Question 1

Which of the following statements about the circular-flow diagram is correct?

Accepted Answer

A)  One must imagine that the economy operates without money in order to make sense of the diagram.
B)  The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms.
C)  The government cannot be excluded as a decision maker in a circular-flow diagram.
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 2

In the early 19th century, the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic. The villagers noticed that wherever doctors appeared, people died. Therefore, many doctors were chased away from villages, and some were even killed. This reaction to the correlation between doctors and deaths is most likely a problem of

Accepted Answer

A)  omitted variables.
B)  reverse causality.
C)  government propaganda.
D)  medical incompetence.E) B) and D)
F) C) and D)

Question 3

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Economists speaking like policy advisers make

Accepted Answer

A)  claims about how the world is.
B)  descriptive statements.
C)  normative statements.
D)  More than one of the above is correct.E) All of the above
F) A) and B)

Question 6

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Accepted Answer

A)  A ceiling on rents reduces the quantity and quality of housing available.
B)  Fiscal policy has a significant stimulative impact on a less than fully employed economy.
C)  The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged.
D)  The United States should implement universal health care for its citizens.E) None of the above
F) All of the above

Question 7

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

Question 8

"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a

Accepted Answer

A)  normative economic statement.
B)  positive economic statement.
C)  statement made by an economist working as a scientist.
D)  judgment based on evaluation of evidence, not values.E) B) and C)
F) B) and D)

Question 9

Macroeconomics is the study of economy-wide phenomena.

Accepted Answer

A) True 
 B)False

Question 10

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) None of the above
F) A) and C)

Question 11

Figure 2-10
Panel (a) 
Panel (b)   
-Refer to Figure 2-10, Panel (a)  and Panel (b) . A shift of the economy's production possibilities frontier from Panel (a)  to Panel (b)  could be caused by

Accepted Answer

A)  unemployment.
B)  an improvement in sofa production technology.
C)  an improvement in tractor production technology.
D)  an improvement in both sofa and tractor production technology.E) C) and D)
F) A) and C)

Question 12

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 13

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

Question 14

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A)  households and firms are both buyers.
B)  households and firms are both sellers.
C)  households are buyers and firms are sellers.
D)  households are sellers and firms are buyers.E) All of the above
F) C) and D)

Question 15

Figure 2-8 
-Refer to Figure 2-8. Efficient production is represented by which point(s) ?

Accepted Answer

A)  J
B)  J, K
C)  J, K, L
D)  J, K, ME) None of the above
F) B) and D)

Question 16

Figure 2-3 
-Refer to Figure 2-3. What do the outer arrows represent in the figure?

Accepted Answer

The answer of Figure 2-3 
-Refer to Figure 2-3. What...

Question 17

Factors of production are

Accepted Answer

A)  used to produce goods and services.
B)  also called output.
C)  abundant in most economies.
D)  assumed to be owned by firms in the circular-flow diagram.E) A) and B)
F) All of the above

Question 18

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

Question 19

For an economist, the idea of making assumptions is regarded generally as a

Accepted Answer

A)  bad idea, since doing so leads to the omission of important ideas and variables from economic models.
B)  bad idea, since doing so invariably leads to data-collection problems.
C)  good idea, since doing so helps to simplify the complex world and make it easier to understand.
D)  good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.E) A) and B)
F) A) and C)

Question 20

The slope of a fairly flat upward-sloping line will be a

Accepted Answer

A)  small positive number.
B)  large positive number.
C)  small negative number.
D)  large negative number.E) All of the above
F) A) and B)

Exam 2: Thinking Like an Economist

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Correct Answer
verified

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Correct Answer
verified

In the markets for goods and services in the circular-flow diagram,

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Economists speaking like policy advisers make

Correct Answer
verified

Figure 2-8 -Refer to Figure 2-8. Efficient production is represented by which point(s) ?

Correct Answer
verified

Correct Answer
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The slope of a fairly flat upward-sloping line will be a

Correct Answer
verified

Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a) and Panel (b) . A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Correct Answer
verified

For an economist, the idea of making assumptions is regarded generally as a

Correct Answer
verified

Factors of production are

Correct Answer
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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?

Correct Answer
verified

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

Correct Answer
verified

"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a

Correct Answer
verified

Which of the following statements about the circular-flow diagram is correct?

Correct Answer
verified

Macroeconomics is the study of economy-wide phenomena.

Correct Answer
verified

Economic models

Correct Answer
verified

Figure 2-3 -Refer to Figure 2-3. What do the outer arrows represent in the figure?

Correct Answer
verified

Economists believe that production possibilities frontiers

Correct Answer
verified

Exam 2: Thinking Like an Economist

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Correct AnswerverifiedShow Answer

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions?

Correct AnswerverifiedShow Answer

In the markets for goods and services in the circular-flow diagram,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Economists speaking like policy advisers make

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8. Efficient production is represented by which point(s) ?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The slope of a fairly flat upward-sloping line will be a

Correct AnswerverifiedShow Answer

Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a) and Panel (b) . A shift of the economy's production possibilities frontier from Panel (a) to Panel (b) could be caused by

Correct AnswerverifiedShow Answer

For an economist, the idea of making assumptions is regarded generally as a

Correct AnswerverifiedShow Answer

Factors of production are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

"Ensuring that Social Security is financially sound for future generations is an important use of taxpayer dollars" is an example of a

Correct AnswerverifiedShow Answer

Which of the following statements about the circular-flow diagram is correct?

Correct AnswerverifiedShow Answer

Macroeconomics is the study of economy-wide phenomena.

Correct AnswerverifiedShow Answer

Economic models

Correct AnswerverifiedShow Answer

Figure 2-3 -Refer to Figure 2-3. What do the outer arrows represent in the figure?

Correct AnswerverifiedShow Answer

Economists believe that production possibilities frontiers

Correct AnswerverifiedShow Answer

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