Question 1

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 2

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Accepted Answer

A) True 
 B)False

Question 3

In the circular-flow diagram,one loop represents the flow of goods,services,and factors of production,and the other loop represents the corresponding flow of dollars.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Accepted Answer

A)   For the most part,microeconomists are unconcerned with macroeconomics,and macroeconomists are unconcerned with microeconomics.
B)   Microeconomists study markets for small products,whereas macroeconomists study markets for large products.
C)   Microeconomics and macroeconomics are distinct from one another,yet they are closely related.
D)   Microeconomics is oriented toward policy studies,whereas macroeconomics is oriented toward theoretical studies.

Question 5

When studying the effects of public policy changes,economists

Accepted Answer

A)   always refrain from making assumptions.
B)   sometimes make different assumptions about the short run and the long run.
C)   consider only the direct effects of those policy changes and not the indirect effects.
D)   consider only the short-run effects of those policy changes and not the long-run effects.

Question 6

Historical episodes are

Accepted Answer

A)   valuable to economists because they allow economists to see how the science of economics has evolved.
B)   valuable to economists because they allow economists to evaluate economic theories.
C)   not of concern to economists because economics is about predicting the future,not dwelling on the past.
D)   not of concern to economists because the exact circumstances of historical episodes are unlikely to be observed again.

Question 7

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

Accepted Answer

A)   a landowner leases land to a farmer
B)   a farmer hires a teenager to help with harvest
C)   a construction company rents trucks for its business
D)   a woman buys corn for dinner

Question 8

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Accepted Answer

A)   opinions and education.
B)   opinions and values.
C)   scientific judgments and education.
D)   scientific judgments and values.

Question 9

Figure 2-4 
-Refer to Figure 2-4.The opportunity cost of this economy moving from point Z to point Y is

Accepted Answer

A)   0 lamps.
B)   10 lamps.
C)   10 notepads.
D)   20 lamps.

Question 10

Trade-offs are involved in most policy decisions.

Accepted Answer

A) True 
 B)False

Question 11

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Accepted Answer

A)   is useless,since the real world has many countries trading many goods.
B)   can be useful only in situations involving two countries and two goods.
C)   can be useful in the classroom,but is useless in the real world.
D)   can be useful in helping economists understand the complex world of international trade involving many countries and many goods.

Question 12

"Other things equal,an increase in supply causes a decrease in price" is a normative statement,not a positive statement.

Accepted Answer

A) True 
 B)False

Question 13

In the ordered pair (17,75) ,75 is the

Accepted Answer

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

Question 14

Figure 2-13 
-Refer to Figure 2-13.Taking cause and effect into account,which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

Accepted Answer

A)   The less coffee a person drinks per day,the more time he can go without sleep.
B)   There is no relationship between how much coffee per day a person drinks and how long he can go without sleep.
C)   The more coffee a person drinks per day,the more time he can go without sleep.
D)   The more coffee a person drinks per day,the less time he can go without sleep.

Question 15

When constructing a production possibilities frontier,which of the following assumptions is not made?

Accepted Answer

A)   The economy produces only two goods or two types of goods.
B)   Firms produce goods using factors of production.
C)   The technology available to firms is given.
D)   The quantities of the factors of production that are available are increasing over the relevant time period.

Question 16

Figure 2-14 
-Refer to Figure 2-14.Given the technology available for manufacturing doghouses and dishwashers,this economy does not have enough of the factors of production to support the level of output represented by point C.

Accepted Answer

A) True 
 B)False

Question 17

The slope of a line is equal to

Accepted Answer

A)   the change in the value of x divided by the change in the value of y.
B)   the change in the value of y divided by the change in the value of x.
C)   the horizontal distance divided by the vertical distance.
D)   the value of y divided by the value of x.

Question 18

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 19

Which of the following statements about economic models is correct?

Accepted Answer

A)   Economic models are built to mirror reality exactly.
B)   Economic models are useful,but they should not be used for the purpose of improving public policies.
C)   Because economic models omit many details,they allow us to see what is truly important.
D)   Economic models seldom incorporate equations or diagrams.

Question 20

Economists use some familiar terms in specialized ways

Accepted Answer

A)   to make the subject sound more complex than it is.
B)   because every respectable field of study has its own language.
C)   to provide a new and useful way of thinking about the world.
D)   because it was too difficult to come up with new terms.

Exam 2: Thinking Like an Economist

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

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

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Trade-offs are involved in most policy decisions.

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An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Correct AnswerverifiedShow Answer

When studying the effects of public policy changes,economists

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

In the circular-flow diagram,one loop represents the flow of goods,services,and factors of production,and the other loop represents the corresponding flow of dollars.

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Which of the following statements about economic models is correct?

Correct AnswerverifiedShow Answer

Historical episodes are

Correct AnswerverifiedShow Answer

Figure 2-13 -Refer to Figure 2-13.Taking cause and effect into account,which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

Correct AnswerverifiedShow Answer

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Correct AnswerverifiedShow Answer

When constructing a production possibilities frontier,which of the following assumptions is not made?

Correct AnswerverifiedShow Answer

In the ordered pair (17,75) ,75 is the

Correct AnswerverifiedShow Answer

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Correct AnswerverifiedShow Answer

The slope of a line is equal to

Correct AnswerverifiedShow Answer

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Correct AnswerverifiedShow Answer

"Other things equal,an increase in supply causes a decrease in price" is a normative statement,not a positive statement.

Correct AnswerverifiedShow Answer

Economists use some familiar terms in specialized ways

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4.The opportunity cost of this economy moving from point Z to point Y is

Correct AnswerverifiedShow Answer

Figure 2-14 -Refer to Figure 2-14.Given the technology available for manufacturing doghouses and dishwashers,this economy does not have enough of the factors of production to support the level of output represented by point C.

Correct AnswerverifiedShow Answer

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