Question 1

A production possibilities frontier shifts outward when

Accepted Answer

A)   the economy experiences economic growth.
B)   the desires of the economy's citizens change.
C)   at least one of the basic principles of economics is violated.
D)   opportunity costs are lessened.E) A) and C)
F) A) and D)

Question 2

Normative statements describe how the world is,while positive statements prescribe how the world should be.

Accepted Answer

A) True 
 B)False

Question 3

In the circular-flow diagram,in the markets for

Accepted Answer

A)   goods and services, households and firms are both sellers.
B)   goods and services, households are sellers and firms are buyers.
C)   the factors of production, households are sellers and firms are buyers.
D)   the factors of production, households and firms are both buyers.E) A) and C)
F) C) and D)

Question 4

Which two groups of decision makers are included in the simple circular-flow diagram?

Accepted Answer

A)   markets and government
B)   households and government
C)   firms and government
D)   households and firmsE) B) and C)
F) C) and D)

Question 5

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

Accepted Answer

A)   Gasoline prices ought to be lower than they are now.
B)   The federal government should raise taxes on wealthy people.
C)   The social security system is a good system and it deserves to be preserved as it is.
D)   All of the above are normative statements.E) B) and C)
F) A) and D)

Question 6

A certain production possibilities frontier shows production possibilities for two goods,jewelry and clothing.Which of the following concepts cannot be illustrated by this model?

Accepted Answer

A)   the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing
B)   the tradeoff between production of jewelry and production of clothing
C)   the opportunity cost of clothing in terms of jewelry
D)   the effect of economic growth on production possibilities involving jewelry and clothingE) B) and C)
F) A) and C)

Question 7

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.E) A) and B)
F) A) and C)

Question 8

In the ordered pair (10,30),10 is the horizontal location of the point and 30 is the vertical location of the point.

Accepted Answer

A) True 
 B)False

Question 9

Positive statements can be evaluated using data alone,but normative statements cannot.

Accepted Answer

A) True 
 B)False

Question 10

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) None of the above
F) C) and D)

Question 11

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 12

Figure 2-2
 
-Refer to Figure 2-2.If the owners of land,labor,and capital are represented by Box B of this circular-flow diagram,then

Accepted Answer

A)   households are represented by Box A.
B)   firms are represented by Box C.
C)   firms are represented by Box A.
D)   firms are sellers in Box B.E) B) and D)
F) A) and D)

Question 13

Since economists cannot use natural experiments offered by history,they must use carefully constructed laboratory experiments instead.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not correct?

Accepted Answer

A)   The slope of a line will be a small positive number for a fairly flat upward-sloping line.
B)   The slope of a line will be a large positive number for a steep upward-sloping line.
C)   The slope of a line will be a negative number for a downward-sloping line.
D)   The slope of a line will be infinite for a horizontal line.E) A) and C)
F) C) and D)

Question 15

Economic models

Accepted Answer

A)   are not useful because they omit many real-world details.
B)   are usually composed of diagrams and equations.
C)   are useful because they do not omit any real-world details.
D)   are usually plastic representations of the economy.E) None of the above
F) C) and D)

Question 16

Figure 2-14
 
-Refer to Figure 2-14.The opportunity cost of moving from point B to point D is 15 doghouses.

Accepted Answer

A) True 
 B)False

Question 17

Figure 2-12
 
-Refer to Figure 2-12.Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Accepted Answer

A)   D, H
B)   B, C
C)   F, G
D)   A, BE) C) and D)
F) A) and B)

Question 18

Figure 2-14
 
-Refer to Figure 2-14.It is possible for this economy to produce 30 doghouses and 20 dishwashers.

Accepted Answer

A) True 
 B)False

Question 19

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 income tax cuts are unfair to those with low incomes; another economist believes income tax cuts are not unfair to those with low incomes.
B)   One economist believes unemployment causes more human suffering than does inflation; another economist believes inflation causes more human suffering than does unemployment.
C)   One economist believes the policies of the Democratic party offer the best hope for America's future; another economist believes the policies of the Republican party offer the best hope for America's future.
D)   One economist believes increases in the minimum wage increase unemployment; another economist believes increases in the minimum wage do not increase unemployment.E) All of the above
F) B) and C)

Question 20

Economists may disagree about the validity of alternative positive theories about how the world works.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist.

Economic models

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

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Figure 2-12 -Refer to Figure 2-12.Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

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Which two groups of decision makers are included in the simple circular-flow diagram?

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

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Which of the following is not correct?

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Figure 2-14 -Refer to Figure 2-14.It is possible for this economy to produce 30 doghouses and 20 dishwashers.

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In the circular-flow diagram,in the markets for

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Normative statements describe how the world is,while positive statements prescribe how the world should be.

Correct AnswerverifiedShow Answer

A production possibilities frontier shifts outward when

Correct AnswerverifiedShow Answer

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

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Positive statements can be evaluated using data alone,but normative statements cannot.

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Economists may disagree about the validity of alternative positive theories about how the world works.

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A certain production possibilities frontier shows production possibilities for two goods,jewelry and clothing.Which of the following concepts cannot be illustrated by this model?

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In the ordered pair (10,30),10 is the horizontal location of the point and 30 is the vertical location of the point.

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Figure 2-2 -Refer to Figure 2-2.If the owners of land,labor,and capital are represented by Box B of this circular-flow diagram,then

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Duties of the Council of Economic Advisers include

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Since economists cannot use natural experiments offered by history,they must use carefully constructed laboratory experiments instead.

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

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Figure 2-14 -Refer to Figure 2-14.The opportunity cost of moving from point B to point D is 15 doghouses.

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