Question 1

The President receives economic policy advice from economists at each of the following except

Accepted Answer

A)  the Council of Economic Advisors.
B)  the Department of the Treasury.
C)  the Congressional Budget office.
D)  the Department of Labor.E) A) and B)
F) All of the above

Question 2

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

Question 3

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)  the effect of an increase in the alcohol tax on the market for beer
B)  the effect of foreign competition on the domestic auto industry
C)  the effect of a price war in the airline industry
D)  the effect of an increase in the minimum wage on an economy's overall rate of unemploymentE) All of the above
F) B) and C) D

Question 4

Figure 2-16​ 
-Refer to Figure 2-16. If this economy devotes all of its resources to the production of gadgets, then it will produce

Accepted Answer

A)  0 gadgets and 100 widgets.
B)  50 gadgets and 70 widgets.
C)  100 gadgets and 0 widgets.
D)  80 gadgets and 90 widgets.E) A) and D)
F) C) and D)

Question 5

Economists speaking like policy advisers make

Accepted Answer

A)  claims about how the world is.
B)  descriptive statements.
C)  normative statements.
D)  More than one of the above is correct.E) None of the above
F) All of the above

Question 6

Figure 2-3 
-Refer to Figure 2-3. What do the outer arrows represent in the figure?

Accepted Answer

The answer of Figure 2-3 
-Refer to Figure 2-3. What...

Question 7

One way to characterize the difference between positive statements and normative statements is as follows:

Accepted Answer

A)  Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future.
B)  Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be.
C)  Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation.
D)  Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements.E) B) and C)
F) C) and D)

Question 8

Economic growth causes a production possibilities frontier to shift outward.

Accepted Answer

A) True 
 B)False

Question 9

Economic models are built with

Accepted Answer

A)  recommendations concerning public policies.
B)  facts about the legal system.
C)  assumptions.
D)  statistical forecasts.E) None of the above
F) A) and D)

Question 10

Historical episodes are not valuable to economists.

Accepted Answer

A) True 
 B)False  False

Question 11

Economists view normative statements as

Accepted Answer

A)  prescriptive, making a claim about how the world ought to be.
B)  descriptive, making a claim about how the world is.
C)  statements about the normal condition of the world.
D)  pessimistic, putting the worst possible interpretation on things.E) A) and C)
F) B) and C)

Question 12

When two variables have a negative correlation and the x-variable decreases,

Accepted Answer

A)  the y-variable increases.
B)  the y-variable decreases.
C)  the y-variable stays the same.
D)  the x-variable can never be positive.E) A) and B)
F) A) and C)

Question 13

Figure 2-1 
-Refer to Figure 2-1. Which arrow represents the flow of spending by households?

Accepted Answer

A)  A
B)  B
C)  C
D)  DE) B) and D)
F) C) and D)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The institution that sets the nation's monetary policy is called the

Accepted Answer

The answer of The institution that sets the nation's monetary...

Question 16

Figure 2-5 
-Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point B is

Accepted Answer

A)  20 dryers.
B)  20 washers.
C)  20 dryers and 20 washers.
D)  60 dryers.E) All of the above
F) B) and C) A

Question 17

The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

Accepted Answer

A)  wages
B)  income
C)  capital
D)  rentE) A) and C)
F) None of the above

Question 18

Figure 2-4 
-Refer to Figure 2-4. Inefficient production is represented by which point(s) ?

Accepted Answer

A)  Q, S
B)  Q, S, T
C)  R, U
D)  TE) B) and C)
F) C) and D)

Question 19

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.E) C) and D)
F) B) and C)

Question 20

Figure 2-4 
-Refer to Figure 2-4. Unemployment could cause this economy to produce at which point(s) ?

Accepted Answer

A)  Q, S
B)  Q, S, T
C)  R, U
D)  TE) A) and C)
F) B) and C)

Exam 2: Thinking Like an Economist

The President receives economic policy advice from economists at each of the following except

Correct AnswerverifiedShow Answer

Historical episodes are

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Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Correct AnswerverifiedD

Figure 2-16​ -Refer to Figure 2-16. If this economy devotes all of its resources to the production of gadgets, then it will produce

Correct AnswerverifiedShow Answer

Economists speaking like policy advisers make

Correct AnswerverifiedShow Answer

Figure 2-3 -Refer to Figure 2-3. What do the outer arrows represent in the figure?

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One way to characterize the difference between positive statements and normative statements is as follows:

Correct AnswerverifiedShow Answer

Economic growth causes a production possibilities frontier to shift outward.

Correct AnswerverifiedShow Answer

Economic models are built with

Correct AnswerverifiedShow Answer

Historical episodes are not valuable to economists.

Correct AnswerverifiedFalse

Economists view normative statements as

Correct AnswerverifiedShow Answer

When two variables have a negative correlation and the x-variable decreases,

Correct AnswerverifiedShow Answer

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of spending by households?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The institution that sets the nation's monetary policy is called the

Correct AnswerverifiedShow Answer

Figure 2-5 -Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point B is

Correct AnswerverifiedA

The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4. Inefficient production is represented by which point(s) ?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4. Unemployment could cause this economy to produce at which point(s) ?

Correct AnswerverifiedShow Answer

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Figure 2-16 -Refer to Figure 2-16. If this economy devotes all of its resources to the production of gadgets, then it will produce

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False

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A

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