Question 1

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Positive statements are not

Accepted Answer

A)   descriptive.
B)   prescriptive.
C)   claims about how the world is.
D)   made by economists speaking as scientists.E) C) and D)
F) A) and D)

Question 4

A macroeconomist - as opposed to a microeconomist - would study

Accepted Answer

A)   the effects of rent control on housing in New York City.
B)   the effects of foreign competition on the US auto industry.
C)   the effects of borrowing by the federal government.
D)   the effects of raising the gasoline tax on transit ridership.E) A) and B)
F) B) and C)

Question 5

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

Question 6

President Truman once said he 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 C)
F) B) and D)

Question 7

Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year, it is producing 1050 units of food and 52 machines. Which of the following events could not explain the increase in output?

Accepted Answer

A)   a reduction in unemployment
B)   an increase in available labor
C)   an improvement in technology
D)   Any of these events could explain the increase in output.E) A) and B)
F) B) and C)

Question 8

Which of the following statements is correct?

Accepted Answer

A)   Few economic models incorporate assumptions.
B)   Different economic models employ different sets of assumptions.
C)   Good economic models attempt to mimic reality as closely as possible.
D)   Economic models, to be accepted, must be tested by conducting experiments.E) A) and B)
F) All of the above

Question 9

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is correct?

Accepted Answer

A)   Economists almost always find it easy to conduct experiments in order to test their theories.
B)   Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories.
C)   Economics is a social science rather than a true science because it cannot employ the scientific method.
D)   Economists are usually not able to conduct experiments, so they must rely on natural experiments offered by history.E) A) and B)
F) C) and D)

Question 11

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 12

The production possibilities frontier is a graph that shows the various combinations of output that an economy

Accepted Answer

A)   should produce.
B)   wants to produce.
C)   can produce.
D)   demands.E) A) and C)
F) B) and C)

Question 13

Use the following Figure to answer the question : Figure 2-4 : 
-Refer to Figure 2-4. Inefficient production is represented by which points) ?

Accepted Answer

A)   Q, S
B)   Q, S, T
C)   R, U
D)   TE) B) and C)
F) None of the above

Question 14

One way to characterize the difference between positive statements and normative statements is as follows:

Accepted Answer

A)   Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future.
B)   Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be.
C)   Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation.
D)   Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements.E) B) and C)
F) A) and D)

Question 15

Unemployment would cause an economy to

Accepted Answer

A)   produce inside its production possibilities frontier.
B)   produce on its production possibilities frontier.
C)   produce outside its production possibilities frontier.
D)   experience an inward shift of its production possibilities frontier.E) A) and B)
F) All of the above

Question 16

In the circular-flow diagram, in the markets for

Accepted Answer

A)   goods and services, households and firms are both sellers.
B)   goods and services, households are buyers and firms are sellers.
C)   the factors of production, households are buyers and firms are sellers.
D)   the factors of production, households and firms are both buyers.E) B) and C)
F) A) and D)

Question 17

Economists sometimes give conflicting advice because

Accepted Answer

A)   graduate students in economics are encouraged to argue with each other.
B)   economists have different values and scientific judgment.
C)   economists acting as scientists do not like to agree with economists acting as policy advisers.
D)   economics is more of a belief system than a science.E) None of the above
F) A) and B)

Question 18

Use the following Figure to answer the question : Figure 2-6 
-Refer to Figure 2-6. If this economy moves from point F to point G, then which of the following statements is correct?

Accepted Answer

A)   This economy has moved from a point of inefficient production to a point of efficient production.
B)   This economy has experienced economic growth.
C)   This economy has experienced an increase in employment.
D)   None of the above is correct.E) A) and C)
F) A) and B)

Question 19

Use the following Figure to answer the question : Figure 2-5:  
-Refer to Figure 2-5. It is possible for this economy to produce

Accepted Answer

A)   60 dryers and 50 washers.
B)   60 dryers and 60 washers.
C)   80 dryers and 50 washers.
D)   All of the above.E) A) and B)
F) C) and D)

Question 20

Use the following Figure to answer the question : Figure 2-23 : 
-Refer to Figure 2-23. Points B and C represent infeasible outcomes for this economy.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Unemployment would cause an economy to

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

Use the following Figure to answer the question : Figure 2-23 : -Refer to Figure 2-23. Points B and C represent infeasible outcomes for this economy.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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Use the following Figure to answer the question : Figure 2-6 -Refer to Figure 2-6. If this economy moves from point F to point G, then which of the following statements is correct?

Correct Answer
verified

Correct Answer
verified

Economists sometimes give conflicting advice because

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The production possibilities frontier is a graph that shows the various combinations of output that an economy

Correct Answer
verified

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Correct Answer
verified

In the circular-flow diagram, in the markets for

Correct Answer
verified

Use the following Figure to answer the question : Figure 2-4 : -Refer to Figure 2-4. Inefficient production is represented by which points) ?

Correct Answer
verified

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?

Correct Answer
verified

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

Correct Answer
verified

Use the following Figure to answer the question : Figure 2-5: -Refer to Figure 2-5. It is possible for this economy to produce

Correct Answer
verified

One way to characterize the difference between positive statements and normative statements is as follows:

Correct Answer
verified

A macroeconomist - as opposed to a microeconomist - would study

Correct Answer
verified

President Truman once said he 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 Answer
verified

Positive statements are not

Correct Answer
verified

Exam 2: Thinking Like an Economist

Unemployment would cause an economy to

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : Figure 2-23 : -Refer to Figure 2-23. Points B and C represent infeasible outcomes for this economy.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : Figure 2-6 -Refer to Figure 2-6. If this economy moves from point F to point G, then which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists sometimes give conflicting advice because

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The production possibilities frontier is a graph that shows the various combinations of output that an economy

Correct AnswerverifiedShow Answer

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Correct AnswerverifiedShow Answer

In the circular-flow diagram, in the markets for

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : Figure 2-4 : -Refer to Figure 2-4. Inefficient production is represented by which points) ?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have different values about what policy should try to accomplish.

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : Figure 2-5: -Refer to Figure 2-5. It is possible for this economy to produce

Correct AnswerverifiedShow Answer

One way to characterize the difference between positive statements and normative statements is as follows:

Correct AnswerverifiedShow Answer

A macroeconomist - as opposed to a microeconomist - would study

Correct AnswerverifiedShow Answer

President Truman once said he 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

Positive statements are not

Correct AnswerverifiedShow Answer

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