Question 1

Figure 2-6 
-Refer to Figure 2-6.Inefficient production is represented by which point(s) ?

Accepted Answer

A)   A,B
B)   C,D,F,G
C)   C,F,G
D)   DE) A) and C)
F) All of the above

Question 2

In the circular-flow diagram,one loop represents the flow of goods and services,and the other loop represents the flow of factors of production.

Accepted Answer

A) True 
 B)False

Question 3

When a production possibilities frontier is bowed outward,the opportunity cost of producing an additional unit of a good

Accepted Answer

A)   increases as more of the good is produced.
B)   decreases as more of the good is produced.
C)   does not change as more of the good is produced.
D)   may increase,decrease,or not change as more of the good is produced.E) C) and D)
F) None of the above

Question 4

Economists who are primarily responsible for advising Congress on economic matters work in which agency?

Accepted Answer

A)   the Federal Reserve
B)   the Congressional Budget Office
C)   the Department of the Treasury
D)   the Department of CommerceE) All of the above
F) C) and D)

Question 5

All scientific models,including economic models,simplify reality in order to improve our understanding of it.

Accepted Answer

A) True 
 B)False

Question 6

When economists make

Accepted Answer

A)   positive statements,they are speaking not as policy advisers but as scientists.
B)   positive statements,they are speaking not as scientists but as forecasters.
C)   normative statements,they are speaking not as scientists but as policy advisers.
D)   normative statements,they are speaking not as policy advisers but as model-builders.E) A) and D)
F) A) and C)

Question 7

Economists at the U.S.Department of Justice help enforce the nation's antitrust laws.

Accepted Answer

A) True 
 B)False

Question 8

In the circular-flow diagram,

Accepted Answer

A)   factors of production flow from government to firms.
B)   goods and services flow from households to firms.
C)   income paid to the factors of production flows from firms to households.
D)   spending on goods and services flows from firms to households.E) B) and C)
F) B) and D)

Question 9

The design of tax policy is one of the responsibilities of economists who work at the

Accepted Answer

A)   Council of Economic Advisers.
B)   Federal Reserve.
C)   Department of the Treasury.
D)   Congressional Budget Office.E) A) and B)
F) A) and C)

Question 10

Figure 2-9
Panel (a) Panel (b)   
-Refer to Figure 2-9,Panel (a) .The movement from point S to point R could be caused by

Accepted Answer

A)   economic growth.
B)   unemployment.
C)   an improvement in efficiency.
D)   an advance in production technology.E) C) and D)
F) B) and C)

Question 11

Figure 2-2 
-Refer to Figure 2-2.If the owners of land,labor,and capital are represented by Box B of this circular-flow diagram,then

Accepted Answer

A)   households are represented by Box A.
B)   firms are represented by Box C.
C)   firms are represented by Box A.
D)   firms are sellers in Box B.E) B) and D)
F) All of the above

Question 12

Figure 2-2 
-Refer to Figure 2-2.Boxes A and B of this circular-flow diagram represent

Accepted Answer

A)   firms and households.
B)   households and government.
C)   the markets for goods and services and the markets for financial assets.
D)   the markets for goods and the markets for services.E) None of the above
F) All of the above

Question 13

You know an economist has crossed the line from scientist to policy adviser when he or she

Accepted Answer

A)   claims that the problem at hand is widely misunderstood by non-economists.
B)   talks about the evidence.
C)   makes normative statements.
D)   makes a claim about how the world is.E) B) and C)
F) A) and C)

Question 14

Economists usually have to make do with whatever data the world happens to give them.

Accepted Answer

A) True 
 B)False

Question 15

The country of Econoland produces two goods,textbooks and widgets.Last year,it produced 200 textbooks and 500 widgets.This year,it produced 250 textbooks and 600 widgets.Given no other information,which of the following events could not explain this change?

Accepted Answer

A)   Econoland experienced a reduction in unemployment.
B)   Econoland experienced an improvement in widget-making technology.
C)   Econoland acquired more resources.
D)   Any of these events could,in fact,explain the change.E) None of the above
F) A) and D)

Question 16

The slope of an upward-sloping line is positive,and the slope of a downward-sloping line is negative.

Accepted Answer

A) True 
 B)False

Question 17

Suppose a nation is currently producing at a point inside its production possibilities frontier.We know that

Accepted Answer

A)   the nation is producing beyond its capacity,so inflation will occur.
B)   the nation is not using all available resources or is using inferior technology or both.
C)   the nation is producing an efficient combination of goods.
D)   there will be a large opportunity cost if the nation tries to increase production of any good.E) B) and C)
F) None of the above

Question 18

Economists build economic models by

Accepted Answer

A)   generating data.
B)   conducting controlled experiments in a lab.
C)   making assumptions.
D)   reviewing statistical forecasts.E) A) and B)
F) A) and C)

Question 19

The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and

Accepted Answer

A)   society's preferences.
B)   the available production technology.
C)   a fair distribution of the output.
D)   the available demand for the output.E) All of the above
F) A) and B)

Question 20

In the circular-flow diagram,factors of production are the goods and services produced by firms.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

In the circular-flow diagram,one loop represents the flow of goods and services,and the other loop represents the flow of factors of production.

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When a production possibilities frontier is bowed outward,the opportunity cost of producing an additional unit of a good

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Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9,Panel (a) .The movement from point S to point R could be caused by

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Economists at the U.S.Department of Justice help enforce the nation's antitrust laws.

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Economists build economic models by

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The country of Econoland produces two goods,textbooks and widgets.Last year,it produced 200 textbooks and 500 widgets.This year,it produced 250 textbooks and 600 widgets.Given no other information,which of the following events could not explain this change?

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The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and

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In the circular-flow diagram,factors of production are the goods and services produced by firms.

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All scientific models,including economic models,simplify reality in order to improve our understanding of it.

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Figure 2-2 -Refer to Figure 2-2.If the owners of land,labor,and capital are represented by Box B of this circular-flow diagram,then

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Figure 2-6 -Refer to Figure 2-6.Inefficient production is represented by which point(s) ?

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The slope of an upward-sloping line is positive,and the slope of a downward-sloping line is negative.

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The design of tax policy is one of the responsibilities of economists who work at the

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You know an economist has crossed the line from scientist to policy adviser when he or she

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When economists make

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In the circular-flow diagram,

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Suppose a nation is currently producing at a point inside its production possibilities frontier.We know that

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Figure 2-2 -Refer to Figure 2-2.Boxes A and B of this circular-flow diagram represent

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Economists who are primarily responsible for advising Congress on economic matters work in which agency?

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Economists usually have to make do with whatever data the world happens to give them.

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