Question 1

In the circular-flow diagram, firms produce

Accepted Answer

A)   goods and services using factors of production.
B)   output using inputs.
C)   factors of production using goods and services.
D)   Both a)  and b)  are correct.E) None of the above
F) A) and D)

Question 2

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Accepted Answer

A)   performing an experiment in an economic system.
B)   applying mathematical methods to economic analysis.
C)   analyzing available data.
D)   formulating theories about economic events.E) A) and B)
F) None of the above

Question 3

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to

Accepted Answer

A)   make use of theory and observation.
B)   rely upon the scientific method.
C)   conduct laboratory experiments.
D)   find articles or books that were written before 1900.E) C) and D)
F) None of the above

Question 4

When economists are trying to help improve the world, they are

Accepted Answer

A)   in the realm of positive economics rather than normative economics.
B)   in the realm of macroeconomics rather than microeconomics.
C)   scientists.
D)   policy advisers.E) C) and D)
F) A) and B)

Question 5

Figure 2-8 
-Refer to Figure 2-8. Inefficient production is represented by which points) ?

Accepted Answer

A)   K, M
B)   L
C)   L, M
D)   ME) A) and C)
F) A) and D)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

What you must give up to get something else is called the

Accepted Answer

The answer of What you must give up to get...

Question 8

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

The answer of In the circular flow diagram, when Brian...

Question 10

Economists speaking like policy advisers make

Accepted Answer

A)   claims about how the world is.
B)   descriptive statements.
C)   normative statements.
D)   More than one of the above is correct.E) None of the above
F) A) and C)

Question 11

Unemployment causes production levels to be inefficient.

Accepted Answer

A) True 
 B)False

Question 12

Positive statements are not

Accepted Answer

A)   descriptive.
B)   prescriptive.
C)   claims about how the world is.
D)   made by economists speaking as scientists.E) B) and D)
F) C) and D)

Question 13

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)   One economist believes everyone should pay the same percentage of their income in taxes; another economist believes that wealthier citizens should pay a higher percentage of their income in taxes.
B)   One economist believes that manufacturing firms should face greater regulation to preserve the environment; another economist believes the government should not intervene in free markets.
C)   One economist believes that equality should be valued over efficiency in policy decisions; another economist believes that efficiency should be valued over equality in policy decisions.
D)   One economist believes the government should tax a household's income; another economist believes the government should tax a household's consumption.E) A) and B)
F) B) and C)

Question 14

In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 15

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Accepted Answer

A)   A ceiling on rents reduces the quantity and quality of housing available.
B)   Fiscal policy has a significant stimulative impact on a less than fully employed economy.
C)   The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged.
D)   The United States should implement universal health care for its citizens.E) A) and C)
F) None of the above

Question 16

The essence of science is

Accepted Answer

A)   the laboratory experiment.
B)   the scientific method.
C)   the study of nature, but not the study of society.
D)   All of the above are correct.E) C) and D)
F) A) and C)

Question 17

An example of a price that changes only infrequently is the price of

Accepted Answer

A)   stocks on the New York Stock Exchange.
B)   crude oil.
C)   residential real estate.
D)   magazines sold at newsstands.E) All of the above
F) None of the above

Question 18

You know an economist has crossed the line from scientist to policy adviser when he or she

Accepted Answer

A)   claims that the problem at hand is widely misunderstood by non-economists.
B)   talks about the evidence.
C)   makes normative statements.
D)   makes a claim about how the world is.E) A) and C)
F) B) and C)

Question 19

A circular-flow diagram is a model that

Accepted Answer

A)   helps to explain how participants in the economy interact with one another.
B)   helps to explain how the economy is organized.
C)   incorporates all aspects of the real economy.
D)   Both a)  and b)  are correct.E) None of the above
F) B) and C)

Question 20

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

Accepted Answer

The answer of When economists disagree about whether a policy...

Exam 2: Thinking Like an Economist

Economists speaking like policy advisers make

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The essence of science is

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Positive statements are not

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What you must give up to get something else is called the

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You know an economist has crossed the line from scientist to policy adviser when he or she

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An example of a price that changes only infrequently is the price of

Correct AnswerverifiedShow Answer

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to

Correct AnswerverifiedShow Answer

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Correct AnswerverifiedShow Answer

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Correct AnswerverifiedShow Answer

In the markets for goods and services in the circular-flow diagram, households are buyers and firms are sellers.

Correct AnswerverifiedShow Answer

Unemployment causes production levels to be inefficient.

Correct AnswerverifiedShow Answer

A circular-flow diagram is a model that

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8. Inefficient production is represented by which points) ?

Correct AnswerverifiedShow Answer

In the circular-flow diagram, firms produce

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement?

Correct AnswerverifiedShow Answer

When economists are trying to help improve the world, they are

Correct AnswerverifiedShow Answer

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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