Question 1

Economists at the Department of the Treasury

Accepted Answer

A)   design U.S. currency and coins.
B)   provide Congress with the annual budget.
C)   enforce the U.S. antitrust laws.
D)   provide advice on tax policy to the President.E) B) and D)
F) A) and B)

Question 2

Figure 2-23 
-Refer to Figure 2-23. Points A, B, and D represent feasible outcomes for this economy.

Accepted Answer

A) True 
 B)False

Question 3

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.E) A) and B)
F) None of the above

Question 4

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.E) B) and C)
F) A) and C)

Question 5

Figure 2-6 
-Refer to Figure 2-6. If this economy devotes all of its resources to the production of blankets, then it will produce

Accepted Answer

A)   0 blankets and 360 pillows.
B)   200 blankets and 240 pillows.
C)   320 blankets and 120 pillows.
D)   360 blankets and 0 pillows.E) A) and D)
F) A) and C)

Question 6

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

Accepted Answer

A)   households
B)   firms
C)   government
D)   markets for factors of productionE) None of the above
F) C) and D)

Question 7

Figure 2-20
Relationship Between Years of Education and Annual Income 
-Refer to Figure 2-20. The graph above is a

Accepted Answer

A)   bar graph
B)   scatterplot
C)   pie chart
D)   time series analysisE) A) and B)
F) A) and C)

Question 8

Normative statements are

Accepted Answer

A)   not usually made by economists.
B)   claims about how the world should be.
C)   claims about how variables in the economy normally behave.
D)   pessimistic interpretations of the economy.E) A) and D)
F) A) and C)

Question 9

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 10

Figure 2-7 
-Refer to Figure 2-7. Unemployment could cause this economy to produce at which point(s) ?

Accepted Answer

A)   L, M
B)   N, O, P, Q
C)   N, O, P
D)   QE) A) and B)
F) A) and C)

Question 11

Which markets are represented in the simple circular-flow diagram?

Accepted Answer

A)   markets for goods and services and markets for financial assets
B)   markets for factors of production and markets for financial assets
C)   markets for goods and services and markets for factors of production
D)   markets for goods and services and markets for imports and exportsE) All of the above
F) B) and C)

Question 12

Figure 2-7 
-Refer to Figure 2-7. Efficient production is represented by which point(s) ?

Accepted Answer

A)   L, M
B)   L, M, N, P, Q
C)   N, O, P
D)   QE) B) and C)
F) All of the above

Question 13

Figure 2-9
Panel (a)  Panel (b) 
  
-Refer to Figure 2-9, Panel (a) . The opportunity cost of moving from point J to point L is

Accepted Answer

A)   2 donuts.
B)   2 donuts and 2 cups of coffee.
C)   2 cups of coffee.
D)   6 cups of coffee.E) A) and B)
F) B) and C)

Question 14

Which types of models are built with assumptions?

Accepted Answer

A)   economic models, but not models in other disciplines such as physics and biology
B)   economic models as well as models in other disciplines such as physics and biology
C)   models that are built for teaching purposes but not for research purposes
D)   bad modelsE) None of the above
F) B) and C)

Question 15

Economic models can help us understand reality only when they include all details of the economy.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Figure 2-2 
-Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box represents households?

Accepted Answer

A)   Box B
B)   Box C
C)   Box D
D)   Any one of the other boxes (B, C, or 
D)   could represent households.E) A) and D)
F) A) and B)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

Accepted Answer

A)   goods and services
B)   land, labor, and capital
C)   dollars spent on goods and services
D)   wages, rent, and profitE) B) and C)
F) A) and B)

Question 20

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)   -1.
C)   -2.
D)   -4.E) A) and B)
F) None of the above

Exam 2: Thinking Like an Economist

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

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Figure 2-7 -Refer to Figure 2-7. Unemployment could cause this economy to produce at which point(s) ?

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Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a) . The opportunity cost of moving from point J to point L is

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Figure 2-23 -Refer to Figure 2-23. Points A, B, and D represent feasible outcomes for this economy.

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Figure 2-6 -Refer to Figure 2-6. If this economy devotes all of its resources to the production of blankets, then it will produce

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

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Which types of models are built with assumptions?

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The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

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Which markets are represented in the simple circular-flow diagram?

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Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. The graph above is a

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

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Economic models can help us understand reality only when they include all details of the economy.

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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

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Figure 2-2 -Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box represents households?

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Figure 2-7 -Refer to Figure 2-7. Efficient production is represented by which point(s) ?

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Economists at the Department of the Treasury

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In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

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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

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Normative statements are

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

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