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Exam 2: Thinking Like an Economist

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Question 141

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The slope of a horizontal line is infinite, and the slope of a vertical line is zero.

A) True
B) False

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Question 142

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In the ordered pair (10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.

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B) False

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Question 143

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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.

While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth.

In the circular flow diagram, when Brian provides labor through the markets for factors of production to ABC Company, the flow of money he receives in exchange is called

Table 2-1 ​ $\begin{array}{l}\text { Production Possibilities }\\\begin{array} { | c | c | } \hline \text { Tennis Rackets } & \text { Tennis Balls } \\\hline 150 & 9,000 \\\hline 300 & 7,500 \\\hline 450 & ? \\\hline\end{array}\end{array}$ -Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1,000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1,050 units of food and 47 machines. Which of the following statements is correct?

Figure 2-5 -Refer to Figure 2-5. Which of the following events would explain the shift of the production possibilities frontier from A to B?

In the circular-flow diagram, factors of production include land, labor, and capital.

Is the following a positive or normative statement? The United States government should mandate that every citizen purchases health insurance.

In the circular-flow diagram, which of the following items flows from firms to households through the markets for the factors of production?

Two variables that have a negative correlation move in opposite directions.

A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.

Which type of statement - positive or normative - can be evaluated by analyzing data alone?

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

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

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. What is the opportunity cost to Ecoville of increasing the production of socks from 600 to 900?

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

Figure 2-1 -Refer to Figure 2-1. Brianna buys a refrigerator for her new home. To which of the arrows does this transaction directly contribute?

The President counts among his economic advisors the Congressional Budget Office.

The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place.