Question 1

Which of the following transactions does not take place in the markets for the factors of production in the circular-flow diagram?

Accepted Answer

A)   Jason provides plumbing services for a plumbing company and receives an hourly wage from the company for his services.
B)   Jennifer works as a marriage counselor and her clients pay her on a per-hour basis for her services.
C)   Brody owns several shopping malls and receives rent payments from the companies that operate those malls.
D)   Bree sells advertising for a newspaper and receives a commission from the newspaper company for each advertisement that she sells.

Question 2

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.

Question 3

Erma and Wayne are both economists.Erma thinks that taxing consumption,rather than income,would result in higher household saving because income that is saved would not be taxed.Wayne does not think that household saving would respond much to a change in the tax laws.In this example,Erma and Wayne

Accepted Answer

A)   have different normative views about tax policy.
B)   disagree about the validity of a positive theory.
C)   must both be incorrect because economists always agree on policy issues.
D)   None of the above is correct.

Question 4

When a variable that is named on an axis of a graph changes,the curve shifts.

Accepted Answer

A) True 
 B)False

Question 5

"Minimum wage laws result in unemployment" is a normative statement,while "the minimum wage should be higher" is a positive statement.

Accepted Answer

A) True 
 B)False

Question 6

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

Accepted Answer

A) True 
 B)False

Question 7

The y-coordinate is the

Accepted Answer

A)   first number of an ordered pair and represents the point's horizontal location.
B)   second number of an ordered pair and represents the point's horizontal location.
C)   first number of an ordered pair and represents the point's vertical location.
D)   second number of an ordered pair and represents the point's vertical location.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

Larry Summers,a chief economic adviser to President Obama,stated that as a result of using Keynesian policies in 2008 and 2009,

Accepted Answer

A)   US government policy moved in a strongly activist direction.
B)   the US has shifted from worrying about an economic depression to thinking about what kind of expansion the country will have.
C)   the US has shifted from rescuing the economy to economic recovery.
D)   All of the above are correct.

Question 11

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.

Question 12

Table 2-3
Production Possibilities for Libraryland
 
-Refer to Table 2-3.What is the opportunity cost to Libraryland of increasing the production of books from 200 to 300?

Accepted Answer

A)   100 magazines
B)   150 magazines
C)   200 magazines
D)   350 magazines

Question 13

Production possibilities frontiers are usually bowed outward.This is because

Accepted Answer

A)   the more resources a society uses to produce one good,the fewer resources it has available to produce another good.
B)   it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced.
C)   of the effects of technological change.
D)   resources are specialized; that is,some are better at producing particular goods rather than other goods.

Question 14

Which of the following statements about the circular-flow diagram is correct?

Accepted Answer

A)   One must imagine that the economy operates without money in order to make sense of the diagram.
B)   The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms.
C)   The government cannot be excluded as a decision maker in a circular-flow diagram.
D)   All of the above are correct.

Question 15

In the simple circular-flow diagram,households

Accepted Answer

A)   are the only decision makers.
B)   own the factors of production.
C)   are buyers of inputs.
D)   consume only some of the goods and services that firms produce.

Question 16

If Erin's income decreases and,as a result,she chooses to buy fewer milkshakes per month at each price,then her demand curve will

Accepted Answer

A)   shift to the right.
B)   shift to the left.
C)   not shift; instead,Erin will move along her demand curve downward and to the right.
D)   not shift; instead,Erin will move along her demand curve upward and to the left.

Question 17

Figure 2-9
 
-Refer to Figure 2-9,Panel (a) .The movement from point C to point B could be caused by

Accepted Answer

A)   economic growth.
B)   unemployment.
C)   an improvement in efficiency.
D)   an advance in production technology.

Question 18

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

Accepted Answer

A)   The discount rate is the interest rate the Federal Reserve charges banks to borrow funds.
B)   The US income tax rate increases with the amount of income earned.
C)   The government should increase the tax on gasoline.
D)   The US unemployment rate increased to 10 percent in 2009.

Question 19

Which of the following trade-offs does the production possibilities frontier illustrate?

Accepted Answer

A)   if an economy wants to increase efficiency in production,then it must sacrifice equality in consumption
B)   once an economy has reached the efficient points on its production possibilities frontier,the only way of getting more of one good is to get less of the other
C)   for an economy to consume more of one good,it must stop consuming the other good entirely
D)   for an economy to produce and consume goods,it must sacrifice environmental quality

Question 20

Figure 2-9
 
-Refer to Figure 2-9,Panel (a) and Panel (b) .A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Accepted Answer

A)   unemployment.
B)   an improvement in computer production technology.
C)   an improvement in printer production technology.
D)   an improvement in both computer and printer production technology.

Exam 2: Thinking Like an Economist

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

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The y-coordinate is the

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If Erin's income decreases and,as a result,she chooses to buy fewer milkshakes per month at each price,then her demand curve will

Correct AnswerverifiedShow Answer

Which of the following trade-offs does the production possibilities frontier illustrate?

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The first number in any ordered pair is

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Economists speaking like policy advisers make

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"Minimum wage laws result in unemployment" is a normative statement,while "the minimum wage should be higher" is a positive statement.

Correct AnswerverifiedShow Answer

Figure 2-9 -Refer to Figure 2-9,Panel (a) and Panel (b) .A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

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Production possibilities frontiers are usually bowed outward.This is because

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

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Table 2-3 Production Possibilities for Libraryland -Refer to Table 2-3.What is the opportunity cost to Libraryland of increasing the production of books from 200 to 300?

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When a variable that is named on an axis of a graph changes,the curve shifts.

Correct AnswerverifiedShow Answer

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

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In the simple circular-flow diagram,households

Correct AnswerverifiedShow Answer

Figure 2-9 -Refer to Figure 2-9,Panel (a) .The movement from point C to point B could be caused by

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Which of the following statements about the circular-flow diagram is correct?

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Which of the following transactions does not take place in the markets for the factors of production in the circular-flow diagram?

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Larry Summers,a chief economic adviser to President Obama,stated that as a result of using Keynesian policies in 2008 and 2009,

Correct AnswerverifiedShow Answer

Erma and Wayne are both economists.Erma thinks that taxing consumption,rather than income,would result in higher household saving because income that is saved would not be taxed.Wayne does not think that household saving would respond much to a change in the tax laws.In this example,Erma and Wayne

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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