Question 1

Economists view positive statements as

Accepted Answer

A)   affirmative, justifying existing economic policy.
B)   optimistic, putting the best possible interpretation on things.
C)   descriptive, making a claim about how the world is.
D)   prescriptive, making a claim about how the world ought to be.E) A) and B)
F) A) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

Accepted Answer

A)   the impact of minimum-wage laws on employment in the fast food industry
B)   the effect of changes in household saving rates on the growth rate of national income
C)   the impact of faster money growth on the rate of inflation
D)   a comparison of alternative tax policies and their respective impacts on the rate of the nation's economic growthE) None of the above
F) A) and B)

Question 4

Economists believe that production possibilities frontiers rarely have a bowed shape.

Accepted Answer

A) True 
 B)False

Question 5

In the circular-flow diagram,which of the following items flows from firms to households through the markets for goods and services?

Accepted Answer

A)   goods and services
B)   dollars paid to land, labor, and capital
C)   dollars spent on goods and services
D)   wages, rent, and profitE) A) and C)
F) B) and D)

Question 6

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.E) All of the above
F) B) and C)

Question 7

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

Question 8

In the circular-flow diagram,firms consume all the goods and services that they produce.

Accepted Answer

A) True 
 B)False

Question 9

Production possibilities frontiers can be used to illustrate scarcity,trade-offs,opportunity cost,efficiency,unemployment,technological advances,and economic growth.

Accepted Answer

A) True 
 B)False

Question 10

Economists believe that production possibilities frontiers

Accepted Answer

A)   never have a bowed shape.
B)   rarely have a bowed shape.
C)   often have a bowed shape.
D)   always have a bowed shape.E) None of the above
F) All of the above

Question 11

If a line passes through the points (20,5)and (10,10),then the slope of the line is -2.

Accepted Answer

A) True 
 B)False

Question 12

Economists regard events from the past as

Accepted Answer

A)   irrelevant, since history is unlikely to repeat itself.
B)   of limited interest, since those events seldom provide any useful economic data.
C)   interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories.
D)   interesting and valuable, since those events are capable of helping us to understand the past, the present, and the future.E) All of the above
F) B) and D)

Question 13

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

Accepted Answer

A)   Universal health care would be good for U.S. citizens.
B)   An increase in the cigarette tax would cause a decrease in the number of smokers.
C)   A decrease in the minimum wage would decrease unemployment.
D)   A law requiring the federal government to balance its budget would increase economic growth.E) None of the above
F) A) and B)

Question 14

When economists make

Accepted Answer

A)   positive statements, they are speaking not as scientists but as policy advisers.
B)   positive statements, they are speaking not as scientists but as forecasters.
C)   normative statements, they are speaking not as scientists but as policy advisers.
D)   normative statements, they are speaking not as policy advisers but as model-builders.E) A) and B)
F) A) and C)

Question 15

Figure 2-14
 
-Refer to Figure 2-14.Point B represents an inefficient outcome for this economy.

Accepted Answer

A) True 
 B)False

Question 16

In the circular-flow diagram,firms produce goods and services using the factors of production.

Accepted Answer

A) True 
 B)False

Question 17

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

Accepted Answer

A)   performing an experiment in an economic system.
B)   applying mathematical methods to economic analysis.
C)   analyzing available data.
D)   formulating theories about economic events.E) B) and D)
F) A) and B)

Question 18

Efficiency is illustrated by

Accepted Answer

A)   both the production possibilities frontier and the circular-flow diagram.
B)   neither the production possibilities frontier nor the circular-flow diagram.
C)   the production possibilities frontier only.
D)   the circular-flow diagram only.E) C) and D)
F) B) and C)

Question 19

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 20

Which of the following is not correct?

Accepted Answer

A)   Economists use some familiar words in specialized ways.
B)   Economics has its own language and its own way of thinking, but few other fields of study do.
C)   Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist's language.
D)   The value of the economist's language lies in its ability to provide you with a new and useful way of thinking about the world in which you live.E) A) and B)
F) C) and D)

Exam 2: Thinking Like an Economist.

If a line passes through the points (20,5)and (10,10),then the slope of the line is -2.

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

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When economists make

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Economists believe that production possibilities frontiers

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Figure 2-14 -Refer to Figure 2-14.Point B represents an inefficient outcome for this economy.

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In the circular-flow diagram,which of the following items flows from firms to households through the markets for goods and services?

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Economists view positive statements as

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Production possibilities frontiers can be used to illustrate scarcity,trade-offs,opportunity cost,efficiency,unemployment,technological advances,and economic growth.

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

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Economists believe that production possibilities frontiers rarely have a bowed shape.

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Which of the following is not correct?

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Economists regard events from the past as

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Efficiency is illustrated by

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Which of the following areas of study typifies microeconomics as opposed to macroeconomics?

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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.

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In economics,capital refers to

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In the circular-flow diagram,firms consume all the goods and services that they produce.

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In the circular-flow diagram,firms produce goods and services using the factors of production.

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The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

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

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