Question 1

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) B) and D)
F) B) and C)

Question 2

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Accepted Answer

A)   This month, the economy reduced the unemployment of its resources.
B)   This month, the economy experienced an improvement in technology.
C)   This month, the economy experienced an increase in resources
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 3

When an economy is operating inside its production possibilities frontier, we know that

Accepted Answer

A)   there are unused resources or inefficiencies in the economy.
B)   all of the economy's resources are fully employed.
C)   economic growth would have to occur in order for the economy to move to a point on the frontier.
D)   in order to produce more of one good, the economy would have to give up some of the other good.E) All of the above
F) A) and B)

Question 4

Who would be more likely to study the inflation rate in the United States, a macroeconomist or a microeconomist?

Accepted Answer

The answer of Who would be more likely to study...

Question 5

One thing economists do to help them understand how the real world works is

Accepted Answer

A)   make assumptions.
B)   ignore the past.
C)   try to capture every aspect of the real world in the models they construct.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 6

In the circular-flow diagram, which of the following items flows from firms to households 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 D)
F) A) and C)

Question 7

Figure 2-10
Panel a)  Panel b) 
  
-Refer to Figure 2-10, Panel a) . Production is

Accepted Answer

A)   possible at points V, W, Y, and Z, but efficient only at points V, W, and Z.
B)   possible at points V, W, Y, and Z, but efficient only at point Y.
C)   possible at points U, V, W, and Z, but efficient only at points V, W, and Z.
D)   possible at points U, V, W, and Z, but efficient only at point U.E) B) and D)
F) C) and D)

Question 8

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

Accepted Answer

A) True 
 B)False

Question 9

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Accepted Answer

A) True 
 B)False

Question 10

The second number in any ordered pair is

Accepted Answer

A)   the x-coordinate.
B)   the y-coordinate.
C)   the horizontal location of the point.
D)   the slope.E) A) and B)
F) All of the above

Question 11

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

Accepted Answer

A) True 
 B)False

Question 12

A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"

Accepted Answer

A)   would likely be made by an economist acting as a policy advisor.
B)   would require values and data to be evaluated.
C)   would require data but not values to be evaluated.
D)   could not be evaluated by economists acting as scientists.E) B) and D)
F) B) and C)

Question 13

Figure 2-16 
-Refer to Figure 2-16. The graph shown is known as a

Accepted Answer

A)   time-series graph.
B)   bar graph.
C)   scatterplot.
D)   pie chart.E) All of the above
F) B) and C)

Question 14

Instead of conducting laboratory experiments to generate data to test their theories, economists often

Accepted Answer

A)   ask winners of the Nobel Prize in Economics to evaluate their theories.
B)   argue that data is impossible to collect in economics.
C)   gather data from historical episodes of economic change.
D)   assume that data would support their theories.E) C) and D)
F) A) and D)

Question 15

Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

Accepted Answer

The answer of Is the following a positive or normative...

Question 16

Policies such as rent control and trade barriers persist

Accepted Answer

A)   because economists are about evenly divided as to the merits of those policies.
B)   because almost all economists agree that those policies have no discernible economic effects.
C)   because almost all economists agree that those policies are desirable.
D)   despite the fact that almost all economists agree that those policies are undesirable.E) B) and D)
F) C) and D)

Question 17

To display information on two variables, an economist must use

Accepted Answer

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

Question 18

Economists at which of the following offices help formulate spending plans and regulatory policies?

Accepted Answer

A)   Office of Management and Budget
B)   Department of the Treasury
C)   Congressional Budget Office
D)   The Federal ReserveE) C) and D)
F) All of the above

Question 19

John Maynard Keynes described economics as an easy subject at which very few excel. Which of the following is not one of the reasons Keynes gave for why so few people excel at the study of economics?

Accepted Answer

A)   An economist must also be a mathematician, historian, statesman, and philosopher in some degree.
B)   An economist must understand symbols and speak in words.
C)   An economist must be purposeful and disinterested in a simultaneous mood.
D)   An economist must understand environmental science, regulation, and political science.E) B) and C)
F) A) and B)

Question 20

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A production point is said to be efficient if there is no way for the economy to produce more of one good without producing less of another.

Correct AnswerverifiedShow Answer

Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and 200 gallons of ice cream. This month, the same economy produced 15 robots and 240 gallons of ice cream. Which of the following statements could explain this change?

Correct AnswerverifiedShow Answer

The second number in any ordered pair is

Correct AnswerverifiedShow Answer

When an economy is operating inside its production possibilities frontier, we know that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 2-10 Panel a) Panel b) -Refer to Figure 2-10, Panel a) . Production is

Correct AnswerverifiedShow Answer

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

Correct AnswerverifiedShow Answer

One thing economists do to help them understand how the real world works is

Correct AnswerverifiedShow Answer

Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency, unemployment, technological advances, and economic growth.

Correct AnswerverifiedShow Answer

Figure 2-16 -Refer to Figure 2-16. The graph shown is known as a

Correct AnswerverifiedShow Answer

A positive economic statement such as "Pollution taxes decrease the quantity of pollution generated by firms"

Correct AnswerverifiedShow Answer

Economists at which of the following offices help formulate spending plans and regulatory policies?

Correct AnswerverifiedShow Answer

To display information on two variables, an economist must use

Correct AnswerverifiedShow Answer

John Maynard Keynes described economics as an easy subject at which very few excel. Which of the following is not one of the reasons Keynes gave for why so few people excel at the study of economics?

Correct AnswerverifiedShow Answer

Policies such as rent control and trade barriers persist

Correct AnswerverifiedShow Answer

Instead of conducting laboratory experiments to generate data to test their theories, economists often

Correct AnswerverifiedShow Answer

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Correct AnswerverifiedShow Answer

Who would be more likely to study the inflation rate in the United States, a macroeconomist or a microeconomist?

Correct AnswerverifiedShow Answer

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