Question 1

Figure 2-15
Relationship between Price and Cups of Coffee
 
-Refer to Figure 2-15. The slope of the line containing points A and B is

Accepted Answer

A)   -1/2.
B)   -2.
C)   1/2.
D)   2.

Question 2

In the circular-flow diagram, firms produce goods and services using the factors of production.

Accepted Answer

A) True 
 B)False

Question 3

With respect to how economists study the economy, which of the following statements is most accurate?

Accepted Answer

A)   Economists study the past, but they do not try to predict the future.
B)   Economists use "rules of thumb" to predict the future.
C)   Economists devise theories, collect data, and analyze the data to test the theories.
D)   Economists use controlled experiments in much the same way that biologists and physicists do.

Question 4

Economists make assumptions in order to

Accepted Answer

A)   mimic the methodologies employed by other scientists.
B)   minimize the number of experiments that yield no useful data.
C)   minimize the likelihood that some aspect of the problem at hand is being overlooked.
D)   focus their thinking on the essence of the problem at hand.

Question 5

If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

Accepted Answer

A) True 
 B)False

Question 6

Assumptions can simplify the complex world and make it easier to understand.

Accepted Answer

A) True 
 B)False

Question 7

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

Accepted Answer

A)   economists have not yet convinced the general public that the policies are undesirable.
B)   economists engage in positive analysis, not normative analysis.
C)   economists have values that are different from the values of most non-economists.
D)   economists' theories are not easily confirmed or refuted in laboratory analysis.

Question 8

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

Accepted Answer

A) True 
 B)False

Question 9

In principle, we can

Accepted Answer

A)   ignore positive statements when choosing among various public policy alternatives.
B)   ignore normative statements when choosing among various public policy alternatives.
C)   confirm or refute positive statements by examining evidence.
D)   confirm or refute normative statements by examining evidence.

Question 10

The President counts among his economic advisors the Congressional Budget Office.

Accepted Answer

A) True 
 B)False

Question 11

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

Accepted Answer

A)   Most people who study economics are not very bright.
B)   Good economists must possess a rare combination of gifts.
C)   Economics is quite boring; hence, people tend to lose interest in it before mastering it.
D)   Good thinkers become frustrated with economics because it does not make use of the scientific method.

Question 12

Table 2-5
 
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations of cookies and coffee is not currently attainable but would be attainable if there was an improvement in overall production technology?

Accepted Answer

A)   800 dozen cookies and 150 pounds of coffee
B)   700 dozen cookies and 400 pounds of coffee
C)   500 dozen cookies and 850 pounds of coffee
D)   300 dozen cookies and 900 pounds of coffee

Question 13

Figure 2-2
 
-Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

Accepted Answer

A)   flows of goods and services from households to firms.
B)   flows of inputs from households to firms.
C)   flows of rent payments paid to owners of land.
D)   flows of wages and salaries paid to workers.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

In the circular-flow diagram,

Accepted Answer

A)   firms are buyers in the markets for goods and services.
B)   households are sellers in the markets for the factors of production.
C)   firms are sellers in the markets for factors of production and in the markets for goods and services.
D)   dollars that are spent on goods and services flow directly from firms to households.

Question 16

Figure 2-8
 
-Refer to Figure 2-8, 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 donut production technology.
C)   an improvement in coffee production technology.
D)   an improvement in both donut and coffee production technology.

Question 17

With the resources it has, an economy can produce at any point on or outside the production possibilities frontier, but it cannot produce at points inside the frontier.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is correct?

Accepted Answer

A)   Few economic models incorporate assumptions.
B)   Different economic models employ different sets of assumptions.
C)   Good economic models attempt to mimic reality as closely as possible.
D)   Economic models, to be accepted, must be tested by conducting experiments.

Question 20

Macroeconomics is the study of economy-wide phenomena.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Economists make assumptions in order to

Correct AnswerverifiedShow Answer

In the circular-flow diagram, firms produce goods and services using the factors of production.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

Correct AnswerverifiedShow Answer

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

Correct AnswerverifiedShow Answer

Assumptions can simplify the complex world and make it easier to understand.

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8, Panel (a) and Panel (b) . A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Correct AnswerverifiedShow Answer

In principle, we can

Correct AnswerverifiedShow Answer

With respect to how economists study the economy, which of the following statements is most accurate?

Correct AnswerverifiedShow Answer

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

Correct AnswerverifiedShow Answer

Table 2-5 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations of cookies and coffee is not currently attainable but would be attainable if there was an improvement in overall production technology?

Correct AnswerverifiedShow Answer

Figure 2-2 -Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Macroeconomics is the study of economy-wide phenomena.

Correct AnswerverifiedShow Answer

The President counts among his economic advisors the Congressional Budget Office.

Correct AnswerverifiedShow Answer

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

Correct AnswerverifiedShow Answer

Figure 2-15 Relationship between Price and Cups of Coffee -Refer to Figure 2-15. The slope of the line containing points A and B is

Correct AnswerverifiedShow Answer

In the circular-flow diagram,

Correct AnswerverifiedShow Answer

With the resources it has, an economy can produce at any point on or outside the production possibilities frontier, but it cannot produce at points inside the frontier.

Correct AnswerverifiedShow Answer

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