Question 1

Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

Accepted Answer

The answer of Is the following a positive or normative...

Question 2

A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing one good than another.

Accepted Answer

A) True 
 B)False

Question 3

Where can an economy not produce?

Accepted Answer

A)   inside its production possibilities frontier
B)   on its production possibilities frontier
C)   outside its production possibilities frontier
D)   at the endpoints of its production possibilities frontierE) B) and C)
F) A) and D)

Question 4

Figure 2-14 
-Refer to Figure 2-14.The slope of the curve between points A and B is

Accepted Answer

A)   -5
B)   -1/5
C)   1/5
D)   5E) C) and D)
F) B) and C)

Question 5

In the circular-flow diagram,payments for labor,land,and capital flow from firms to households through the markets for the factors of production.

Accepted Answer

A) True 
 B)False

Question 6

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) A) and B)
F) All of the above

Question 7

Which of the following is not correct?

Accepted Answer

A)   When developing economic theories,graphs offer a way to visually express ideas that might be less clear if described with equations or words.
B)   Graphs are one way of expressing the relationships among variables.
C)   When studying the relationship between two economic variables,graphs allow economists to draw indisputable conclusions about causes and effects.
D)   When analyzing economic data,graphs provide a powerful way of finding and interpreting patterns.E) All of the above
F) B) and C)

Question 8

In the circular-flow diagram,which of the following items does not flow from households to firms?

Accepted Answer

A)   revenue
B)   land,labor,and capital
C)   factors of production
D)   profitE) A) and B)
F) B) and D)

Question 9

In principle,we can

Accepted Answer

A)   ignore positive statements when choosing among various public policy alternatives.
B)   ignore normative statements when choosing among various public policy alternatives.
C)   confirm or refute positive statements by examining evidence.
D)   confirm or refute normative statements by examining evidence.E) All of the above
F) A) and B)

Question 10

A normative economic statement such as "The minimum wage should be abolished"

Accepted Answer

A)   would likely be made by an economist acting as a scientist.
B)   would require values and data in order to be evaluated.
C)   would require data but not values in order to be evaluated.
D)   could not be evaluated by economists acting as policy advisers.E) None of the above
F) B) and C)

Question 11

-Refer to Figure 2-3.What are the coordinates of point C?

Accepted Answer

The answer of 
-Refer to Figure 2-3.What are the coordinates...

Question 12

The art in scientific thinking -- whether in chemistry,economics,or biology -- is

Accepted Answer

A)   the design and implementation of laboratory experiments.
B)   knowing when to stop collecting data and when to start analyzing the data.
C)   deciding which assumptions to make.
D)   being able to mathematically model natural phenomena.E) None of the above
F) B) and C)

Question 13

Which two groups of decision makers are included in the simple circular-flow diagram?

Accepted Answer

A)   markets and government
B)   households and government
C)   firms and government
D)   households and firmsE) A) and D)
F) B) and D)

Question 14

Figure 2-2 
-Refer to Figure 2-2.If the owners of land,labor,and capital are represented by Box B of this circular-flow diagram,then

Accepted Answer

A)   households are represented by Box A.
B)   firms are represented by Box C.
C)   firms are represented by Box A.
D)   firms are sellers in Box B.E) C) and D)
F) B) and D)

Question 15

Positive statements are

Accepted Answer

A)   prescriptive.
B)   claims about how the world should be.
C)   claims about how the world is.
D)   made by economists speaking as policy advisers.E) B) and D)
F) A) and B)

Question 16

Is the following a positive or normative statement? The unemployment rate in Nevada is higher than the unemployment rate in New York.

Accepted Answer

The answer of Is the following a positive or normative...

Question 17

With the resources it has,an economy can produce at any point on or outside the production possibilities frontier,but it cannot produce at points inside the frontier.

Accepted Answer

A) True 
 B)False

Question 18

Economic models

Accepted Answer

A)   cannot be useful if they are based on false assumptions.
B)   were once thought to be useful,but that is no longer true.
C)   must incorporate all aspects of the economy if they are to be useful.
D)   can be useful,even if they are not particularly realistic.E) None of the above
F) C) and D)

Question 19

In the circular-flow diagram,factors of production include land,labor,and capital.

Accepted Answer

A) True 
 B)False

Question 20

When an economy is operating inside its production possibilities frontier,we know that

Accepted Answer

A)   there are unused resources or inefficiencies in the economy.
B)   all of the economy's resources are fully employed.
C)   economic growth would have to occur in order for the economy to move to a point on the frontier.
D)   in order to produce more of one good,the economy would have to give up some of the other good.E) None of the above
F) B) and D)

Exam 2: Thinking Like an Economist

Where can an economy not produce?

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Is the following a positive or normative statement? The unemployment rate in Nevada is higher than the unemployment rate in New York.

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-Refer to Figure 2-3.What are the coordinates of point C?

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Which two groups of decision makers are included in the simple circular-flow diagram?

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In principle,we can

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When an economy is operating inside its production possibilities frontier,we know that

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A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing one good than another.

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Which of the following is not correct?

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The art in scientific thinking -- whether in chemistry,economics,or biology -- is

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In the circular-flow diagram,factors of production include land,labor,and capital.

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A normative economic statement such as "The minimum wage should be abolished"

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Positive statements are

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With the resources it has,an economy can produce at any point on or outside the production possibilities frontier,but it cannot produce at points inside the frontier.

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Economic models

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Is the following a positive or normative statement? The Federal Reserve should set an inflation target and employ policies to meet the target.

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Figure 2-2 -Refer to Figure 2-2.If the owners of land,labor,and capital are represented by Box B of this circular-flow diagram,then

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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?

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Figure 2-14 -Refer to Figure 2-14.The slope of the curve between points A and B is

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In the circular-flow diagram,payments for labor,land,and capital flow from firms to households through the markets for the factors of production.

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In the circular-flow diagram,which of the following items does not flow from households to firms?

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