Question 1

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

Question 2

Economists may disagree about the validity of alternative positive theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 3

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) B) and D)
F) None of the above

Question 4

The bowed shape of the production possibilities frontier can be explained by the fact that

Accepted Answer

A)   all resources are scarce.
B)   economic growth is always occurring.
C)   the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.
D)   the only way to get more of one good is to get less of the other.E) A) and B)
F) C) and D)

Question 5

In the simple circular-flow diagram, who consumes the goods and services that firms produce?

Accepted Answer

A)   households only
B)   firms only
C)   both households and firms
D)   neither households nor firmsE) B) and C)
F) A) and D)

Question 6

Figure 2-6
 
-Refer to Figure 2-6. Inefficient production is represented by which point(s) ?

Accepted Answer

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

Question 7

According to economist John Maynard Keynes, a great economist must also be a(n)

Accepted Answer

A)   mathematician.
B)   historian.
C)   philosopher.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 8

While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth.

Accepted Answer

A) True 
 B)False

Question 9

The trade-off between the production of one good and the production of another good can change over time because of technological advances.

Accepted Answer

A) True 
 B)False

Question 10

Economists believe that production possibilities frontiers rarely have a bowed shape.

Accepted Answer

A) True 
 B)False

Question 11

The production possibilities frontier is used to illustrate some basic economic ideas, including

Accepted Answer

A)   scarcity.
B)   opportunity cost.
C)   economic growth.
D)   All of the above are correct.E) All of the above
F) B) and D)

Question 12

Figure 2-8
 
-Refer to Figure 2-8, Panel (a) . Production is

Accepted Answer

A)   possible at points J, K, L, and M, but efficient only at points J, L, and M.
B)   possible at points J, K, L, and M, but efficient only at point K.
C)   possible at points J, L, M, and N, but efficient only at points J, L, and M.
D)   possible at points J, L, M, and N, but efficient only at point N.E) A) and C)
F) B) and C)

Question 13

Normative statements are

Accepted Answer

A)   prescriptive, whereas positive statements are descriptive.
B)   descriptive, whereas positive statements are prescriptive.
C)   backward-looking, whereas positive statements are forward-looking.
D)   forward-looking, whereas positive statements are backward-looking.E) All of the above
F) A) and B)

Question 14

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

Accepted Answer

A)   the Department of Labor
B)   the Department of the Treasury
C)   the Congressional Budget Office
D)   the Council of Economic AdvisersE) A) and B)
F) B) and C)

Question 15

Figure 2-14
 
-Refer to Figure 2-14. Unemployment could cause this economy to produce at point B.

Accepted Answer

A) True 
 B)False

Question 16

Economists try to address their subject with a scientist's objectivity.

Accepted Answer

A) True 
 B)False

Question 17

The Council of Economic Advisers' Economic Report of the President discusses recent developments in the economy and presents the council's analysis of current policy issues.

Accepted Answer

A) True 
 B)False

Question 18

Almost all economists agree that local and state governments should

Accepted Answer

A)   eliminate subsidies to professional sports franchises.
B)   increase subsidies to professional sports franchises.
C)   copy economic policy from Washington, D.C.
D)   prevent companies from outsourcing work.E) A) and B)
F) A) and C)

Question 19

Figure 2-17
Relationship Between Years of Education and Annual Income
 
-Refer to Figure 2-17. According to the graph, the correlation between years of education and annual income is

Accepted Answer

A)   positive
B)   negative
C)   inverse
D)   normativeE) A) and B)
F) A) and D)

Question 20

Figure 2-8
 
-Refer to Figure 2-8, Panel (a) . The opportunity cost of moving from point M to point L is

Accepted Answer

A)   2 donuts.
B)   2 donuts and 4 cups of coffee.
C)   4 donuts.
D)   4 cups of coffee.E) A) and B)
F) B) and C)

Exam 2: Thinking Like an Economist

Economists may disagree about the validity of alternative positive theories about how the world works.

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8, Panel (a) . The opportunity cost of moving from point M to point L is

Correct AnswerverifiedShow Answer

According to economist John Maynard Keynes, a great economist must also be a(n)

Correct AnswerverifiedShow Answer

The bowed shape of the production possibilities frontier can be explained by the fact that

Correct AnswerverifiedShow Answer

The Council of Economic Advisers' Economic Report of the President discusses recent developments in the economy and presents the council's analysis of current policy issues.

Correct AnswerverifiedShow Answer

The production possibilities frontier is used to illustrate some basic economic ideas, including

Correct AnswerverifiedShow Answer

Figure 2-17 Relationship Between Years of Education and Annual Income -Refer to Figure 2-17. According to the graph, the correlation between years of education and annual income is

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

Correct AnswerverifiedShow Answer

Economists believe that production possibilities frontiers rarely have a bowed shape.

Correct AnswerverifiedShow Answer

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch?

Correct AnswerverifiedShow Answer

Economists try to address their subject with a scientist's objectivity.

Correct AnswerverifiedShow Answer

In the simple circular-flow diagram, who consumes the goods and services that firms produce?

Correct AnswerverifiedShow Answer

While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth.

Correct AnswerverifiedShow Answer

Normative statements are

Correct AnswerverifiedShow Answer

Figure 2-6 -Refer to Figure 2-6. Inefficient production is represented by which point(s) ?

Correct AnswerverifiedShow Answer

Almost all economists agree that local and state governments should

Correct AnswerverifiedShow Answer

The trade-off between the production of one good and the production of another good can change over time because of technological advances.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 2-14 -Refer to Figure 2-14. Unemployment could cause this economy to produce at point B.

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8, Panel (a) . Production is

Correct AnswerverifiedShow Answer

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