Question 1

Figure 2-11 
-Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

Accepted Answer

A)   simultaneous technological advances in the book and DVD industries.
B)   a reallocation of resources away from the production of DVDs and toward the production of books.
C)   economic growth.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 2

Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

Accepted Answer

A)   the effects of rent control on the availability of housing in New York City
B)   the economic impact of tornadoes on cities and towns in Oklahoma
C)   how tariffs on shoes affects the shoe industry
D)   the effect on the economy of changes in the nation's unemployment rateE) B) and C)
F) A) and B)

Question 3

As a substitute for laboratory experiments, economists use evidence available through history's

Accepted Answer

natural ex...

Question 4

Duties of the Council of Economic Advisers include

Accepted Answer

A)   advising the president and writing the annual Economic Report of the President.
B)   implementing the president's tax policies.
C)   tracking the behavior of the nation's money supply.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 5

Normative statements are

Accepted Answer

A)   prescriptive, whereas positive statements are descriptive.
B)   descriptive, whereas positive statements are prescriptive.
C)   backward-looking, whereas positive statements are forward-looking.
D)   forward-looking, whereas positive statements are backward-looking.E) All of the above
F) None of the above

Question 6

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A)   households provide firms with savings for investment.
B)   households provide firms with labor, land, and capital.
C)   firms provide households with output.
D)   firms provide households with profit.E) None of the above
F) A) and B)

Question 7

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Accepted Answer

A)   any misunderstandings in communicating the policy to the public.
B)   whether the policy will affect his standing among different groups in the electorate.
C)   what amendments will be suggested by members of Congress.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not an assumption of the productions possibilities frontier?

Accepted Answer

A)   A country produces only two goods or types of goods.
B)   Technology does not change.
C)   The amount of available resources does not change.
D)   There is a fixed quantity of money.E) None of the above
F) C) and D)

Question 10

In the circular-flow diagram, which of the following items does not flow from firms to households?

Accepted Answer

A)   goods
B)   services
C)   capital
D)   profitE) None of the above
F) C) and D)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)   When the minimum wage is increased, unemployment is a predictable consequence.
B)   The income tax rate should be increased to offset the budget deficit.
C)   Increasing government spending is the best way to help the economy move out of a recession.
D)   More than one of the above are positive statements.E) C) and D)
F) All of the above

Question 13

Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

Accepted Answer

A) True 
 B)False

Question 14

In the circular-flow diagram, firms produce goods and services using the factors of production.

Accepted Answer

A) True 
 B)False

Question 15

When economists make normative statements, they are

Accepted Answer

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

Question 16

In constructing models, economists

Accepted Answer

A)   leave out equations, since equations and models tend to contradict one another.
B)   ignore the long run, since models are useful only for short-run analysis.
C)   sometimes make assumptions that are contrary to features of the real world.
D)   try to include every feature of the economy.E) A) and C)
F) B) and C)

Question 17

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

Accepted Answer

A)   0 cups of coffee.
B)   1 donut.
C)   2 donuts.
D)   4 cups of coffee.E) A) and D)
F) B) and D)

Question 18

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 19

The Council of Economic Advisers

Accepted Answer

A)   was created in 1946.
B)   advises the president of the United States on economic policy matters.
C)   writes the annual Economic Report of the President.
D)   All of the above are correct.E) B) and D)
F) All of the above

Question 20

Which of the following statements about economic models is correct?

Accepted Answer

A)   Economic models are built to mirror reality exactly.
B)   Economic models are useful, but they should not be used for the purpose of improving public policies.
C)   Because economic models omit many details, they allow us to see what is truly important.
D)   Economic models seldom incorporate equations or diagrams.E) B) and C)
F) C) and D)

Exam 2: Thinking Like an Economist

Duties of the Council of Economic Advisers include

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The Council of Economic Advisers

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

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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 K to point L is

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

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When economists make normative statements, they are

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Which of the following statements about economic models is correct?

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In constructing models, economists

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Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

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Which of the following is not an assumption of the productions possibilities frontier?

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

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In the markets for goods and services in the circular-flow diagram,

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In the circular-flow diagram, which of the following items does not flow from firms to households?

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In the circular-flow diagram, firms produce goods and services using the factors of production.

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Figure 2-11 -Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

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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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One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

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As a substitute for laboratory experiments, economists use evidence available through history's

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Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

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Normative statements are

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