Question 1

The language of economics is

Accepted Answer

A)  needlessly arcane.
B)  valuable because it provides a new and useful way of learning about the world.
C)  easy to learn within a day.
D)  unnecessary to learn for a thorough understanding of economics.

Question 2

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.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

In economics, capital refers to

Accepted Answer

A)  the finances necessary for firms to produce their products.
B)  buildings and machines used in the production process.
C)  the money households use to purchase firms' output.
D)  stocks and bonds.

Question 5

Economists speaking like scientists make

Accepted Answer

A)  positive statements.
B)  prescriptive statements.
C)  claims about how the world should be.
D)  More than one of the above is correct.

Question 6

In the circular flow diagram, when Daphne purchases a new mobile phone, she participates in the markets for

Accepted Answer

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

Question 7

Unemployment causes production levels to be inefficient.

Accepted Answer

A) True 
 B)False

Question 8

When economists make

Accepted Answer

A)  positive statements, they are speaking not as policy advisers but as scientists.
B)  positive statements, they are speaking not as scientists but as forecasters.
C)  normative statements, they are speaking not as policy advisers but as scientists.
D)  normative statements, they are speaking not as policy advisers but as model-builders.

Question 9

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.

Question 10

Duties of the Council of Economic Advisers include

Accepted Answer

A)  advising the president and writing the annual Economic Report of the President.
B)  implementing the president's tax policies.
C)  tracking the behavior of the nation's money supply.
D)  All of the above are correct.

Question 11

An assumption an economist might make while studying international trade is

Accepted Answer

A)  there are only two countries.
B)  countries only produce two goods.
C)  technology does not change.
D)  All of the above are possible assumptions.

Question 12

Figure 2-3 
-Refer to Figure 2-3. Which shape refers to the markets for goods and services?

Accepted Answer

A)  oval A
B)  oval B
C)  rectangle 1
D)  rectangle 2

Question 13

It is possible for an economy to increase its production of both goods if the economy

Accepted Answer

A)  moves downward and to the right along its production possibilities frontier and the frontier is bowed outward.
B)  moves upward and to the left along its production possibilities frontier and the frontier is bowed outward.
C)  moves in either direction along its production possibilities frontier and the frontier is a straight line.
D)  moves from a situation of inefficient production to a situation of efficient production.

Question 14

Table 2-3
Production Possibilities for Footville 
-Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

Accepted Answer

A)  400 socks
B)  300 socks
C)  200 socks
D)  100 socks

Question 15

Differences in scientific judgment between economists are similar to all of the following except

Accepted Answer

A)  astronomers debating whether the sun or earth was at the center of the solar system.
B)  meteorologists debating the existence of global warming.
C)  two politicians arguing about the fairness of the tax code.
D)  explorers debating whether or not the earth was flat before the time of Christopher Columbus.

Question 16

A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing one good than another.

Accepted Answer

A) True 
 B)False

Question 17

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

Accepted Answer

A) True 
 B)False

Question 18

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Accepted Answer

A)  Indiadesh decreased unemployment.
B)  Indiadesh experienced an improvement in textile-making technology.
C)  Indiadesh experienced an improvement in computer-making technology.
D)  Indiadesh experienced a reduction in resources.

Question 19

When two variables have a positive correlation,

Accepted Answer

A)  when the x-variable increases, the y-variable decreases.
B)  when the x-variable decreases, the y-variable increases.
C)  when the x-variable increases, the y-variable increases.
D)  More than one of the above is correct.

Question 20

Figure 2-7 
-Refer to Figure 2-7. What is the opportunity cost of moving from point M to point L?

Accepted Answer

A)  zero
B)  15 tvs
C)  20 engines and 15 tvs
D)  20 engines

Exam 2: Thinking Like an Economist

Duties of the Council of Economic Advisers include

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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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A model can be accurately described as a

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Figure 2-7 -Refer to Figure 2-7. What is the opportunity cost of moving from point M to point L?

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When two variables have a positive correlation,

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When economists make

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An assumption an economist might make while studying international trade is

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

Correct AnswerverifiedShow Answer

Table 2-3 Production Possibilities for Footville -Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

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A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

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In the circular flow diagram, when Daphne purchases a new mobile phone, she participates in the markets for

Correct AnswerverifiedShow Answer

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Correct AnswerverifiedShow Answer

Differences in scientific judgment between economists are similar to all of the following except

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Unemployment causes production levels to be inefficient.

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Economists speaking like scientists make

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Figure 2-3 -Refer to Figure 2-3. Which shape refers to the markets for goods and services?

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The language of economics is

Correct AnswerverifiedShow Answer

In economics, capital refers to

Correct AnswerverifiedShow Answer

It is possible for an economy to increase its production of both goods if the economy

Correct AnswerverifiedShow Answer

A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing one good than another.

Correct AnswerverifiedShow Answer

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