Question 1

It is possible for an economy to increase its production of both goods if the economy

Accepted Answer

A)   moves downward and to the right along its production possibilities frontier and the frontier is bowed outward.
B)   moves upward and to the left along its production possibilities frontier and the frontier is bowed outward.
C)   moves in either direction along its production possibilities frontier and the frontier is a straight line.
D)   moves from a situation of inefficient production to a situation of efficient production.E) A) and D)
F) A) and C)

Question 2

Figure 2-4 
-Refer to Figure 2-4.It is not possible for this economy to produce at point

Accepted Answer

A)   V.
B)   W.
C)   Y.
D)   Z.E) A) and B)
F) B) and C)

Question 3

The production possibilities frontier is used to illustrate some basic economic ideas,including

Accepted Answer

A)   scarcity.
B)   opportunity cost.
C)   economic growth.
D)   All of the above are correct.E) A) and D)
F) B) and D)

Question 4

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

Accepted Answer

A)   Income tax rates should not have been cut as they were a few years ago.
B)   The quantity of money has grown too slowly in recent years.
C)   When the quantity of money grows rapidly,inflation is a predictable consequence.
D)   All of the above are positive statements.E) A) and B)
F) C) and D)

Question 5

Figure 2-8
 
-Refer to Figure 2-8,Panel (a) .In order to gain 2 donuts by moving from point L to point M,society must sacrifice

Accepted Answer

A)   efficiency.
B)   employment.
C)   4 cups of coffee.
D)   More than one of the above is correct.E) B) and C)
F) A) and C)

Question 6

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 7

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

Accepted Answer

A)   If the price of a product decreases,people's willingness to buy that product will increase.
B)   Reducing tax rates on the wealthy would benefit the nation.
C)   If the national saving rate were to increase,so would the rate of economic growth.
D)   The elimination of trade restrictions would increase an economy's standard of living.E) None of the above
F) C) and D)

Question 8

When economists make positive statements,they are

Accepted Answer

A)   speaking as scientists.
B)   speaking as policy advisers.
C)   making claims about how the world should be.
D)   revealing that they are very conservative in their views of how the world works.E) All of the above
F) None of the above

Question 9

If an economy can produce more of one good without giving up any of another good,then the economy's current production point is inefficient.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)   the effect of foreign direct investment on economic growth
B)   the effect of a sales tax on the cigarette industry
C)   the effect of an investment tax credit on the economy's capital stock
D)   the effect of a war on government spendingE) B) and D)
F) None of the above

Question 11

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) B) and C)
F) All of the above

Question 12

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

Question 13

Microeconomics is the study of

Accepted Answer

A)   how money affects the economy.
B)   how individual households and firms make decisions.
C)   how government affects the economy.
D)   how the economy as a whole works.E) A) and D)
F) B) and C)

Question 14

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

Accepted Answer

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

Question 15

Which of the following statements about models is correct?

Accepted Answer

A)   The more details a model includes,the better the model.
B)   Models assume away irrelevant details.
C)   Models cannot be used to explain how the economy functions.
D)   Models cannot be used to make predictions.E) A) and B)
F) A) and C)

Question 16

Factors of production are

Accepted Answer

A)   used to produce goods and services.
B)   also called output.
C)   abundant in most economies.
D)   assumed to be owned by firms in the circular-flow diagram.E) A) and C)
F) A) and B)

Question 17

In the circular-flow diagram,firms consume all the goods and services that they produce.

Accepted Answer

A) True 
 B)False

Question 18

In the ordered pair (10,30),10 is the y-coordinate and 30 is the z-coordinate.

Accepted Answer

A) True 
 B)False

Question 19

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

Accepted Answer

A) True 
 B)False

Question 20

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

If an economy can produce more of one good without giving up any of another good,then the economy's current production point is inefficient.

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The production possibilities frontier is used to illustrate some basic economic ideas,including

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

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In the ordered pair (10,30),10 is the y-coordinate and 30 is the z-coordinate.

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It is possible for an economy to increase its production of both goods if the economy

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Figure 2-8 -Refer to Figure 2-8,Panel (a) .In order to gain 2 donuts by moving from point L to point M,society must sacrifice

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

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When economists make positive statements,they are

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Figure 2-4 -Refer to Figure 2-4.It is not possible for this economy to produce at point

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The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

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

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A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

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A macroeconomist - as opposed to a microeconomist - might study

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

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Microeconomics is the study of

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

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In the circular-flow diagram,firms consume all the goods and services that they produce.

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Factors of production are

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Which of the following statements about models is correct?

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

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