Question 1

When economists are trying to explain the world, they are

Accepted Answer

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

Question 2

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

Accepted Answer

A)  If the price of a product decreases, people's willingness to buy that product will increase.
B)  Reducing tax rates on the wealthy would benefit the nation.
C)  If the national saving rate were to increase, so would the rate of economic growth.
D)  The elimination of trade restrictions would increase an economy's standard of living.E) C) and D)
F) A) and D)

Question 3

Which of these statements about economic models is correct?

Accepted Answer

A)  For economists, economic models provide insights about the world.
B)  Economic models are built with assumptions.
C)  Economic models are often composed of equations and diagrams.
D)  All of the above are correct.E) B) and C)
F) B) and D)

Question 4

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

Accepted Answer

A)  Income tax rates should not have been cut as they were a few years ago.
B)  The quantity of money has grown too slowly in recent years.
C)  When the quantity of money grows rapidly, inflation is a predictable consequence.
D)  All of the above are positive statements.E) B) and C)
F) A) and B)

Question 5

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

Question 6

Figure 2-16
In the following graph the x-axis shows the number of times a commuter rail train stops at a station per hour and the y-axis shows the number of commuter rail passengers per hour.Commuter Rail Passengers by Frequency of Service 
-Refer to Figure 2-16. A policymaker observes this graph and concludes that increasing the frequency of commuter rail service is a certain way to get more commuters to choose the commuter rail instead of driving their own cars. You warn the policymaker about making a reverse causality mistake with which of the following statements?

Accepted Answer

A)  Higher gas prices are causing more people to choose the commuter rail over driving.
B)  The service frequency was increased in response to an increase in the number of passengers per hour.
C)  There is a positive relationship between frequency of stops and number of passengers.
D)  None of the above is correct.E) All of the above
F) B) and C)

Question 7

The point where both x and y are zero is known as the

Accepted Answer

A)  origin.
B)  null.
C)  zero coordinate.
D)  center.E) A) and C)
F) C) and D)

Question 8

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.

Accepted Answer

A) True 
 B)False

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.E) All of the above
F) None of the above

Question 10

A circular-flow diagram is a model that

Accepted Answer

A)  helps to explain how participants in the economy interact with one another.
B)  helps to explain how the economy is organized.
C)  incorporates all aspects of the real economy.
D)  Both (a)  and (b)  are correct.E) B) and C)
F) C) and D)

Question 11

Table 2-3
Production Possibilities for Libraryland
   Bouks  Naparines 40003002002003501004500500\begin{array} { | c | c } \hline 	ext { Bouks } & 	ext { Naparines } \\hline 400 & 0 \\hline 300 & 200 \\hline 200 & 350 \\hline 100 & 450 \\hline 0 & 500 \\hline\end{array} Bouks 4003002001000​ Naparines 0200350450500​​ 
-Refer to Table 2-3. Which of the following statements is correct?

Accepted Answer

A)  The opportunity cost of an additional 100 books is constant at 50 magazines.
B)  The opportunity cost of an additional 100 books is constant at 100 magazines.
C)  Libraryland's production possibilities frontier is a straight, downward-sloping line.
D)  The opportunity cost of an additional 100 books increases as more books are produced. E) B) and D)
F) All of the above

Question 12

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

Accepted Answer

A)  Households
B)  Firms
C)  Government
D)  Markets for Factors of ProductionE) B) and D)
F) None of the above

Question 13

Figure 2-12 
-Refer to Figure 2-12. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Accepted Answer

A)  D, H
B)  B, C
C)  F, G
D)  A, BE) A) and D)
F) C) and D)

Question 14

Economists work both inside and outside the administrative branch of the U.S. government.

Accepted Answer

A) True 
 B)False

Question 15

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Accepted Answer

A)  Harry Truman
B)  George Bernard Shaw
C)  John Maynard Keynes
D)  Ronald ReaganE) A) and B)
F) B) and D)

Question 16

Good assumptions simplify a problem without substantially affecting the answer.

Accepted Answer

A) True 
 B)False

Question 17

Figure 2-1 
-Refer to Figure 2-1. Ali buys a new pair of shoes at a shoe store. To which of the arrows does this transaction directly contribute?

Accepted Answer

A)  A only
B)  A and B
C)  C only
D)  C and DE) B) and C)
F) All of the above

Question 18

A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.

Accepted Answer

A) True 
 B)False

Question 19

The circular-flow diagram is a

Accepted Answer

A)  visual model of the economy.
B)  visual model of the relationships among money, prices, and businesses.
C)  model that shows the effects of government on the economy.
D)  mathematical model of how the economy works.E) C) and D)
F) A) and B)

Question 20

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

Exam 2: Thinking Like an Economist

Correct Answer
verified

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.

Correct Answer
verified

Economic models

Correct Answer
verified

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Which of these statements about economic models is correct?

Correct Answer
verified

When economists are trying to explain the world, they are

Correct Answer
verified

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

Correct Answer
verified

A circular-flow diagram is a model that

Correct Answer
verified

The circular-flow diagram is a

Correct Answer
verified

The point where both x and y are zero is known as the

Correct Answer
verified

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 Answer
verified

Good assumptions simplify a problem without substantially affecting the answer.

Correct Answer
verified

A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.

Correct Answer
verified

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

Correct Answer
verified

Economists work both inside and outside the administrative branch of the U.S. government.

Correct Answer
verified

Figure 2-1 -Refer to Figure 2-1. Ali buys a new pair of shoes at a shoe store. To which of the arrows does this transaction directly contribute?

Correct Answer
verified

Figure 2-12 -Refer to Figure 2-12. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Correct Answer
verified

Exam 2: Thinking Like an Economist

Correct AnswerverifiedShow Answer

The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.

Correct AnswerverifiedShow Answer

Economic models

Correct AnswerverifiedShow Answer

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of these statements about economic models is correct?

Correct AnswerverifiedShow Answer

When economists are trying to explain the world, they are

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

A circular-flow diagram is a model that

Correct AnswerverifiedShow Answer

The circular-flow diagram is a

Correct AnswerverifiedShow Answer

The point where both x and y are zero is known as the

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

Good assumptions simplify a problem without substantially affecting the answer.

Correct AnswerverifiedShow Answer

A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.

Correct AnswerverifiedShow Answer

The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?

Correct AnswerverifiedShow Answer

Economists work both inside and outside the administrative branch of the U.S. government.

Correct AnswerverifiedShow Answer

Figure 2-1 -Refer to Figure 2-1. Ali buys a new pair of shoes at a shoe store. To which of the arrows does this transaction directly contribute?

Correct AnswerverifiedShow Answer

Figure 2-12 -Refer to Figure 2-12. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Correct AnswerverifiedShow Answer

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