Question 1

Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

Accepted Answer

A)   Transit ridership increased in Atlanta following an increase in gas prices.
B)   Federal tax revenue increased following a decrease in the tax rate.
C)   Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances.
D)   Following the imposition of austerity measures, the growth rate of the economy in Greece slowed.E) A) and B)
F) A) and C)

Question 2

The scientific method is the dispassionate development and testing of theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 3

What you must give up to get something else is called the

Accepted Answer

The answer of What you must give up to get...

Question 4

Figure 2-1 
-Refer to Figure 2-1. Harvey receives his first paycheck for working as an ice cream vendor. To which of the arrows does this transaction directly contribute?

Accepted Answer

A)   B only
B)   A and B
C)   C only
D)   C and DE) None of the above
F) A) and B)

Question 5

Figure 2-4 
-Refer to Figure 2-4. Inefficient production is represented by which point(s) ?

Accepted Answer

A)   Q, S
B)   Q, S, T
C)   R, U
D)   TE) C) and D)
F) All of the above

Question 6

On a bowed production possibilities frontier, as you move down along the curve

Accepted Answer

A)   more of one good must be given up to receive one unit of the other good.
B)   the available production technology does not change.
C)   the opportunity cost increases.
D)   All of the above are correct.E) A) and C)
F) All of the above

Question 7

Figure 2-3 
-Refer to Figure 2-3. What does the arrow going from oval A to rectangle 2 represent in the figure?

Accepted Answer

goods and ...

Question 8

Figure 2-2 
-Refer to Figure 2-2. If households are buyers in the markets represented by Box C of this circular-flow diagram, then

Accepted Answer

A)   Box C must represent the markets for the factors of production.
B)   Box D must represent the markets for goods and services.
C)   firms are sellers in the markets represented by Box C.
D)   All of the above are correct.E) B) and D)
F) A) and D)

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

Economists at which administrative department help enforce the nation's antitrust laws?

Accepted Answer

Department...

Question 11

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Accepted Answer

A) True 
 B)False

Question 12

Figure 2-15 
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

Accepted Answer

The answer of Figure 2-15 
-Refer to Figure 2-15. Consider...

Question 13

Figure 2-17 
-Refer to Figure 2-17. The slope of the curve between points A and B is

Accepted Answer

A)   -5
B)   -1/5
C)   1/5
D)   5E) B) and C)
F) A) and B)

Question 14

Which of the following statements about the circular-flow diagram is correct?

Accepted Answer

A)   One must imagine that the economy operates without money in order to make sense of the diagram.
B)   The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms.
C)   The government cannot be excluded as a decision maker in a circular-flow diagram.
D)   All of the above are correct.E) B) and C)
F) B) and D)

Question 15

The Federal Reserve

Accepted Answer

A)   designs tax policy.
B)   enforces the nation's antitrust laws.
C)   sets the nation's monetary policy.
D)   analyzes data on workers.E) All of the above
F) A) and D)

Question 16

Historical episodes allow economists to illustrate and evaluate current economic theories.

Accepted Answer

A) True 
 B)False

Question 17

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) None of the above
F) B) and D)

Question 18

The language of economics is

Accepted Answer

A)   needlessly arcane.
B)   valuable because it provides a new and useful way of learning about the world.
C)   easy to learn within a day.
D)   unnecessary to learn for a thorough understanding of economics.E) All of the above
F) A) and C)

Question 19

Economists view positive statements as

Accepted Answer

A)   affirmative, justifying existing economic policy.
B)   optimistic, putting the best possible interpretation on things.
C)   descriptive, making a claim about how the world is.
D)   prescriptive, making a claim about how the world ought to be.E) B) and D)
F) A) and B)

Question 20

When two variables have a positive correlation,

Accepted Answer

A)   they tend to move in opposite directions.
B)   they tend to move in the same direction.
C)   one variable will move while the other remains constant.
D)   the variables' values are never negative.E) C) and D)
F) A) and C)

Exam 2: Thinking Like an Economist

Which of the following statements about the circular-flow diagram is correct?

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On a bowed production possibilities frontier, as you move down along the curve

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Historical episodes allow economists to illustrate and evaluate current economic theories.

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When two variables have a positive correlation,

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An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

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Economists at which administrative department help enforce the nation's antitrust laws?

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Economists view positive statements as

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Figure 2-1 -Refer to Figure 2-1. Harvey receives his first paycheck for working as an ice cream vendor. To which of the arrows does this transaction directly contribute?

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The Federal Reserve

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Figure 2-2 -Refer to Figure 2-2. If households are buyers in the markets represented by Box C of this circular-flow diagram, then

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Figure 2-4 -Refer to Figure 2-4. Inefficient production is represented by which point(s) ?

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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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Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

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What you must give up to get something else is called the

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Figure 2-17 -Refer to Figure 2-17. The slope of the curve between points A and B is

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The scientific method is the dispassionate development and testing of theories about how the world works.

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Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

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

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The language of economics is

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Figure 2-3 -Refer to Figure 2-3. What does the arrow going from oval A to rectangle 2 represent in the figure?

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