and B)
F) B) and D)

Question 9

Two variables that have a positive correlation move in the same direction.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a correct statement about production possibilities frontiers?

Accepted Answer

A)   An economy can produce only on the production possibilities frontier.
B)   An economy can produce at any point inside or outside a production possibilities frontier.
C)   An economy can produce at any point on or inside the production possibilities frontier,but not outside the frontier.
D)   An economy can produce at any point inside the production possibilities frontier,but not on or outside the frontier.E) A) and D)
F) A) and C)

Question 11

Economic models

Accepted Answer

A)   are constructed to mirror reality as closely as possible,and in this respect economic models are no different from other scientific models.
B)   are constructed to mirror reality as closely as possible,and in this respect economic models are very different from other scientific models.
C)   are simplifications of reality,and in this respect economic models are no different from other scientific models.
D)   are simplifications of reality,and in this respect economic models are very different from other scientific models.E) A) and B)
F) C) and D)

Question 12

Economic models are built with

Accepted Answer

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

Question 13

Figure 2-8
Panel (a) Panel (b)   
-Refer to Figure 2-8,Panel (a) .The opportunity cost of one cup of coffee is highest when the economy produces

Accepted Answer

A)   0 cups of coffee.
B)   2 cups of coffee.
C)   4 cups of coffee.
D)   6 cups of coffee.E) B) and D)
F) All of the above

Question 14

Figure 2-10 
-Refer to Figure 2-10.The shift of the production possibilities frontier from A to B illustrates

Accepted Answer

A)   simultaneous technological advances in the battery and bagel industries.
B)   a reallocation of resources away from the production of bagels and toward the production of batteries.
C)   economic growth.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 15

Figure 2-14 
-Refer to Figure 2-14.Point B represents an inefficient outcome for this economy.

Accepted Answer

A) True 
 B)False

Question 16

Figure 2-13 
-Refer to Figure 2-13.The movement from point B to point C is a(n)

Accepted Answer

A)   shift of the demand curve.
B)   movement along the demand curve.
C)   indication that the price of roses has changed.
D)   indication that the costs incurred by firms that produce roses have changed.E) A) and B)
F) A) and C)

Question 17

When studying the effects of changes in public policy,economists believe that

Accepted Answer

A)   it is important to distinguish between the short run and the long run.
B)   the assumptions used in studying those effects should be the same for the short run as for the long run.
C)   the short-run effects of those changes are always more beneficial to society than are the long-run effects.
D)   the long-run effects of those changes are always more beneficial to society than are the short-run effects.E) C) and D)
F) B) and D)

Question 18

A macroeconomist - as opposed to a microeconomist - might study

Accepted Answer

A)   the effect of agricultural price support programs on the cotton industry
B)   the effect on U.S.steel producers of an import quota imposed on foreign steel
C)   the effect of an increasing inflation rate on national living standards
D)   the effect of an increase in the price of imported coffee beans on the U.S.coffee industryE) A) and B)
F) A) and C)

Question 19

When an economist evaluates a positive statement,he or she is primarily

Accepted Answer

A)   examining evidence.
B)   evaluating values as well as facts.
C)   acting as a policy adviser.
D)   concerned with making a sound decision on how the world ought to be.E) A) and B)
F) A) and C)

Question 20

Just like models constructed in other areas of science,economic models

Accepted Answer

A)   incorporate assumptions that contradict reality.
B)   incorporate all details of the real world.
C)   complicate reality.
D)   avoid the use of diagrams and equations.E) C) and D)
F) None of the above

Exam 2: Thinking Like an Economist

The two loops in the circular-flow diagram represent

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Figure 2-13 -Refer to Figure 2-13.The movement from point B to point C is a(n)

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Figure 2-14 -Refer to Figure 2-14.Point B represents an inefficient outcome for this economy.

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Points on the production possibilities frontier represent efficient levels of production.

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A macroeconomist - as opposed to a microeconomist - might study

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Economic models

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Which of the following is a correct statement about production possibilities frontiers?

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When an economist evaluates a positive statement,he or she is primarily

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Economic models are built with

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When studying the effects of changes in public policy,economists believe that

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Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

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A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions.Which of the following is not one of those propositions?

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Historical episodes are not valuable to economists.

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Figure 2-10 -Refer to Figure 2-10.The shift of the production possibilities frontier from A to B illustrates

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Since 1946,the president of the United States has received guidance from the Council of Economic Advisers.

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The y-coordinate of an ordered pair specifies the

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Two variables that have a positive correlation move in the same direction.

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Figure 2-3 -Refer to Figure 2-3.Efficient production is represented by which point(s) ?

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Figure 2-8 Panel (a) Panel (b) -Refer to Figure 2-8,Panel (a) .The opportunity cost of one cup of coffee is highest when the economy produces

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Just like models constructed in other areas of science,economic models

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