Question 1

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) B) and D)
F) B) and C)

Question 2

Figure 2-12
 
-Refer to Figure 2-12. Which of the following combinations of points are both efficient and attainable for this economy?

Accepted Answer

A)   B, C
B)   A, D, H
C)   A, B, C, D, H
D)   F, GE) None of the above
F) All of the above

Question 3

The production possibilities frontier provides an illustration of the principle that

Accepted Answer

A)   trade can make everyone better off.
B)   governments can sometimes improve market outcomes.
C)   people face trade-offs.
D)   people respond to incentives.E) All of the above
F) A) and C)

Question 4

In surveys of professional economists, fourteen propositions were endorsed by an overwhelming majority of respondents.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is correct about the roles of economists?

Accepted Answer

A)   Economists are best viewed as policy advisers.
B)   Economists are best viewed as scientists.
C)   In trying to explain the world, economists are policy advisers; in trying to improve the world, they are scientists.
D)   In trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers.E) None of the above
F) A) and B)

Question 6

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

Accepted Answer

A)   will never be able to produce.
B)   can produce using all available resources and technology.
C)   can produce using some portion, but not all, of its resources and technology.
D)   may be able to produce in the future with more resources and/or superior technology.E) None of the above
F) A) and B)

Question 7

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

Accepted Answer

A)   goods
B)   services
C)   capital
D)   profitE) None of the above
F) All of the above

Question 8

Figure 2-12
 
-Refer to Figure 2-12. Which of the following statements is true about point B for this economy?

Accepted Answer

A)   Point B is currently unattainable.
B)   Point B is efficient.
C)   At point B, more pillows are produced than blankets.
D)   There is unemployment at point B.E) All of the above
F) C) and D)

Question 9

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

Accepted Answer

A)   The discount rate is the interest rate the Federal Reserve charges banks to borrow funds.
B)   The US income tax rate increases with the amount of income earned.
C)   The government should increase the tax on gasoline.
D)   The US unemployment rate increased to 10 percent in 2009.E) C) and D)
F) B) and C)

Question 10

Which of these terms are used interchangeably?

Accepted Answer

A)   "goods and services" and "inputs"
B)   "goods and services" and "factors of production"
C)   "inputs" and "factors of production"
D)   "land, labor, and capital" and "goods and services"E) B) and D)
F) A) and B)

Question 11

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Accepted Answer

A) True 
 B)False

Question 12

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Accepted Answer

A) True 
 B)False

Question 13

Two variables that have a negative correlation move in opposite directions.

Accepted Answer

A) True 
 B)False

Question 14

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 15

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

Accepted Answer

A)   amount of the other good that must be given up.
B)   market price of the additional amount produced.
C)   amount of resources that must be devoted to its production.
D)   number of dollars that must be spent to produce it.E) C) and D)
F) B) and D)

Question 16

Economists have helped modify the debate over the environment

Accepted Answer

A)   by pointing out that nature is invaluable.
B)   by focusing discussion on issues of resource allocation.
C)   by lobbying Congress for acid rain legislation.
D)   by arguing against tradeable permits for pollution.E) A) and D)
F) A) and C)

Question 17

Figure 2-1
 
-Refer to Figure 2-1. Which arrow represents the flow of income payments?

Accepted Answer

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

Question 18

Which of the following is not an example of a positive, as opposed to normative, statement?

Accepted Answer

A)   Higher gasoline prices will reduce gasoline consumption.
B)   Equality is more important than efficiency.
C)   Trade restrictions lower our standard of living.
D)   If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money.E) None of the above
F) A) and B)

Question 19

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) A) and C)
F) A) and D)

Question 20

If a line passes through the points (20,5) and (10,10), then the slope of the line is 1/2.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Two variables that have a negative correlation move in opposite directions.

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Which of these terms are used interchangeably?

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Efficiency is illustrated by

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In surveys of professional economists, fourteen propositions were endorsed by an overwhelming majority of respondents.

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

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The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

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Any point on a country's production possibilities frontier represents a combination of two goods that an economy

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Which of the following statements is correct about the roles of economists?

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Figure 2-12 -Refer to Figure 2-12. Which of the following combinations of points are both efficient and attainable for this economy?

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When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

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

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If a line passes through the points (20,5) and (10,10), then the slope of the line is 1/2.

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Economists have helped modify the debate over the environment

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Which of the following is not an example of a positive, as opposed to normative, statement?

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Figure 2-12 -Refer to Figure 2-12. Which of the following statements is true about point B for this economy?

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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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Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of income payments?

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

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The production possibilities frontier provides an illustration of the principle that

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The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

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