Question 1

Which of the following is an example of a normative, as opposed to positive, statement?

Accepted Answer

A)  The growth rate of the economy last year was higher than any other year in the last decade.
B)  The federal government reduced spending in the last quarter of the fiscal year.
C)  The Federal Reserve Bank adjusted interest rates in response to the lower-than-expected growth rate of the economy.
D)  The federal government should decrease unemployment benefits to stimulate the economy out of the recession.

Question 2

The ordered pair that represents the origin on a graph is

Accepted Answer

A)  (1, 1) .
B)  (0, 0) .
C)  (-1, -1) .
D)  (  ) .

Question 3

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 4

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 profit

Question 5

The scientific method is applicable to studying

Accepted Answer

A)  natural sciences, but not social sciences.
B)  social sciences, but not natural sciences.
C)  both natural sciences and social sciences.
D)  None of the above is correct.

Question 6

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

Accepted Answer

A)  A only
B)  A and B
C)  C only
D)  C and D

Question 7

Figure 2-15 
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

Accepted Answer

The answer of Figure 2-15 
-Refer to Figure 2-15. Consider...

Question 8

The president of the United States receives tax policy advice from economists in the

Accepted Answer

A)  Federal Reserve.
B)  Department of Justice.
C)  Department of the Treasury.
D)  Congressional Budget Office.

Question 9

When two variables have a positive correlation,

Accepted Answer

A)  they tend to move in opposite directions.
B)  they tend to move in the same direction.
C)  one variable will move while the other remains constant.
D)  the variables' values are never negative.

Question 10

Figure 2-17 
-Refer to Figure 2-17. The slope of the curve between points A and B is

Accepted Answer

A)  -5
B)  -1/5
C)  1/5
D)  5

Question 11

The opportunity cost of something is what you give up to get it.

Accepted Answer

A) True 
 B)False

Question 12

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Accepted Answer

A) True 
 B)False

Question 13

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

Accepted Answer

A) True 
 B)False

Question 14

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.

Question 15

Figure 2-16 
-Refer to Figure 2-16. Cups of coffee per day and the hours that someone can go without sleep appear to have

Accepted Answer

A)  a positive correlation.
B)  a negative correlation.
C)  a random correlation.
D)  no correlation.

Question 16

Table 2-3
Production Possibilities for Footville 
-Refer to Table 2-3. Which of the following statements is correct?

Accepted Answer

A)  The opportunity cost of an additional 200 shoes is constant at 200 socks.
B)  The opportunity cost of an additional 200 shoes is constant at 300 socks.
C)  Footville's production possibilities frontier is a straight, downward-sloping line.
D)  The opportunity cost of an additional 200 shoes increases as more socks are produced.

Question 17

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Accepted Answer

A)  have no questions but hundreds of answers.
B)  have 100 questions and 3,000 answers.
C)  have 1,000 questions but no answers.
D)  never produce a winner.

Question 18

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

Accepted Answer

A)  interest
B)  capital
C)  spending by households on goods
D)  spending by households on services

Question 19

The first number in any ordered pair is

Accepted Answer

A)  the x-coordinate.
B)  the y-coordinate.
C)  the vertical location of the point.
D)  the slope.

Question 20

In the ordered pair (20, 30) , 20 is the

Accepted Answer

A)  the x-coordinate.
B)  the horizontal location of the point.
C)  the y-coordinate.
D)  Both a and b are correct.

Exam 2: Thinking Like an Economist

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

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President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

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Table 2-3 Production Possibilities for Footville -Refer to Table 2-3. Which of the following statements is correct?

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The president of the United States receives tax policy advice from economists in the

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The opportunity cost of something is what you give up to get it.

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Figure 2-16 -Refer to Figure 2-16. Cups of coffee per day and the hours that someone can go without sleep appear to have

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The scientific method is applicable to studying

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

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The first number in any ordered pair is

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Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

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Which of the following is an example of a normative, as opposed to positive, statement?

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In the ordered pair (20, 30) , 20 is the

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Figure 2-17 -Refer to Figure 2-17. The slope of the curve between points A and B is

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Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

Correct AnswerverifiedShow Answer

The ordered pair that represents the origin on a graph is

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In the circular-flow diagram, which of the following items represents a payment for a factor of production?

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When two variables have a positive correlation,

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

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Evaluating normative statements involves values as well as facts.

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