Question 1

Which of the following is an example of a positive statement?

Accepted Answer

A)   Lower interest rates should lead to decreased savings.
B)   If the minimum wage increases, the world will be a better place.
C)   Inflation is more harmful to the economy than unemployment.
D)   The benefits to the economy of improved equity are greater than the costs of reduced efficiency.E) A) and C)
F) B) and C)

Question 2

Figure 2-9 
-Refer to Figure 2-9. What do cups of coffee per day and the hours that someone can go without sleep have?

Accepted Answer

A)   a positive correlation
B)   a negative correlation
C)   a random correlation
D)   no correlationE) A) and D)
F) C) and D)

Question 3

What is a characteristic of a good theory?

Accepted Answer

A)   It is a widely accepted theory.
B)   It is a theory that starts from realistic assumptions.
C)   It is a theory that helps us understand how the world works.
D)   It is a theory based on original predictions.E) All of the above
F) A) and C)

Question 4

Using this outline, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.
Figure 2-12

Accepted Answer

This diagram should duplicate the essent...

Question 5

The country of San Ignacio produces two goods: beach towels and soccer balls. Last year, it produced at a point inside its production possibilities frontier and currently it is operating at a point on the (same)  production possibilities frontier. Which statement best explains the change?

Accepted Answer

A)   San Ignacio was originally experiencing unemployment but is now employing all its resources.
B)   San Ignacio experienced an improvement in soccer ball producing technology.
C)   San Ignacio acquired more resources.
D)   San Ignacio experienced a high level of emigration out of the country.E) A) and B)
F) A) and C)

Question 6

Which statement best describes economic models?

Accepted Answer

A)   They are based on unrealistic assumptions.
B)   They accurately describe the reality.
C)   They allow economists to learn how the economy works.
D)   They include as many variables as possible.E) C) and D)
F) B) and D)

Question 7

In the factors of production market, how do households and firms interact?

Accepted Answer

A)   Households are sellers and firms are buyers.
B)   Households are buyers and firms are sellers.
C)   Households and firms are both buyers.
D)   Households and firms are both sellers.E) B) and C)
F) C) and D)

Question 8

"Society would be better if the welfare system were abolished" is a positive statement, not a normative statement.

Accepted Answer

A) True 
 B)False

Question 9

Economists outside the government also offer policy advice. Which institution does NOT publish reports by economists?

Accepted Answer

A)   C.D. Howe Institute
B)   Fraser Institute
C)   Institute for Research on Public Policy
D)   H.M. Holmes InstituteE) A) and C)
F) A) and D)

Question 10

What is the opportunity cost of obtaining more of one good, as it relates to the production possibilities frontier?

Accepted Answer

A)   the amount of the other good that must be given up
B)   the market price of the additional amount produced
C)   the amount of resources that must be devoted to its production
D)   the number of dollars that must be spent to produce itE) B) and C)
F) None of the above

Question 11

Because it is difficult for economists to use experiments to generate data, what must they generally do?

Accepted Answer

A)   do without data
B)   use whatever data the world gives them
C)   select a committee of economists to make up data for all economists to use
D)   use hypothetical, computer-generated dataE) B) and D)
F) B) and C)

Question 12

Why do economists make assumptions?

Accepted Answer

A)   to diminish the chance of wrong answers
B)   to make the world easier to understand
C)   because all scientists make assumptions
D)   to make certain that all necessary variables are includedE) A) and B)
F) None of the above

Question 13

Suppose an economy produces two goods: clothes and cars. This economy always operates on its production possibilities frontier. Last year, it produced 91 units of clothes and 48 cars. This year, it is producing 95 units of clothes and 51 cars. Which of the following would NOT explain the increase in output?

Accepted Answer

A)   a reduction in unemployment
B)   an increase in the labour force
C)   an improvement in technology
D)   an increase in worker productivityE) A) and D)
F) All of the above

Question 14

Figure 2-2 
-Refer to Figure 2-2. What do boxes C and D represent?

Accepted Answer

A)   households and firms
B)   the goods and services market and the factors of production market
C)   the goods and services market and the financial market
D)   government and foreign tradeE) A) and B)
F) A) and C)

Question 15

What do economists at Foreign Affairs Canada and International Trade Canada do?

Accepted Answer

A)   help negotiate trade agreements with other countries
B)   offer advice on overseas economic development projects
C)   analyze financial markets
D)   compile databases on the economyE) B) and C)
F) A) and C)

Question 16

Figure 2-2 
-Refer to Figure 2-2. In which market are firms sellers?

Accepted Answer

A)   Box A
B)   Box B
C)   Box C
D)   Box DE) None of the above
F) A) and B)

Question 17

What are economists who try to improve the world considered?

Accepted Answer

A)   mathematicians
B)   policy advisors
C)   scientists
D)   politiciansE) C) and D)
F) A) and D)

Question 18

Suppose there are two countries, Here and There, which have identical amounts of resources, identical technologies, and identical populations. Both produce two types of goods-consumer goods and capital goods-and they both always operate on their production possibilities frontiers. The only difference is that this year There chooses to produce relatively more capital goods than Here. What will happen as a result?

Accepted Answer

A)   Here will have a lower living standard this year and will grow slower than There.
B)   Here will have a lower living standard this year but will grow faster than There.
C)   There will have a lower living standard this year and will grow slower than Here.
D)   There will have a lower living standard this year but will grow faster than Here.E) B) and C)
F) All of the above

Question 19

In order to provide information on two variables, what must an economist use?

Accepted Answer

A)   a bar graph
B)   a pie chart
C)   the coordinate system
D)   a time-series graphE) A) and B)
F) B) and C)

Question 20

Which statement best describes economic models?

Accepted Answer

A)   Economic models attempt to mirror reality exactly.
B)   Economic models are useful but should not be used for policymaking.
C)   Economic models omit many details to allow us to see what is truly important.
D)   Economic models cannot be used in the real world because they omit details.E) A) and D)
F) B) and C)

Exam 2: Thinking Like an Economist

Correct Answer
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Figure 2-2 -Refer to Figure 2-2. What do boxes C and D represent?

Correct Answer
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What are economists who try to improve the world considered?

Correct Answer
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"Society would be better if the welfare system were abolished" is a positive statement, not a normative statement.

Correct Answer
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Because it is difficult for economists to use experiments to generate data, what must they generally do?

Correct Answer
verified

The country of San Ignacio produces two goods: beach towels and soccer balls. Last year, it produced at a point inside its production possibilities frontier and currently it is operating at a point on the (same) production possibilities frontier. Which statement best explains the change?

Correct Answer
verified

Economists outside the government also offer policy advice. Which institution does NOT publish reports by economists?

Correct Answer
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Which of the following is an example of a positive statement?

Correct Answer
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Which statement best describes economic models?

Correct Answer
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Why do economists make assumptions?

Correct Answer
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Figure 2-9 -Refer to Figure 2-9. What do cups of coffee per day and the hours that someone can go without sleep have?

Correct Answer
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Correct Answer
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Figure 2-2 -Refer to Figure 2-2. In which market are firms sellers?

Correct Answer
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What do economists at Foreign Affairs Canada and International Trade Canada do?

Correct Answer
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What is a characteristic of a good theory?

Correct Answer
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In order to provide information on two variables, what must an economist use?

Correct Answer
verified

In the factors of production market, how do households and firms interact?

Correct Answer
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Which statement best describes economic models?

Correct Answer
verified

Using this outline, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram. Figure 2-12

Correct Answer
verified
This diagram should duplicate the essent...
View Answer

What is the opportunity cost of obtaining more of one good, as it relates to the production possibilities frontier?

Correct Answer
verified

Exam 2: Thinking Like an Economist

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Figure 2-2 -Refer to Figure 2-2. What do boxes C and D represent?

Correct AnswerverifiedShow Answer

What are economists who try to improve the world considered?

Correct AnswerverifiedShow Answer

"Society would be better if the welfare system were abolished" is a positive statement, not a normative statement.

Correct AnswerverifiedShow Answer

Because it is difficult for economists to use experiments to generate data, what must they generally do?

Correct AnswerverifiedShow Answer

The country of San Ignacio produces two goods: beach towels and soccer balls. Last year, it produced at a point inside its production possibilities frontier and currently it is operating at a point on the (same) production possibilities frontier. Which statement best explains the change?

Correct AnswerverifiedShow Answer

Economists outside the government also offer policy advice. Which institution does NOT publish reports by economists?

Correct AnswerverifiedShow Answer

Which of the following is an example of a positive statement?

Correct AnswerverifiedShow Answer

Which statement best describes economic models?

Correct AnswerverifiedShow Answer

Why do economists make assumptions?

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Figure 2-9 -Refer to Figure 2-9. What do cups of coffee per day and the hours that someone can go without sleep have?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 2-2 -Refer to Figure 2-2. In which market are firms sellers?

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What do economists at Foreign Affairs Canada and International Trade Canada do?

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What is a characteristic of a good theory?

Correct AnswerverifiedShow Answer

In order to provide information on two variables, what must an economist use?

Correct AnswerverifiedShow Answer

In the factors of production market, how do households and firms interact?

Correct AnswerverifiedShow Answer

Which statement best describes economic models?

Correct AnswerverifiedShow Answer

Using this outline, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram. Figure 2-12

Correct AnswerverifiedThis diagram should duplicate the essent...View AnswerShow Answer

What is the opportunity cost of obtaining more of one good, as it relates to the production possibilities frontier?

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Correct Answer
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Correct Answer
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This diagram should duplicate the essent...
View Answer

Correct Answer
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