Question 1

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

Question 2

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Accepted Answer

A)   efficiency
B)   opportunity cost
C)   equality
D)   trade-offsE) All of the above
F) A) and B)

Question 3

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Accepted Answer

A) True 
 B)False  False

Question 4

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

Accepted Answer

A)   Americans deserve a cleaner environment.
B)   Reducing emissions reduces days missed from school due to asthma.
C)   All Americans are entitled to quality health care.
D)   Economic policies should focus on improving equality.E) C) and D)
F) B) and D) B

Question 5

In the circular-flow diagram,

Accepted Answer

A)   firms own the factors of production.
B)   the factors of production are labor, land, and capital.
C)   the factors of production are also called "output."
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 6

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

Question 7

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Accepted Answer

A)   have no questions but hundreds of answers.
B)   have 100 questions and 3,000 answers.
C)   have 1,000 questions but no answers.
D)   never produce a winner.E) None of the above
F) C) and D)

Question 8

Which of the following statements is correct?

Accepted Answer

A)   Few economic models incorporate assumptions.
B)   Different economic models employ different sets of assumptions.
C)   Good economic models attempt to mimic reality as closely as possible.
D)   Economic models, to be accepted, must be tested by conducting experiments.E) All of the above
F) B) and C)

Question 9

In the ordered pair (10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Graphs such as bar graphs and pie charts are limited in that they

Accepted Answer

A)   can only show variables that are positively related.
B)   can only show variables that have a negative correlation.
C)   provide information on only one variable.
D)   provide information on no more than two variables.E) None of the above
F) A) and B)

Question 12

The opportunity cost of something is what you give up to get it.

Accepted Answer

A) True 
 B)False

Question 13

Economists at the Department of the Treasury

Accepted Answer

A)   design U.S. currency and coins.
B)   provide Congress with the annual budget.
C)   enforce the U.S. antitrust laws.
D)   provide advice on tax policy to the President.E) B) and C)
F) B) and D)

Question 14

When two variables move in the same direction, the curve relating them is

Accepted Answer

A)   upward sloping, and we say the variables are positively related.
B)   upward sloping, and we say the variables are negatively related.
C)   downward sloping, and we say the variables are positively related.
D)   downward sloping, and we say the variables are negatively related.E) A) and B)
F) A) and C)

Question 15

If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

Accepted Answer

A) True 
 B)False

Question 16

Figure 2-19
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 2-19. 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 17

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)   One economist believes the North American Free Trade Agreement (NAFT
A)   has led to a loss of American jobs; another economist disputes this claim.
B)   One economist believes that when income taxes are cut, people will increase their spending; another economist believes that when income taxes are cut, people will increase their saving.
C)   One economist advises against increases in sales taxes because she thinks such increases are unfair to low- income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people.
D)   One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth.E) A) and C)
F) C) and D) C

Question 18

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Accepted Answer

A)   a controlled experiment that lead to the formulation of a scientific theory.
B)   being in the right place at the right time.
C)   an idea whose time had come.
D)   the interplay between observation and theory in science.E) B) and C)
F) A) and D)

Question 19

Figure 2-23 
-Refer to Figure 2-23. It is possible for this economy to produce 30 doghouses and 20 dishwashers.

Accepted Answer

A) True 
 B)False

Question 20

Figure 2-17 
-Refer to Figure 2-17. The movement from point A to point B is a(n)

Accepted Answer

A)   shift of the demand curve.
B)   indication of a change in preferences for grapes.
C)   movement along the demand curve.
D)   indication of an increase in income.E) All of the above
F) C) and D)

Exam 2: Thinking Like an Economist

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

Correct Answer
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Which of the following concepts cannot be illustrated by the production possibilities frontier?

Correct Answer
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Normative statements describe how the world is, while positive statements prescribe how the world should be.

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False

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

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B

In the circular-flow diagram,

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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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President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Correct Answer
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Which of the following statements is correct?

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In the ordered pair (10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.

Correct Answer
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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.

Correct Answer
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Graphs such as bar graphs and pie charts are limited in that they

Correct Answer
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The opportunity cost of something is what you give up to get it.

Correct Answer
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Economists at the Department of the Treasury

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When two variables move in the same direction, the curve relating them is

Correct Answer
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If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

Correct Answer
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Correct Answer
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Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

Correct Answer
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C

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Correct Answer
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Figure 2-23 -Refer to Figure 2-23. It is possible for this economy to produce 30 doghouses and 20 dishwashers.

Correct Answer
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Figure 2-17 -Refer to Figure 2-17. The movement from point A to point B is a(n)

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Exam 2: Thinking Like an Economist

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

Correct AnswerverifiedShow Answer

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Correct AnswerverifiedShow Answer

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Correct AnswerverifiedFalse

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

Correct AnswerverifiedB

In the circular-flow diagram,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

In the ordered pair (10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Graphs such as bar graphs and pie charts are limited in that they

Correct AnswerverifiedShow Answer

The opportunity cost of something is what you give up to get it.

Correct AnswerverifiedShow Answer

Economists at the Department of the Treasury

Correct AnswerverifiedShow Answer

When two variables move in the same direction, the curve relating them is

Correct AnswerverifiedShow Answer

If new government regulations designed to protect wetlands remove very productive farmland from production, then the production possibilities frontier will shift inward.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

Correct AnswerverifiedC

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Correct AnswerverifiedShow Answer

Figure 2-23 -Refer to Figure 2-23. It is possible for this economy to produce 30 doghouses and 20 dishwashers.

Correct AnswerverifiedShow Answer

Figure 2-17 -Refer to Figure 2-17. The movement from point A to point B is a(n)

Correct AnswerverifiedShow Answer

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False

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B

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C

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