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Exam 2: Thinking Like an Economist

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Question 121

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The duties of the Council of Economic Advisers are to advise the president of the United States and to determine U.S. monetary policy.

A) True
B) False

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Question 122

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

A) True
B) False

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Question 123

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Justin and Madison are economists. Justin thinks that the wealthiest 10 percent of the U.S. population should be taxed a rate higher than the rest of society because they can better afford it. Madison thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Justin and Madison

Figure 2-13 ​ Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two. ​ ​ ​ -Refer to Figure 2-13. Which point(s) on the graph is(are) unattainable given current resources and technology?

Figure 2-10 ​ ​ ​ ​ ​ -Refer to Figure 2-10. It is possible for this economy to produce 30 doghouses and 20 dishwashers.

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

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

Two variables that have a positive correlation move in the same direction.

Figure 2-13 ​ Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two. ​ ​ ​ -Refer to Figure 2-13. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Table 2-2 ​ $\text { Ecoville's Production Possibilities }$ $\begin{array} { | c | c | } \hline \text { Socks } & \text { Glasses } \\\hline 1,200 & 0 \\\hline 900 & 400 \\\hline 600 & 700 \\\hline 300 & 900 \\\hline 0 & 1,000 \\\hline\end{array}$ ​ ​ -Refer to Table 2-2. Which of the following statements is correct?

Macroeconomics is the study of

When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables are positively related.

Analysis of data on workers and those looking for work is conducted by economists at the

Figure 2-7 -Refer to Figure 2-7. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

When economists disagree about whether a policy is fair, they are expressing a difference in

The scientific method can be applied to the study of economics.

The x-coordinate of an ordered pair specifies the

Figure 2-6 -Refer to Figure 2-6. Consider the production possibilities frontier for an economy that produces only cars and sofas. The opportunity cost of each car is

Figure 2-7 -Refer to Figure 2-7. The graph shown is known as a

Figure 2-2 -Refer to Figure 2-2. Ethan works as an attorney for a corporation and is paid a salary in exchange for the legal services he performs. If Ethan's income is represented by a flow of dollars from Box D to Box B of this circular-flow diagram, then the revenue earned by a firm selling its product is represented by a flow of dollars