Question 1

A macroeconomist - as opposed to a microeconomist - might study the effect of

Accepted Answer

A)   changes in the money supply on the inflation rate.
B)   an increase in the gas tax on fuel consumption.
C)   a technological advance on the natural gas industry.
D)   a hurricane on prices in the orange industry.E) B) and C)
F) A) and C)

Question 2

Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.

Accepted Answer

A) True 
 B)False

Question 3

In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of finding and interpreting patterns when analyzing economic data.

Accepted Answer

A) True 
 B)False

Question 4

Use the following Figure to answer the question Figure: 2-1 
-Refer to Figure 2-1. Which arrow represents the flow of goods and services?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) All of the above
F) None of the above

Question 5

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

Accepted Answer

A)   amount of the other good that must be given up.
B)   market price of the additional amount produced.
C)   amount of resources that must be devoted to its production.
D)   number of dollars that must be spent to produce it.E) A) and D)
F) C) and D)

Question 6

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 D)

Question 7

A model can be accurately described as a

Accepted Answer

A)   theoretical abstraction with very little value.
B)   device that is useful only to the people who created it.
C)   realistic and carefully constructed theory.
D)   simplification of reality.E) C) and D)
F) A) and B)

Question 8

Use the following Figure to answer the question : Figure 2-17 
-Refer to Figure 2-17. The movement from point B to point C could have been caused by

Accepted Answer

A)   inflation.
B)   a change in income.
C)   a change in the price of grapes.
D)   a change in the cost of producing grapes.E) B) and C)
F) A) and B)

Question 9

Which of these terms are used interchangeably?

Accepted Answer

A)   "goods and services" and "inputs"
B)   "goods and services" and "factors of production"
C)   "inputs" and "factors of production"
D)   "land, labor, and capital" and "goods and services"E) C) and D)
F) B) and C)

Question 10

Use the following Figure to answer the question : Figure 2-8 :

-Refer to Figure 2-8. To reach point L, the economy would have to

Accepted Answer

A)   acquire more resources or experience a technological advance.
B)   begin using its available resources more efficiently than it is currently using them.
C)   shift resources away from the production of nails and toward the production of hammers.
D)   None of the above are correct; the economy will never be able to reach point L.E) A) and B)
F) None of the above

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Use the following Figure to answer the question Figure: 2-1 
-Refer to Figure 2-1. Which arrow represents the flow of spending by households?

Accepted Answer

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

Question 13

Use the following Figure to answer the question : Figure 2-23 : 
-Refer to Figure 2-23. It is possible for this economy to produce 75 doghouses.

Accepted Answer

A) True 
 B)False

Question 14

When constructing a production possibilities frontier, which of the following assumptions is not made?

Accepted Answer

A)   The economy produces only two goods or two types of goods.
B)   Firms produce goods using factors of production.
C)   The technology available to firms is given.
D)   The quantities of the factors of production that are available are increasing over the relevant time period.E) B) and C)
F) B) and D)

Question 15

Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

Accepted Answer

A) True 
 B)False

Question 16

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Accepted Answer

A) True 
 B)False

Question 17

Use the following Figure to answer the question :  Figure 2-9
Panel a) 
 
Panel b)  
-Refer to Figure 2-9, Panel a) . Production at point K is

Accepted Answer

A)   possible and efficient.
B)   possible but inefficient.
C)   impossible but efficient.
D)   impossible and inefficient.E) B) and D)
F) A) and B)

Question 18

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

Accepted Answer

A)   goods and services
B)   dollars paid to land, labor, and capital
C)   dollars spent on goods and services
D)   wages, rent, and profitE) A) and B)
F) A) and C)

Question 19

Which of the following allows you to provide information about the relationship between two variables?

Accepted Answer

A)   coordinate system.
B)   pie chart
C)   bar graph
D)   time-series graphE) B) and D)
F) A) and C)

Question 20

The circular-flow diagram is a

Accepted Answer

A)   visual model of the economy.
B)   visual model of the relationships among money, prices, and businesses.
C)   model that shows the effects of government on the economy.
D)   mathematical model of how the economy works.E) B) and D)
F) B) and C)

Exam 2: Thinking Like an Economist

In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of finding and interpreting patterns when analyzing economic data.

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Use the following Figure to answer the question : Figure 2-23 : -Refer to Figure 2-23. It is possible for this economy to produce 75 doghouses.

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

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Use the following Figure to answer the question Figure: 2-1 -Refer to Figure 2-1. Which arrow represents the flow of spending by households?

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The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

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When constructing a production possibilities frontier, which of the following assumptions is not made?

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Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

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A macroeconomist - as opposed to a microeconomist - might study the effect of

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Use the following Figure to answer the question Figure: 2-1 -Refer to Figure 2-1. Which arrow represents the flow of goods and services?

Correct AnswerverifiedShow Answer

The circular-flow diagram is a

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Use the following Figure to answer the question : Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a) . Production at point K is

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Use the following Figure to answer the question : Figure 2-17 -Refer to Figure 2-17. The movement from point B to point C could have been caused by

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Economists view positive statements as

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Use the following Figure to answer the question : Figure 2-8 : -Refer to Figure 2-8. To reach point L, the economy would have to

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A model can be accurately described as a

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The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Correct AnswerverifiedShow Answer

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

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Which of these terms are used interchangeably?

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Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.

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Which of the following allows you to provide information about the relationship between two variables?

Correct AnswerverifiedShow Answer

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