Question 1

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Accepted Answer

A)   will never be able to produce.
B)   can produce using all available resources and technology.
C)   can produce using some portion, but not all, of its resources and technology.
D)   may be able to produce in the future with more resources and/or superior technology.

Question 2

When a variable that is not named on either axis of a graph changes, we read the change as a movement along the curve.

Accepted Answer

A) True 
 B)False

Question 3

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 4

In the early 19th century, the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic. The villagers noticed that wherever doctors appeared, people died. Therefore, many doctors were chased away from villages, and some were even killed. This reaction to the correlation between doctors and deaths is most likely a problem of

Accepted Answer

A)   omitted variables.
B)   reverse causality.
C)   government propaganda.
D)   medical incompetence.

Question 5

Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policymakers?

Accepted Answer

A)   similar opinions about the validity of economic theories
B)   significant differences in education
C)   differences in personal values
D)   a reliance on normative statement for research theories

Question 6

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

Accepted Answer

A)   society's preferences.
B)   the available production technology.
C)   a fair distribution of the output.
D)   the available demand for the output.

Question 7

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 8

When economists are trying to help improve the world, they are

Accepted Answer

A)   in the realm of positive economics rather than normative economics.
B)   in the realm of macroeconomics rather than microeconomics.
C)   scientists.
D)   policy advisers.

Question 9

Economic models

Accepted Answer

A)   are people who act out the behavior of firms and households so that economists can study this behavior.
B)   are usually detailed replications of reality.
C)   incorporate simplifying assumptions that often contradict reality, but also help economists better understand reality.
D)   are useful to researchers but not to teachers because economic models omit many details of the real-world economy.

Question 10

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 11

Use the following Figure to answer the question 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 12

Historical episodes allow economists to illustrate and evaluate current economic theories.

Accepted Answer

A) True 
 B)False

Question 13

Points inside the production possibilities frontier represent feasible levels of production.

Accepted Answer

A) True 
 B)False

Question 14

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Accepted Answer

A)   have no questions but hundreds of answers.
B)   have 100 questions and 3,000 answers.
C)   have 1,000 questions but no answers.
D)   never produce a winner.

Question 15

Use the following Figure to answer the question : Figure 2-3 : 
-Refer to Figure 2-3. What do the outer arrows represent in the figure?

Accepted Answer

The answer of Use the following Figure to answer the...

Question 16

Use the following Figure to answer the question : Figure 2-21 : 
-Refer to Figure 2-21. According to the graph, snowstorms

Accepted Answer

A)   and snowblowers sold are positively correlated.
B)   and snowblowers sold are negatively correlated
C)   and snowblowers sold are uncorrelated.
D)   are caused by more snowblowers being sold.

Question 17

"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 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

Which of the following statements about models is correct?

Accepted Answer

A)   The more details a model includes, the better the model.
B)   Models assume away irrelevant details.
C)   Models cannot be used to explain how the economy functions.
D)   Models cannot be used to make predictions.

Question 20

When income increases the slope of an individual's demand curve, the demand curve

Accepted Answer

A)   turns positive.
B)   becomes undefined.
C)   remains negative.
D)   becomes infinite.

Exam 2: Thinking Like an Economist

Use the following Figure to answer the question 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 Answer
verified

When economists are trying to help improve the world, they are

Correct Answer
verified

Correct Answer
verified

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 Answer
verified

Historical episodes allow economists to illustrate and evaluate current economic theories.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Points inside the production possibilities frontier represent feasible levels of production.

Correct Answer
verified

When income increases the slope of an individual's demand curve, the demand curve

Correct Answer
verified

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Correct Answer
verified

Use the following Figure to answer the question : Figure 2-3 : -Refer to Figure 2-3. What do the outer arrows represent in the figure?

Correct Answer
verified

When a variable that is not named on either axis of a graph changes, we read the change as a movement along the curve.

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements about models is correct?

Correct Answer
verified

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

Correct Answer
verified

Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policymakers?

Correct Answer
verified

In economics, capital refers to

Correct Answer
verified

Economic models

Correct Answer
verified

Use the following Figure to answer the question : Figure 2-21 : -Refer to Figure 2-21. According to the graph, snowstorms

Correct Answer
verified

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Correct Answer
verified

Exam 2: Thinking Like an Economist

Use the following Figure to answer the question 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

When economists are trying to help improve the world, they are

Correct AnswerverifiedShow Answer

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

Historical episodes allow economists to illustrate and evaluate current economic theories.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Points inside the production possibilities frontier represent feasible levels of production.

Correct AnswerverifiedShow Answer

When income increases the slope of an individual's demand curve, the demand curve

Correct AnswerverifiedShow Answer

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : Figure 2-3 : -Refer to Figure 2-3. What do the outer arrows represent in the figure?

Correct AnswerverifiedShow Answer

When a variable that is not named on either axis of a graph changes, we read the change as a movement along the curve.

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

Which of the following statements about models is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policymakers?

Correct AnswerverifiedShow Answer

In economics, capital refers to

Correct AnswerverifiedShow Answer

Economic models

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : Figure 2-21 : -Refer to Figure 2-21. According to the graph, snowstorms

Correct AnswerverifiedShow Answer

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Correct AnswerverifiedShow Answer

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